ADB Maintains South Korea's Growth Forecast at 2.5% for This Year

Asia-Pacific Region Growth Rate at 5.0%, Same as Previous Forecast

The Asian Development Bank (ADB) has maintained its forecast for South Korea's economic growth rate this year at 2.5%, unchanged from three months ago. The growth rate for the Asia-Pacific region was also kept at 5%, consistent with previous projections.

On the 25th, ADB released the "September Asian Development Outlook (ADO)" containing these details. ADB issues economic forecasts four times a year, in April, July, September, and December.

Regarding South Korea's growth rate this year, ADB stated it would maintain the July forecast of 2.5%, driven by increased exports centered on semiconductors and automobiles. The July forecast (2.5%) was a 0.3 percentage point upward revision from the earlier April forecast (2.2%).

This is lower than the projections by the South Korean government and the Organisation for Economic Co-operation and Development (OECD) at 2.6%, but aligns with the forecasts from the Bank of Korea and the International Monetary Fund (IMF).

The growth rate forecast for South Korea next year (2.3%) also remains unchanged from the July projection. ADB expects South Korea's annual consumer price inflation to reach 2.5% this year and to converge to the government's inflation target of 2.0% next year. Both this year's and next year's inflation forecasts are at the same levels as the previous projections.

In this forecast, ADB expects the Asia-Pacific region to grow by 5.0% this year, driven by sustained export growth due to increased exports of electronic products and a semiconductor cycle turnaround. The growth rate for next year is projected at 4.9%, with both this year’s and next year’s growth rates unchanged from previous forecasts.

China's economy is expected to grow by 4.8% this year, and India is forecasted to grow by 7.0%, both maintaining previous projections. Thailand's growth rate for this year was lowered by 0.3 percentage points from 2.6% to 2.3%, while Singapore's was raised by 0.2 percentage points from 2.4% to 2.6%.

However, ADB identified key downside risks including increased protectionism depending on the outcome of the U.S. presidential election in November, heightened geopolitical tensions in the Middle East, a downturn in China's real estate market, and worsening climate conditions.

Inflation in the Asia-Pacific region this year is expected to stabilize at 2.8%, down 0.1 percentage points from the July forecast, due to continued tight monetary policies and falling international food prices. Inflation for next year is projected at 2.9%, also revised downward by 0.1 percentage points from the July forecast.