Major overseas investment banks (IBs) have upgraded their economic growth forecast for Korea this year. JP Morgan, which presented the most conservative forecast, raised Korea's growth rate from 0.5% to 0.7%, increasing it by 0.2 percentage points (p) in just two months.
By concluding trade negotiations with the U.S., they have alleviated some export uncertainties, and this appears to reflect the domestic production gross (GDP) growth in the second quarter, which exceeded market expectations. There are also evaluations suggesting that the effect of consumer support payments through the supplementary budget has contributed to signs of a rebound in consumption.
According to the International Financial Center on the 6th, the average annual GDP (gross domestic product) growth rate forecast for Korea by eight major overseas IBs is recorded at 1.0%. This is an increase of 0.1 percentage points from the previous month.
By IB, the forecasts are as follows: ▲Goldman Sachs 1.2% ▲Nomura 1.0% ▲Berkley 1.1% ▲Bank of America 1.0% ▲Citi 0.9% ▲UBS 1.2% ▲JP Morgan 0.7% ▲HSBC 0.7%.
Among these, Citi, JP Morgan, and Goldman Sachs are the three that have raised their forecasts.
On the 24th of last month, JP Morgan evaluated that following the Bank of Korea's GDP announcement for the second quarter, "export strength and manufacturing growth slightly exceeded market expectations," and noted, "We project an annual growth rate of 0.7% in the second half due to the effect of fiscal stimulus measures."
Goldman Sachs also raised its forecast for Korea's growth rate from 1.1% to 1.2% this year. Goldman Sachs analyzed that "the reduction in uncertainty regarding items such as semiconductors is positive."
Citi raised its forecast from 0.6% to 0.9%, an increase of 0.3 percentage points, reflecting the second quarter GDP on the 24th of last month.
There are also two IBs that have presented a growth rate forecast in the 2% range for next year. Goldman Sachs and JP Morgan have projected Korea's growth rates at 2.2% and 2.0%, respectively. The average forecast from the eight IBs is 1.8%.
With the upward adjustment of growth rate forecasts by the IBs, attention is focused on the growth rate forecasts that the Bank of Korea and the government will present.
The Bank of Korea is set to announce its annual growth rate forecast through a revised economic outlook on the 28th. In its previous forecast from May, the Bank of Korea presented a growth rate of 0.8% for this year. This figure reflects the effect of the first supplementary budget but does not include the second supplementary budget. The Bank of Korea expects that the second supplementary budget will lift the growth rate by 0.1 percentage points.