ADB Lowers Korea's 2024 Growth Forecast from 1.5% to 0.8% in Just Three Months

Decline in Construction Investment and Sluggish Exports Weigh on Economy
Growth Rate Forecast for Next Year Set at 1.6%

The Asian Development Bank (ADB) has sharply lowered its forecast for South Korea's economic growth rate this year to 0.8%. This is a downward revision from the 1.5% forecast presented in April, bringing the projection into the 0% range.

According to the Ministry of Economy and Finance on July 23, the ADB presented a real gross domestic product (GDP) growth rate forecast of 0.8% for South Korea this year in its "Asia Development Outlook Supplement, July 2025" released on this day. The ADB had previously projected a 2.0% growth rate for this year in December last year, but revised it down by 0.5 percentage points to 1.5% in April.

The ADB identified several factors contributing to South Korea's economic slowdown: a decline in construction investment, sluggish exports, and weakness in the real estate market. In addition, the ADB predicted that further export contraction is likely due to increased U.S. tariffs and heightened global trade uncertainty.

However, the ADB noted that political uncertainty has eased following the June presidential election, and that domestic demand is expected to gradually recover from the second half of the year, supported by the government's expansionary fiscal policy. Accordingly, the ADB forecast that next year's growth rate will rebound to 1.6%. However, this projection is also 0.3 percentage points lower than the 1.9% forecast made in April. The ADB maintained its forecasts for consumer price inflation this year and next year at 1.9%, the same as its April projections.

Meanwhile, the ADB projected the overall economic growth rate for the Asia-Pacific region this year at 4.7%, which is 0.2 percentage points lower than the forecast made in April. The forecast for next year was also revised down by 0.1 percentage points to 4.6%. The ADB cited export contraction caused by increased U.S. tariffs and shrinking global trade, maritime transport disruptions due to geopolitical crises such as conflicts in the Middle East, and a prolonged downturn in China's real estate market as reasons for the region's slowing growth.

The inflation rate in the Asia-Pacific region is projected to be 2.0% this year and 2.1% next year. Both figures are downward revisions from the April forecasts by 0.3 percentage points and 0.1 percentage points, respectively. The ADB expects price stability to continue, citing stable international oil and food prices and reduced inflationary pressures due to slower growth. The main country growth forecasts for this year are: China 4.7%, Taiwan 3.5%, India 6.5%, and Singapore 1.6%.

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