AMRO Projects South Korea's Economic Growth at 1.9% and Inflation at 2.3%: "Rising Energy Prices Add Pressure"

ASEAN+3 Region Expected to Grow by 4.0%

Inflation Forecast Raised Amid Surging Energy Prices

The ASEAN+3 Macroeconomic Research Office (AMRO) has projected South Korea's economic growth rate for both this year and next year at 1.9%. AMRO is an international organization that analyzes and monitors the economic trends of ASEAN+3 and supports economic and financial stability in its member countries. This outlook is based on the analysis that growth will be supported by demand for semiconductors and the government's response through supplementary budgets. However, it was also forecast that inflationary pressure will intensify due to rising global energy prices.

The Ministry of Economy and Finance announced on April 6 that AMRO has released its "2026 Regional Economic Outlook (AREO) Report" containing these projections. According to AMRO, South Korea's economic growth rate is expected to rebound from 1.0% in 2025 to 1.9% in 2026, and to maintain a level of 1.9% in 2027. This assessment is based on robust semiconductor demand and the government's ongoing supplementary budget response, both of which are expected to support real economic growth.

However, the inflation outlook has worsened. Reflecting the recent rise in global energy prices, AMRO has revised its inflation forecast for South Korea in 2026 upward from 1.9% (according to the March annual consultation report) to 2.3%.

The growth rate for the entire ASEAN+3 region is projected to be 4.0% in both 2026 and 2027, representing a slight deceleration compared to 4.3% in 2025.

The report noted that external demand may decline due to factors such as U.S. tariff impositions, acting as a drag on growth. However, increases in technology-driven exports, such as those related to artificial intelligence (AI), as well as robust domestic consumption and investment, are expected to partially offset these downward pressures. By country, China is forecast to grow by 4.5%, Japan by 0.7%, and Vietnam by 7.4%.

AMRO assessed that downside risks and uncertainty dominate the economic outlook going forward. While increased investment demand led by advances in AI is a positive factor, the resumption of U.S. tariff policies and disruptions in global energy supply and demand were identified as risk factors that could weigh on growth.

Accordingly, AMRO recommended that authorities adopt a flexible, data-driven approach. The report advised that fiscal and monetary policies should be operated in a complementary manner to build resilience against external shocks and to maintain growth momentum.

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