ADB Raises South Korea's Inflation Forecast for This Year from 3.2% to 4.5%... 3% Expected Next Year

[Asia Economy Sejong=Reporter Son Seon-hee] The Asian Development Bank (ADB) forecasted on the 21st that South Korea's inflation rate this year will reach 4.5%. This is a 1.3 percentage point upward revision from the forecast of 3.2% released just three months ago in April. Furthermore, it predicted that steep inflation will persist long-term, with an inflation rate of 3.0% expected next year as well.

The Ministry of Economy and Finance reported that ADB announced the 'Asian Economic Outlook 2022' containing these details on the same day. ADB explained that South Korea's robust external demand offset the slowdown in consumption and investment, but future interest rate hikes and weakening global economic growth are seen as limiting factors.

The inflation forecast for this year presented by ADB is slightly lower than the government's forecast of 4.7% announced last month during the 'New Government Economic Policy Direction'. ADB typically releases economic outlooks for Asia four times a year, and this forecast supplements the annual outlook released in April. Revised forecasts are expected in September and additional supplements in December.

While the inflation forecast was sharply revised upward, South Korea's GDP growth rate for this year was lowered by 0.4 percentage points from the previous 3.0% to 2.6%, which aligns with the government's forecast of 2.6%. ADB maintained its previously announced economic growth forecast for South Korea next year at 2.6%.

ADB projected that the growth rate for developing Asian countries (46 countries) this year will be 4.6%, down 0.6 percentage points from the April forecast of 5.2%. Next year's growth rate was also revised down by 0.1 percentage points to 5.2%. ADB stated, "This reflects the supply shocks caused by the Ukraine crisis and the impact of aggressive monetary tightening by major countries such as the United States and the European Union (EU), despite the easing of COVID-19 effects in the region."

ADB forecasted that inflation in Asian developing countries will rise to 4.2% this year, up 0.5 percentage points from the April forecast due to increases in oil and food prices, and will reach 3.5% next year, up 0.4 percentage points.

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