ADB Raises South Korea's Inflation Forecast for Next Year from 2.2% to 2.5%... "Core Inflationary Pressures Persist"

The Asian Development Bank (ADB) has projected South Korea's GDP growth rate for next year at 2.2%, the same as its forecast in September. The consumer price inflation rate for next year was revised upward by 0.3 percentage points to 2.5%.

On the 13th, in its "Asian Economic Outlook 2023," ADB stated, "South Korea's growth rate is expected to be 1.3% this year and 2.2% next year as originally forecast, amid mixed upward factors such as export recovery and downward factors including global economic uncertainties."

ADB's growth forecast for next year is lower than that of the Ministry of Economy and Finance (2.4%) and the Organisation for Economic Co-operation and Development (OECD, 2.3%), but higher than that of the Bank of Korea (2.1%), Korea Institute of Finance (2.1%), and Korea Institute for Industrial Economics and Trade (2.0%).

ADB revised its inflation forecasts for South Korea upward by 0.3 percentage points for both this year and next year, citing ongoing core inflationary pressures alongside rising global energy and food prices. In September, ADB had projected inflation rates of 3.3% for this year and 2.2% for next year.

Meanwhile, the growth forecast for the Asian region this year was raised by 0.2 percentage points from the September forecast of 4.7%, supported by domestic demand recovery, strong services sector, manufacturing rebound, and upward revisions to growth rates in China and India. The growth rate for the Asian region next year remains unchanged at 4.8%.

Inflation in the Asian region is projected at 3.5% this year, down 0.1 percentage points from the September forecast, while next year's inflation forecast was raised by 0.1 percentage points to 3.6%.

ADB explained, "Monetary policies in advanced economies such as the United States and the Eurozone, the Russia-Ukraine war, El Ni?o and food export restrictions in some regions, and the Chinese real estate market will be risk factors for the Asian region going forward."