The Bank of Korea raised its economic growth forecast for this year from 0.8% to 0.9%. It maintained the same assessment for next year's growth rate at 1.6%.
In the revised economic outlook announced on the 28th, the Bank of Korea presented this year's growth rate at 0.9%, an increase of 0.1 percentage points from the previous forecast. The Bank of Korea releases expected indicators such as growth rates and inflation through revised economic outlooks at the Monetary Policy Committee meetings in February, May, August, and November each year.
The Bank of Korea's increase in growth rate appears to be due to the effects of the second supplementary budget execution. The government enacted a supplementary budget of 45.6 trillion won this year (1st supplementary budget of 13.8 trillion won and 2nd supplementary budget of 31.8 trillion won). A significant portion of this was used for the people's livelihood recovery consumption coupons, which are distributed to all citizens, with a maximum of 520,000 won per person.
Additionally, even though the gross domestic product (GDP) growth rate in the first quarter was poor, some recovery in the second quarter is interpreted as affecting the Bank of Korea's upward revision of the growth rate. In the first quarter, the growth rate of Korea's real GDP compared to the previous quarter was negative (-) 0.246%. This is among the lowest level among the member countries of the Organisation for Economic Co-operation and Development (OECD).
This is the first time the Bank of Korea has raised its economic growth forecast for this year. In February, the growth forecast was revised down from 1.9% to 1.5%, and in May, it was cut down by nearly half from 1.5% to 0.8%.
The forecast presented by the Bank of Korea this time is the same as the 0.9% proposed in the 'New Government Economic Growth Strategy' by the Ministry of Economy and Finance on the 22nd of this month. It is lower than the Organisation for Economic Co-operation and Development (OECD) forecast of 1.0% and higher than the 0.8% projections by the International Monetary Fund (IMF), Korea Development Institute (KDI), Bank of Korea, and Asian Development Bank (ADB).
The Bank of Korea predicts Korea's economic growth rate for next year to be 1.6%. Up until February, the Bank of Korea had forecast a growth rate of 1.8%, but lowered it to 1.6% in May. This month's forecast maintains the previous outlook.
The consumer price inflation rate has been raised from the previous forecast of 1.9% to 2.0%. The forecast for next year has also been presented at 1.9%, up 0.1 percentage points from the previous forecast.