The Asian Development Bank (ADB) said on the 9th that it would raise this year's forecast for Korea's consumer price inflation to 2.7% from 2.3%. That matches the Bank of Korea (BOK) and the Korea Development Institute (KDI) and is higher than the Organization for Economic Cooperation and Development (OECD, 2.6%) and the International Monetary Fund (IMF, 2.5%).
ADB released its Asian economic outlook on the day. ADB issues its main outlook for major Asian economies in April each year and provides supplemental and revised outlooks in July, September, and December. Raising this year's consumer price inflation forecast by 0.4 percentage point from April, ADB said, "The increase in international energy prices will be reflected in consumer prices." It also lifted next year's consumer price inflation forecast to 2.2% from 2.0%.
ADB also raised this year's growth forecast for Korea to 2.6% from 1.9%. That is an increase of 0.7 percentage point in three months. ADB said, "First-quarter economic growth was stronger than expected." According to the Bank of Korea (BOK), real gross domestic product (GDP) in the first quarter grew 1.8% from the previous quarter. The growth rate was the highest in 5 years and 6 months since the third quarter of 2020 (2.3%). Exports, including semiconductors, performed well. First-quarter exports rose 5.9%. The growth rate was the highest since the third quarter of 2020 (14.9%).
ADB also raised next year's growth forecast to 2.0% from 1.9%. ADB said, "Export expansion driven by growing global demand for artificial intelligence (AI) will be a key driver of Korea's economic growth this year and next." However, it cited potential risks to Korea's economy, including: long-term energy supply disruptions; the reimposition of U.S. tariff; and the onset of an equity correction.
Meanwhile, ADB raised this year's growth forecast for Taiwan, which like Korea is enjoying a semiconductor boom, to 9.5% from 7.6%. Japan was kept at 0.7%.