Overseas IBs Raise South Korea's Growth Forecast to 3.4% for This Year... 2.8% in 2022

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eun-byeol] Major overseas investment banks (IBs) have slightly raised their forecasts for South Korea's real gross domestic product (GDP) growth rate for the new year.

According to the International Finance Center on the 7th, as of the end of December last year, nine overseas IBs including Barclays, Bank of America Merrill Lynch (BoAML), Citi, Credit Suisse, Goldman Sachs, JP Morgan, HSBC, Nomura, and UBS forecasted an average real GDP growth rate of 3.4% for South Korea this year. This is 0.1 percentage points higher than the forecast a month earlier. Among the nine IBs, seven maintained their previous growth rate forecasts, while two raised their forecasts.

Credit Suisse significantly raised its forecast from 2.9% to 3.6%, and HSBC increased its forecast from 2.2% to 2.7%. Barclays (3.2%), BoAML (3.4%), Citi (3.0%), Goldman Sachs (3.6%), JP Morgan (3.5%), Nomura (3.6%), and UBS (4.1%) maintained their previous values.

These nine IBs maintained their growth rate forecast for last year at -1.1%. The Bank of Korea's forecast for South Korea's growth rate last year was also -1.1%. The government, in its '2021 Economic Policy Direction' announced on the 17th of last month, predicted last year's growth rate at -1.1%, but noted that due to the spread of COVID-19, the growth rate could be in the '-1% range.' This leaves open the possibility that the actual growth rate could be lower than the forecast.

The average growth rate forecast for South Korea in 2022 by the nine major IBs is 2.8%. UBS offered the highest forecast at 3.8%, and JP Morgan (3.5%) and Citi (3.4%) also expect South Korea to record growth exceeding 3% in 2022. Following them are Barclays (2.7%), Goldman Sachs (2.5%), HSBC, and Nomura (both +2.0%). BoAML and Credit Suisse did not disclose separate figures.

Meanwhile, these IBs projected the global economic growth rate for the new year at 5.7%. The 2020 growth rate was slightly revised upward from -3.8% to -3.7%, and 2022 is expected to see 4.2% growth. By country, the U.S. is forecasted to grow by 4.4%, the Eurozone by 4.8%, China by 8.4%, and Japan by 3% this year.