Already risen as much as possible, but more?… South Korea's inflation forecast ranks 2nd among advanced Asian countries

According to the International Monetary Fund (IMF) World Economic Outlook on the 24th, South Korea's consumer price inflation rate forecast for this year was 4.0%. The photo shows a large supermarket in Seoul. [Image source=Yonhap News]

[Asia Economy Reporter Sumi Hwang] This year, South Korea's inflation rate forecast ranked second highest among advanced Asian countries.

According to the International Monetary Fund (IMF)'s World Economic Outlook on the 24th, South Korea's consumer price inflation forecast for this year was 4.0%.

This figure is 1.6 percentage points higher than the average of eight advanced Asian countries (2.4%). The IMF classifies about 40 countries worldwide as advanced economies. Among Asian countries, eight are included: South Korea, Japan, Taiwan, Australia, Singapore, Hong Kong, New Zealand, and Macau.

Among these, only New Zealand (5.9%) has a higher inflation forecast than South Korea. Australia and Singapore are relatively high at 3.9% and 3.5%, respectively, while Macau (2.8%) and Taiwan (2.3%) are in the 2% range, and Hong Kong (1.9%) and Japan (1.0%) are expected to remain relatively stable in the 1% range.

The upward revision compared to the previous IMF forecast was also significant. The IMF releases forecasts for all member countries twice a year in April and October, and issues revised forecasts focusing on major countries in January and July.

Compared to October last year (1.6%), South Korea's forecast increased by about 2.3 percentage points. Among the eight advanced Asian countries, it was the second largest upward revision after New Zealand (3.7%). Compared to the January forecast (3.1%) this year, it rose by 0.9%.

However, South Korea's inflation forecast for this year is relatively low compared to major countries such as the United States (7.7%), the United Kingdom (7.4%), Canada (5.6%), Germany (5.5%), and France (4.1%).

Accordingly, the South Korean government evaluates the situation as relatively favorable when compared to the US or Europe. The government explains that the impact of rising oil prices due to Russia's invasion of Ukraine has been partially offset by efforts such as fuel tax reductions.

However, among Asian countries with low trade and raw material import dependence on Russia or Ukraine, South Korea appears to be classified as a country suffering considerable damage. There are also forecasts that the rise in international oil and raw material prices due to the Ukraine crisis will cause significant damage.

Meanwhile, the IMF predicted a sharp slowdown in global economic growth in this forecast. The global economy is expected to grow by 3.6% this year, which is 0.8 percentage points lower than the January forecast last year (4.4%).

The IMF cited the following as global economic risk factors this year: ▲ supply chain disruptions caused by worsening war ▲ inflation ▲ the possibility of protectionism and restrictions on technology exchange due to Russian debt default. ▲ surging oil and food prices and social unrest caused by refugees ▲ resurgence of COVID-19 ▲ prolonged slowdown in China's growth ▲ interest rate hikes and increased debt burden were also presented as risk factors.

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