OECD cuts Korea's 2025 GDP forecast to 1.5%

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OECD cuts Korea's 2025 GDP forecast to 1.5%

Published: 17 Mar. 2025, 19:00

SHIN HA-NEE
[email protected]

Audio report: written by reporters, read by AI

Containers are stacked at a port in Pyeongtaek, Gyeonggi, on March 14. [NEWS1]

The Organisation for Economic Cooperation and Development (OECD) significantly lowered its growth projection for the Korean economy this year by 0.6 percentage points to 1.5 percent.

An intensifying tariff war and heightened geopolitical uncertainty significantly weighed down on the growth projection for Korea, as well as the global economy, the Ministry of Economy and Finance said in a release Monday, citing the OECD's interim outlook report, “Steering through Uncertainty,” released the same day.

The figure was in line with the Bank of Korea’s (BOK) updated forecast announced on Feb. 25 but fell far below the Finance Ministry’s projection of 1.8 percent and the International Monetary Fund’s 2 percent, which were both announced in January before the impact of the Donald Trump administration’s tariffs began to materialize.

The OECD noted that recent trends in economic indicators signal “softening of global growth prospects,” and warned of a potential increase in inflationary pressure.

Trade uncertainty led to downgrades in growth projection for major economies, with the United States’ projection cut from December’s 2.4 percent to 2.2 percent, Canada’s from 2 percent to 0.7 percent and Mexico’s from 1.2 percent to a negative 1.3 percent.

The organization revised its projection for the global economy from the previous 3.3 percent to 3.1 percent, citing rising protectionism and heightened political uncertainties spurred by U.S. tariff policies.

Korea's projection for next year was held steady at 2.1 percent.

“Growth in both Korea and Australia is projected to hold up, but to be weaker than previously expected,” the OECD stated.

The BOK chopped its GDP growth projection for 2025 to 1.5 percent from the previous 1.9 percent on Feb. 25, citing trade uncertainties, slower export growth and persistently sluggish consumption.

The OECD releases Economic Outlooks twice a year, in the May-June period and the November-December period, and issues an interim update in March and September.

BY SHIN HA-NEE [[email protected]]