ADB Projects South Korea's Economic Growth Rate at 4.0% This Year... Up 0.5%p in 3 Months

[Sejong=Asia Economy Reporter Son Seon-hee] The Asian Development Bank (ADB) has projected South Korea's economic growth rate for this year at 4.0%. This is a 0.5 percentage point increase from the forecast of 3.5% announced in April, revised upward within three months.

On the 20th (local time), ADB announced in the '2021 Asian Development Outlook Supplement' that it raised the economic growth forecast reflecting recent expansions in South Korea's investment and exports. ADB releases regional economic outlooks four times a year, and this announcement supplements the annual forecast released in April by incorporating recent economic conditions. The economic growth forecast for South Korea in 2022 remains unchanged at the previous estimate of 3.1%.

The overall economic growth forecast for 46 developing countries in Asia was slightly revised to 7.2% in 2021 and 5.4% in 2022. The long-term forecast was lowered by 0.1 percentage points from the previous 7.3%, reflecting the resurgence of COVID-19 in some regions.

Regarding the upward revision of South Korea's economic growth forecast, ADB stated, "The main factors for the revision are increased private facility investment responding to the digital economy, and increased exports of IT equipment and transportation equipment." It also evaluated that "the easing of movement restrictions due to COVID-19 prevention measures and improvements in employment conditions contributed to the increase in private demand."

Although this ADB economic growth forecast is lower than the government’s target of 4.2%, it is the first time that a major international organization has projected South Korea’s economic growth rate in the 4% range. Previously, the International Monetary Fund (IMF) projected 3.6% (March 25), and the Organisation for Economic Co-operation and Development (OECD) projected 3.8% (May 31). However, this ADB forecast reflects economic conditions up to the end of last month and does not consider the impact of the fourth wave of COVID-19, which began in earnest this month.

This content was produced with the assistance of AI translation services.