Morgan Stanley raises Korea's growth outlook to 1.1%

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Morgan Stanley raises Korea's growth outlook to 1.1%

Published: 22 May. 2025, 15:41 Updated: 22 May. 2025, 17:10

Audio report: written by reporters, read by AI

Containers are stacked at Incheon New Port in Yeonsu District, Incheon, on May 16. [NEWS1]

Morgan Stanley on Thursday revised up its 2025 economic growth outlook for Korea to 1.1 percent from 1 percent, citing easing tensions between the United States and China over tariffs.

The latest projection comes just weeks after Morgan Stanley significantly cut its growth outlook for Korea this year. On April 16, the bank downgraded its 2025 forecast to 1 percent from an earlier estimate of 1.5 percent in January, pointing to persistent global trade uncertainties.

Kathleen Oh, an economist at the New York-based investment bank, said in a report Thursday that while the firm maintains a cautious view on the Korean economy due to lingering tariff uncertainties, it decided to adjust the forecast amid signs of de-escalation in U.S.-China trade tensions.

She pointed to the recent announcement of a 90-day suspension on reciprocal tariffs by the United States as a key factor behind the revision.

The bank also raised its 2026 growth estimate from 1.4 percent to 1.5 percent.

Oh expects fiscal policy to become a key growth driver after the presidential election next month. She anticipates a second supplementary budget in the latter half of the year.

Morgan Stanley also forecasts that the Bank of Korea will continue lowering its benchmark interest rate to 2 percent to support the economy.

Despite looser monetary and fiscal policy, the firm projects consumer price inflation will remain contained at 1.9 percent through 2025 and 2026.

Oh attributed this to a gradual domestic recovery and subdued global demand, which she said would likely put downward pressure on oil prices and keep inflation in check.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY JEONG JIN-HONG [[email protected]]