Four Major Financial Holding Companies' Outlook for This Year: "Recovery Amid Ongoing Uncertainties"

[Asia Economy Reporter Song Hwajeong] The four major financial holding companies forecast that while the Korean economy will recover this year, uncertainties will remain.

According to the Financial Supervisory Service's electronic disclosure system on the 27th, the four major financial holding companies?KB, Shinhan, Hana, and Woori?provided their outlooks on this year's economic situation through their business reports.

KB projected Korea's economic growth rate at 2.8% this year. KB explained, "Considering that the real Gross Domestic Product (GDP) in the first quarter started below the potential level, this can still be seen as a growth rate reflecting the base effect," adding, "On a quarterly basis, real GDP and private consumption are expected to exceed pre-COVID-19 trends in the third and fourth quarters respectively, making this year one in which the Korean economy practically returns to normal levels."

They forecast the inflation rate this year to be in the high 2% range annually, higher than last year's 2.5%. KB analyzed, "In the first half of the year, international oil prices are expected to remain high due to geopolitical risks such as Ukraine and supply disruptions," and "inflation expectations are also spreading, making it highly likely that the monthly consumer price inflation rate will exceed 3%." They added, "However, toward the end of the year, factors such as reduced heating demand, easing of crude oil supply concerns, and the alleviation of global supply bottlenecks will gradually lower the consumer price inflation rate."

Shinhan anticipated a continued steady growth trend this year but noted high uncertainty. Shinhan stated, "This year, the Korean economy will maintain a favorable growth trend as exports and investments continue to perform well and private consumption gradually recovers," but diagnosed, "However, there is high uncertainty regarding Korea's future growth path, especially with downside risks such as intensified domestic and international COVID-19 spread during winter, prolonged global inflation and accelerated monetary tightening by major countries, and the possibility of economic slowdown in China."

Hana expected the economic recovery in the first quarter to weaken somewhat due to uncertainties. Hana explained, "In the first quarter of this year, the domestic economy is expected to experience a somewhat weakened recovery due to uncertainties surrounding the COVID-19 situation, inflation, and monetary policy," adding, "As the Omicron variant, which has higher transmissibility than the Delta variant, becomes dominant, COVID-19 cases are surging, and government quarantine measures are being strengthened, which may weaken the consumption recovery." Hana also forecasted that inflation would remain at a high level in the 3% range due to ongoing supply chain instability, rising oil prices from intensified geopolitical conflicts, and increased price pressures in the service sector.

Woori predicted that despite the spread of the Omicron variant, the domestic economy will continue to show favorable growth this year. Woori stated, "Although concerns about the spread of the Omicron variant exist, robust manufacturing demand, gradual improvement in the service sector, and expansionary fiscal policies will support sustained favorable growth," and expected, "Private consumption will see a somewhat moderate increase due to the burden of principal and interest repayments following base rate hikes, despite recovery in service consumption, increased employment and wages, and strengthened fiscal support in employment and welfare sectors. Government consumption is expected to expand due to supplementary budgets increasing government spending for enhanced quarantine measures."

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