OECD Lowers South Korea's Growth Rate from 2.6% to 2.5%

Next Year's Growth Rate Maintained at 2.2% as Before

The Organisation for Economic Co-operation and Development (OECD) has downgraded its forecast for South Korea's economic growth rate this year from 2.6% to 2.5%.

On the 25th, the OECD presented a forecast of 2.5% for South Korea's real Gross Domestic Product (GDP) growth rate this year in its interim economic outlook report. This is 0.1 percentage points lower than the figures presented in the economic outlook in May and the Korea Economic Report in July.

The OECD releases economic forecasts twice a year (May-June and November-December) for all member countries, and issues interim economic outlooks in March and September focusing on major countries. Previously, in May, the OECD had raised South Korea's economic growth forecast by 0.4 percentage points to 2.6%.

The OECD's current growth rate forecast is lower than the government's forecast (2.6%) but higher than the Bank of Korea's (2.4%). It is the same as that of the Korea Development Institute (KDI), the International Monetary Fund (IMF), and the Asian Development Bank (ADB). The growth rate for next year remains unchanged at 2.2%.

The OECD stated, "Exports are expected to show stable growth supported by continued strong global semiconductor demand," but also identified "geopolitical risks, financial market volatility, and labor market slowdown as risk factors." It noted that investment contraction and rising import prices due to geopolitical conflicts, as well as unexpected excessive financial market volatility during the inflation easing process, could occur.

The inflation rate forecast for this year is 2.4%, which is 0.1 percentage points lower than in the July Korea Economic Report. The inflation rate for next year remains at 2.0%. The global economic growth rate for this year is forecasted at 3.2%, up 0.1 percentage points from before. The inflation rate forecast was lowered by 0.5 percentage points to 5.4%. The OECD views that the slowdown in inflation and the resulting increase in household spending are sustaining the recovery.