UN: "South Korea's Economic Growth Rate 2.2% This Year" ... Higher Than Government Estimate

Amid forecasts that South Korea's economic growth rate will fall below 2% this year, the United Nations (UN) has projected that the South Korean economy will grow by 2.2%.

The UN Department of Economic and Social Affairs (DESA) predicted in its 'World Economic Situation and Prospects 2025' report released on the 9th (local time) that South Korea's real Gross Domestic Product (GDP) will increase by 2.2% this year and next year, respectively.

For last year's growth estimate, it presented 2.0%, higher than the 1.4% in 2023. This was attributed to strong semiconductor-related exports while imports remained stagnant. It also forecasted that the growth engine this year will shift to domestic demand, expecting rapid increases in real wages and reductions in financial costs to contribute.

The UN's growth forecast for this year has attracted attention as it is higher than figures released by the government and global investment banks. The government projected on the 2nd that the real GDP growth rate for this year would be only 1.8% due to concerns over sluggish exports. The average growth forecast for South Korea this year from eight overseas investment banks (IBs) compiled by the International Finance Center was 1.7% as of the end of last month.

The UN projected last year's consumer price inflation rate at 2.3%, down from 3.6% in 2023. It expected inflation to remain in the 1% range at 1.6% and 1.8% for this year and next year, respectively.

Meanwhile, the UN forecasted that the global growth rate will maintain 2.8% in 2024 and 2025, the same as in 2023 and 2024. This is because the growth momentum of the world's largest and second-largest economies, the United States and China, is expected to slow down. The US growth rate is projected to decline from 2.8% last year to 1.9% this year, while China's growth rate is expected to decrease from 4.9% last year to 4.8% this year.

In the report, the UN stated, "Due to structural issues such as weak investment, slowing productivity growth, and high debt levels, the global economic growth rate will be lower than the 3.2% average from 2010 to 2019 before the COVID-19 pandemic."