Asia Development Bank maintains Korea's 2024 economic growth forecast at 2.2%

Economy

Published: 13 Dec. 2023, 11:36

Asia Development Bank maintains Korea's 2024 economic growth forecast at 2.2%

The Asian Development Bank (ADB) on Wednesday maintained its next year's economic growth forecast for Korea at 2.2 percent while revising up its forecast for the country's inflation to 2.5 percent.

The Manila-based bank also kept its forecast for Korea's economic growth this year at 1.3 percent, the Ministry of Economy and Finance said.

The outlook for next year is on par with that of the International Monetary Fund, while the Organisation for Economic Co-operation and Development expected a 2.3 percent growth for the Korean economy in 2024.

The Bank of Korea put the figure for next year at 2.1 percent.

The ADB said rising exports are expected to lead to growth, but lingering uncertainties in the global economy could weigh down the economy.

"Despite a stronger-than-expected Q3 (in South Korea), the growth forecasts are maintained given the uncertain global economic outlook and the lack of major policy stimulus," the bank said in its latest report on the global economic outlook.

Asian nations are also facing multiple challenges stemming from the continued monetary tightening policy by major economies, the Russia-Ukraine war and the weak real estate market in China, according to the ADB.

The bank, meanwhile, revised its forecast for Korea's inflation for next year to 2.5 percent from 2.2 percent. It also raised the forecast for this year's inflation by 0.3 percentage points to 3.6 percent.

"As core inflation remains stubbornly high because post-pandemic services inflation continues to be elevated and expectations of higher-for-longer U.S. interest rates are weakening the won, inflation forecasts are revised up to 3.6% for 2023 and 2.5% for 2024," the report read.

Consumer prices in Korea, a key gauge of inflation, rose 3.3 percent on-year in November, staying above 3 percent for the fourth consecutive month.

Inflationary pressure has eased at a slower pace than earlier expected as unfavorable weather conditions and geopolitical risks have pushed up prices of energy and farm products, though the country is expected to reach its target rate of 2 percent by the end of next year, government officials said.

BY KIM JU-YEON, YONHAP [kim.juyeon2@joongang.co.kr]