SEOUL-- Global credit appraiser Standard & Poor's Global Ratings (S&P) on Wednesday revised up its 2021 growth outlook for the South Korean economy to 4 percent amid robust exports.

In April, S&P forecast Asia's fourth-largest economy to expand 3.6 percent this year, following a 0.9 percent contraction last year.

But the agency lowered its 2022 growth outlook for the Korean economy to 2.8 percent from its earlier estimate of 3.1 percent.

The agency's 2021 outlook is on a par with the Bank of Korea's growth estimate. The Korean government forecast economic growth of an 11-year high of 4.2 percent this year.

"Still, the constraint on Asia's recovery remains domestic demand, especially private consumption. External demand remains robust, and this has helped lift manufacturing investment," S&P said in a report on the Asia-Pacific economies.

Shaun Roache, chief economist for Asia-Pacific at S&P Global, told a webinar that the BOK is expected to raise its key interest rate this year and will continue to do so several times next year.

He said the BOK is not expected to hike the policy rate to above 1.25 percent.

In May, the BOK froze the base rate at a record low of 0.5 percent. The central bank slashed the base rate by a combined 0.75 percentage point between March and May 2020 to bolster the pandemic-hit economy.

BOK Gov. Lee Ju-yeol recently said the central bank is ready to raise the policy rate "within this year," stressing the need to orderly normalize its monetary policy amid the accelerating economic recovery.

In April, the S&P maintained its credit rating on South Korea at "AA," the third-highest level on the company's table. It has kept South Korea's sovereign rating at "AA" since August 2016.

Source: Yonhap News Agency