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Morgan Stanley lowers Korea's 2025 GDP forecast to 1%

Published: 16 Apr. 2025, 16:47 Updated: 17 Apr. 2025, 16:01

Containers for export are stacked at Pyeongtaek Port in Gyeonggi on April 10. [NEWS1]

Morgan Stanley on Wednesday revised down Korea’s economic growth forecast for 2025 to 1.0 percent from an earlier estimate of 1.5 percent, citing persistent uncertainty surrounding global trade and tariffs.

The New York-based investment bank trimmed its GDP projections for Korea from 2025 to 2026 by 20 basis points, reflecting recent global developments, Kathleen Oh, an economist at Morgan Stanley, wrote in a report.

The latest projection comes three weeks after the 1.5 percent estimate was made in January.

Morgan Stanley also now expects Korea’s economy to grow 1.4 percent in 2026.

Oh wrote that the bank sees more headwinds for Korea’s export outlook due to continued tariff uncertainty and recent downgrades to growth in major economies and warned that Korea faces increasing external risks.

Beyond the broader and faster U.S. slowdown, prolonged tariff uncertainty and a contraction in global trade will continue to weigh on the firm's already bearish outlook, she said.

Adding to concerns, the United States could announce a preliminary decision next week to raise tariffs on semiconductors to at least 25 percent.

Oh said such a move would add to Korea’s economic headaches.

She also noted that while coordinated policy support is essential to stimulate growth, Korea’s policy options are likely to be constrained through June, when a snap presidential election is scheduled.

Oh expects the government to roll out a supplementary budget in the second half of the year, amounting to at least 20 trillion won ($14 billion).

Morgan Stanley maintained its forecast that the Bank of Korea will lower its key interest rate to 2.0 percent by the end of 2025.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.

BY JEONG JAE-HONG [[email protected]]