The Asian Development Bank (ADB) forecast next year’s South Korean economic growth rate at 2.0%. This is 0.3 percentage points (p) lower than the projection three months ago.
According to the Ministry of Strategy and Finance on the 11th, the ADB presented a forecast of 2.0% for South Korea's real Gross Domestic Product (GDP) growth rate next year in its '2024 Asian Economic Outlook' released that day.
ADB's outlook for the South Korean economy next year is lower than that of the Organization for Economic Cooperation and Development (OECD; 2.1%) and the government (2.2%), but higher than that of the Bank of Korea (1.9%). It is the same as the International Monetary Fund (IMF; Nov. 20 South Korea mission team forecast). ADB also forecast this year's South Korean economic growth rate at 2.2%, down from three months ago by 0.3% p.
ADB expected South Korea's domestic demand to improve due to interest rate cuts and government policies. However, as the impact of increased exports of semiconductors related to artificial intelligence (AI) diminishes, the growth rate is projected to slow down somewhat. This does not reflect recent situations such as the 'emergency martial law' or the 'impeachment political situation.'
ADB lowered the forecast for next year's growth rate in the Asian region to 4.8%, down by 0.1% p from the previous forecast. It projected China's growth at 4.5%, Taiwan's at 2.5%, Hong Kong's at 2.3%, India's at 7.0%, and Singapore's at 2.6%. The growth rate outlook for Asia this year was also lowered by 0.1% p from September to 4.9%, reflecting weaker growth than initially expected in the East Asian and South Asian regions.
ADB pointed out, “Policy changes such as increased tariffs following the launch of the second term of the U.S. Trump administration, intensified geopolitical tensions, and a slump in China's real estate market are downside risks to growth in the Asia-Pacific region.”
Meanwhile, ADB forecast South Korea's inflation rate for next year to remain at 2.0% as previously projected. The inflation rate for this year was adjusted down by 0.2% p to 2.3%. ADB analyzed that the stabilization of inflation is expected to accelerate due to falling international oil prices and slowing food price increases.