Bank of Korea (BOK), South Korea's central bank, expressed concerns about shutdown of the U.S. government, saying that uncertainties over the U.S. fiscal crisis would serve as a downside risk factor to the global economy.
"The global economy will sustain its modest recovery going forward, but the heightening of uncertainties surrounding the U.S. government budget bill and debt ceiling increase," the BOK said in a statement after deciding to freeze the policy rate at 2.5 percent.
The BOK noted that global financial market conditions may change in accordance with the Federal Reserve's decision on the tapering of its monthly bond purchases, cautioning that those factors would act as downside risks to growth.
If Congress fails to raise the current debt limit of 16.7 trillion U.S. dollars by the deadline of Oct. 17, the U.S. administration will fall into default on debt for the first time in the country's history.
Market watchers said that concerns over the prolonged U.S. fiscal crisis lowered possibilities for the Fed tapering in October.
Meanwhile, the BOK said that the domestic economy would continue its moderate growth trend given buoyant exports and improving domestic demand. The daily average exports of South Korea reached an all-time high of 2.24 billion dollars last month, brightening outlook for the country's GDP growth in the fourth quarter.
