Overseas IBs Raise Korea's Growth Forecast for Next Year... Projections Near 2%

Raised by 0.1 Percentage Point in One Month... Average Now at 1.9%
0.3 Percentage Points Higher Than Bank of Korea’s August Forecast

Major overseas investment banks (IBs) have collectively raised their forecasts for South Korea's economic growth rate for next year, bringing the average close to 2%.

According to the International Finance Center on November 6, the average real gross domestic product (GDP) growth rate for South Korea projected by eight major IBs was 1.9% as of the end of last month. This is an increase of 0.1 percentage point compared to the 1.8% forecast at the end of September, and 0.3 percentage point higher than the Bank of Korea's forecast of 1.6% in August.

Looking at the details, Bank of America projected 1.6%, matching the Bank of Korea's forecast, while the remaining seven banks projected higher figures. In particular, Citi significantly raised its forecast from 1.6% to 2.2%, boosting the overall average. In addition to Citi, both JPMorgan and Goldman Sachs projected growth of 2.2%, forecasting growth in the 2% range. Among the others, Nomura projected 1.9%, UBS 1.8%, and Barclays 1.7%.

Given that this year's average growth rate forecast has remained at 1.0%, this suggests that the growth rate is expected to nearly double within a year.

The main reason IBs have raised South Korea's economic growth outlook for next year is exports. Despite the impact of U.S. tariff hikes, they expect exports to remain strong next year, following this year's positive performance. The ratio of South Korea's current account balance to GDP for next year, as projected by these banks, rose significantly from an average of 4.7% at the end of September to 5.3% at the end of last month. Citi raised its forecast sharply from 4.4% to 7.1%, and Nomura from 3.9% to 6.6%. Goldman Sachs, however, lowered its forecast from 6.6% to 6.0%.

As overseas institutions raise their forecasts for South Korea's economic growth rate next year, attention is turning to the Bank of Korea's revised economic outlook for November, scheduled for release on the 27th. In August, the Bank of Korea projected this year's growth rate at 0.9% and next year's at 1.6%. In its monetary policy statement on October 23, the Bank noted that "next year's growth rate is expected to be broadly in line with the August forecast."

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