Korea's Economic Outlook Darkens for Next Year... ADB Downgrades 2023 Korean Growth Rate from 2.6% to 2.3%

ADB Announces '2022 Asia Economic Outlook Revision'

[Asia Economy Sejong=Reporter Son Seon-hee] The Asian Development Bank (ADB) has forecast that the South Korean economy will be more sluggish next year compared to this year. Recently, major institutions have been continuously lowering their growth forecasts for the South Korean economy next year. Concerns have arisen that China's economic downturn is more severe than expected, casting a shadow over the South Korean economy as well.

On the 21st, the Asian Development Bank (ADB) released its "Revised Asian Economic Outlook 2022" report, lowering South Korea's economic growth forecast for next year by 0.3 percentage points from 2.6% in July to 2.3%. The day before, the Organisation for Economic Co-operation and Development (OECD) also lowered its growth forecast for South Korea next year from 2.5% to 2.2%.

This year, South Korea's economic growth rate is expected to remain at 2.6%, maintaining the previous forecast. The ADB announces its annual outlook for member countries every April, followed by supplementary forecasts in July, revised forecasts in September, and supplementary forecasts in December. This announcement serves as a supplement to the July forecast.

In this forecast, the ADB projected that the economic growth rate of Asian developing countries (46 countries) will be 4.3% this year and 4.9% next year. These figures represent a downward revision of 0.3 percentage points each compared to the previous forecast. The ADB explained, "The Asian economy is showing a recovery centered on consumption and employment as the COVID-19 situation eases, but negative factors coexist," adding, "Strong monetary tightening policies by the United States and the European Union (EU), the impact and ripple effects of the Ukraine crisis, and debt vulnerabilities in some countries such as Sri Lanka are major risk factors."

The ADB particularly pointed out that China's economic downturn is "deeper than expected." China's economic growth forecast for this year was lowered by 0.7 percentage points in just two months, reaching only 3.3%. This is more than twice the downward revision of the overall Asian developing countries' growth rate (0.3 percentage points). Notably, this is the first time in nearly 30 years of ADB's Asian Economic Outlook reports that China's growth forecast is lower than that of Asian developing countries excluding China (5.3%). This indicates that China's sluggish growth is severe enough to pull down the growth rates of Asia and the global economy.

Meanwhile, the ADB maintained its inflation forecast for South Korea at 4.5% in 2022 and 3.0% in 2023, consistent with the July forecast. The overall inflation rate for Asian developing countries was revised upward by 0.3 percentage points for 2022 and 0.5 percentage points for 2023, to 4.5% and 4.0%, respectively. It is expected that inflationary pressures, such as rising energy and food prices, will remain at high levels continuously.

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