As domestic and international institutions competitively lower the growth rate forecasts for our country, the possibility of '0% growth' this year is increasing. This is interpreted as a result of chronic domestic stagnation, prolonged political uncertainty, and the export slump due to the tariff shock originating from the United States.
According to the International Financial Center on the 11th, the average growth rate forecast for South Korea's gross domestic product (GDP) from eight major overseas investment banks (IB) was recorded at 0.8% at the end of April. This reflects a downward adjustment of 0.6 percentage points (p) in just one month from an average of 1.4% at the end of March.
Over the past month, all IBs have uniformly adjusted their forecasts downward. Specifically, ▲Barclays 1.4→0.9% ▲Bank of America (BOA) 1.5→0.8% ▲Citigroup 1.2→0.6% ▲Goldman Sachs 1.5→0.7% ▲JP Morgan 0.9→0.5% ▲HSBC 1.4→0.7% ▲Nomura 1.5→1.0% ▲UBS 1.9→1.0%, etc.
Next year looks challenging. The average growth rate forecast for our country from eight major IBs fell from 1.8% at the end of March to 1.6% at the end of April, a decrease of 0.2 percentage points (p). This begins to fall below the forecast (1.8%) presented by the Bank of Korea (BOK) last February. Over half of the IBs lowered their forecasts, including ▲Barclays (1.8→1.4%) ▲BOA (2.0→1.3%) ▲Citigroup (1.6→1.3%) ▲JP Morgan (2.0→1.9%) ▲HSBC (1.9→1.4%), etc.
Even when broadening the view to various domestic and international institutions, the downward revision of growth projections is evident. According to figures compiled by Bloomberg on the 2nd of this month, the growth rate forecast for South Korea's economy from 42 domestic and international institutions is 1.31%. This is 0.1 percentage points (p) lower than the survey results from the 10th of last month (1.41%). Out of all domestic and international institutions, 28 presented forecasts lower than the BOK's (1.5%).
The Bank of Korea is also likely to significantly lower its growth rate forecast for this year. In this regard, BOK Governor Lee Chang-yong recently noted, "It is a situation where we need to lower the growth rate" and added, "The biggest concern is how much consumption increased during the early May holidays."