SEOUL: South Korea’s top government research body has cut its economic growth forecast for this year to 1.5% from its earlier view of 1.8%, saying a deeper and longer export slump than previously expected is likely to offset resilient private consumption.

The Korea Development Institute’s latest projection compared with the 2.6% that Asia’s fourth-largest economy posted last year which matched the average growth rate of the decade through 2022.

It also cut its inflation forecast to 3.4% from the previous 3.5%, while recommending the Bank of Korea maintain a monetary policy skewed toward containing inflation that is far beyond the central bank’s 2% target.

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Still, the agency stopped short of calling for additional interest rate increases as economists generally see the central bank’s rate-hike cycle as over after a combined 300 basis-point rise conducted since August 2021.

The Bank of Korea has forecast this year’s economic growth at 1.6% but its governor, Rhee Chang-yong, in April said the bank would likely lower the forecast at a regular update on May 25.