The Bank of Korea: "US Economy to Continue Rapid Growth Next Year... High Inflation to Persist Until Mid-Year"

Resumption of Economic Activities and Corporate Investment Impact... Gradual Recovery Expected
"High Inflation to Persist Until First Half of Next Year"

[Asia Economy Reporter Jang Sehee] The U.S. economy is expected to continue its rapid recovery next year with growth of 3-4%. However, high inflation is likely to persist until the first half of next year.

On the 19th, the Bank of Korea stated in its 'Overseas Economic Focus' report, "In 2022, the U.S. economy is expected to continue a rapid growth rate significantly exceeding its potential growth rate (about 2.1%). Major forecasting institutions predict that despite constraints such as the base effect from this year's high growth and supply chain disruptions, economic activities will normalize further, resulting in a growth rate in the high 3% to low 4% range."

The Bank of Korea also forecasted that the U.S. labor market will maintain a moderate recovery trend next year, supported by the resumption of economic activities and corporate investment.

The report stated, "The recent sluggish recovery in the labor force participation rate is largely due to uncertainties related to COVID-19 and policy responses rather than structural factors such as population aging. Therefore, there is sufficient potential for the return to the labor market of most core-age groups and some early retirees." It added, "The labor force participation rate is expected to continue a moderate recovery next year but will remain around 62%, below the pre-COVID-19 average (63.3% from 2010 to 2019)."

Inflation is expected to stabilize from the second half of next year. The report said, "The core Personal Consumption Expenditures (PCE) price index growth rate will remain at a high level well above the Federal Reserve's long-term target (2%) until the first half of next year, due to robust consumption growth driven by the continued reopening of the economy." It added, "With the base effect from this year's high inflation and easing supply chain constraints, supply-demand imbalances are expected to ease, leading to a gradual slowdown in inflation from the second half of next year."

Furthermore, it emphasized, "If supply chain disruptions last longer than expected due to a resurgence of COVID-19 or if wage growth accelerates, strong inflationary pressures may persist. This could cause recently rising inflation expectations to become entrenched at a high level, posing a risk of medium- to long-term inflationary pressures."

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