ADB Lowers South Korea's Growth Forecast for This Year from 1.5% to 1.3%

'2023 Asia Economic Outlook Supplement' Announcement

[Image source=Yonhap News]

The Asian Development Bank (ADB) has forecast South Korea's economic growth rate for this year at 1.3%, which is 0.2 percentage points lower than its previous estimate.

According to the Ministry of Economy and Finance on the 19th, ADB released the "2023 Supplement to the Asian Economic Outlook" on the same day containing this information. When ADB announced its forecast in April, it expected South Korea's growth rate this year to be 1.5%. The reasons for lowering the forecast include a decline in exports and sluggish private consumption and investment. However, the growth rate for next year was maintained at 2.2% as previously projected.

South Korea's economic growth forecasts have been on a continuous downward trend. The Organisation for Economic Co-operation and Development (OECD) has lowered its economic outlook five consecutive times since December 2021 (2.7%). In June, it released a forecast of 1.5%, which is 0.2 percentage points lower than the previous one. The International Monetary Fund (IMF) also revised its earlier forecast from 1.7% in April to 1.5%. The government's expected figure announced in the second half economic policy direction was also lowered from 1.6% in December last year to 1.4%.

On the other hand, global economic forecasts are either being maintained or raised. ADB projected Asia's growth rate this year to remain at 4.8%, the same as in April. This reflects positive factors such as China's economic recovery and strong regional demand, but also accounts for a slowdown in exports and industrial activity. The IMF raised Asia's growth rate forecast from 4.3% in October to 4.6% in May, and the OECD increased the global economic growth forecast from 2.6% to 2.7%.

South Korea's inflation rate this year is projected at 3.5%. Although energy and food prices have stabilized, the inflationary trend continues, leading to a 0.3 percentage point increase. The inflation rate for next year was also revised upward by 0.5 percentage points to 2.5%.

Asia's inflation rate was adjusted to 3.6% for this year and 3.4% for next year. This year’s figure was lowered by 0.6 percentage points compared to April, reflecting eased supply-side inflationary pressures, while the 2024 figure was raised by 0.1 percentage points considering the impact of high interest rates.

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