ADB Maintains South Korea's Growth Forecast at 1.3% for This Year

ADB Announces '2023 Asia Economic Outlook'

The Asian Development Bank (ADB) maintained South Korea's economic growth rate forecast for this year at 1.3%, the same as its previous prediction. This marks the first time this year that the ADB has stopped lowering its growth forecast for the Korean economy.

According to the Ministry of Economy and Finance on the 20th, the ADB released the "Asian Economic Outlook 2023," which included this information. The ADB kept its July forecast of South Korea's economic growth rate at 1.3%. The growth rate for next year was also maintained at 2.2%, continuing the previous outlook. The ADB publishes an annual outlook for member countries every April, followed by supplementary forecasts in July, revised forecasts in September, and additional supplementary forecasts in December.

[Image source=Yonhap News]

From April last year to July this year, the ADB had been lowering its growth rate forecast for South Korea, but this year it stopped the downward revision for the first time. The day before, the Organisation for Economic Co-operation and Development (OECD) also maintained its forecast for South Korea's economic growth rate next year at 1.5%. The OECD, which had lowered its forecast for South Korea's economic growth rate four consecutive times from June last year to June this year, also stopped lowering its forecast for the first time this year.

Major international organizations have continuously downgraded their growth forecasts for South Korea. The OECD has lowered its economic outlook five consecutive times since December 2021 (2.7%). In June, it presented a forecast of 1.5%, 0.1 percentage points lower than the previous March forecast, continuing the downward trend. The International Monetary Fund (IMF) also lowered its growth forecast from 1.5% in April to 1.4% in July. The government and the Bank of Korea followed suit. The Bank of Korea lowered its growth forecast from 1.6% to 1.4% in May. The Korea Development Institute (KDI) also lowered its forecast from 1.8% in February to 1.5% in May.

The ADB cited mixed factors as the reason for maintaining its forecast, including upward factors such as export growth and downward factors such as constraints on private consumption and investment due to high interest rates. The ADB also revised South Korea's inflation forecast for this year downward by 0.2 percentage points from its July forecast to 3.3%, reflecting the stabilization of inflation at 2.3% observed in July. The inflation rate for next year was also lowered by 0.3 percentage points to 2.2%, indicating a trend toward price stability.

In this outlook, the ADB projected that the economic growth rate of developing Asian countries (46 countries) will be 4.7% this year, a 0.1 percentage point downward revision from the previous forecast. The ADB explained that risks to the Asian region include the slump in China's real estate market, worsening food security due to El Ni?o, and monetary policy and financial stability issues in major advanced countries. However, the economic growth rate for next year was revised upward by 0.1 percentage points to 4.8%.

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