Seoul, Jan 2 (IANS) Bank of Korea (BOK) Governor Rhee Chang-yong on Friday projected the economy, when excluding the information technology (IT) sector, to grow 1.4 percent this year, forecasting widening disparities across sectors.

“The IT sector is expected to lead growth this year on the back of a global semiconductor upcycle. If we exclude its contribution, economic growth would be limited to 1.4 percent,” Rhee said in his New Year’s address, reports Yonhap news agency.

In its latest outlook released in November, the BOK forecast the economy to grow 1.8 percent in 2026, accelerating from last year’s projected 1 percent expansion.

Rhee said the widening of gaps in the pace of recovery across sectors can hardly be considered a “sustainable or complete” form of economic recovery for the nation, while stressing the need for continued structural reforms.

Speaking of the foreign exchange market, Rhee said the won’s recent 1,400 won level against the U.S. dollar “appears to be significantly out of line with the fundamentals of the economy.”

He warned that a weaker won could increase inflationary pressure and put domestic-oriented companies at a relative disadvantage, potentially deepening polarisation.

Rhee pointed to the continued rise in overseas securities investment by local investors as a major factor behind short-term supply-demand imbalances in the FX market, calling for a “comprehensive review” of its impact on economic growth and the development of the domestic capital market from a macroeconomic perspective, according to the report.

“In the mid to long term, it will be necessary to strengthen the competitiveness of domestic industries and expand investment incentives through reforms to capital market institutions in order to address the weakness of the local currency,” he said.

—IANS

na/