Areas of change in BoK September Statement from August

The BoK downgraded its external assumptions and acknowledged that the global economy will recover at a slower pace than its August assessment: "the global economy will maintain its recovery going forward, albeit at a moderate pace." Previously, it was "global economy will sustain its modest recovery going forward."

The BoK has turned notably more cautious in the September statement amid rising external uncertainties. The Bank believes the "domestic economy will show a trend of recovery, but in view of external economic conditions judges the uncertainties surrounding the growth path to have increased." Previously, it was "the uncertainties surrounding the growth path to be high."

On the domestic economy, the BoK downgraded its assessment on economic agents' sentiments: "while the improvement in economic agents' sentiments has been inadequate". Previously, it was "the consumption and the sentiments of economic agents, after having contracted due mainly to the shock from the MERS outbreak, appear to have improved"

Contrary to this, the recovery in domestic activities appears more encouraging as the Bank judged "the recovery in domestic demand activities such as consumption and investment has continued."

The BoK attributed the heightened international financial market volatility to "instabilities in the Chinese financial and foreign exchange markets" from August's "devaluation of the Chinese yuan", says Barclays.