Financial institutions pessimistic about Korea's growth, average forecast at 0.9%

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Financial institutions pessimistic about Korea's growth, average forecast at 0.9%

Published: 02 Jun. 2025, 10:51 Updated: 02 Jun. 2025, 18:45

Audio report: written by reporters, read by AI

A display of U.S. beef at a large supermarket in Seoul on April 1. [YONHAP]

Major institutions both inside and outside of Korea — including global investment banks — are becoming increasingly pessimistic about the country’s economic outlook.

More than 20 institutions now predict Korea’s economic growth will remain below 1 percent this year. In just four weeks, the average forecast has dropped into the 0.9-percent range. France-based Société Générale offered a forecast of just 0.3 percent — less than half of the Bank of Korea’s outlook.

The average forecast from 41 institutions surveyed by Bloomberg stood at 0.985 percent as of Friday, according to the Bank of Korea on Monday. Projections ranged from 0.3 percent to 2.2 percent.

This marks a drop of 0.322 percentage points from the average of 1.307 percent recorded in a similar survey of 42 institutions on May 2.

Among the institutions projecting such growth figures were Bank of America Merrill Lynch, with 0.8 percent, Capital Economics, with 0.5 percent, Citigroup, with 0.6 percent and HSBC, with 0.7 percent.

Kospi, Kosdaq and currency information displayed at the Hana Bank headquarters in central Seoul on May 28. [YONHAP]

In total, 21 institutions forecast growth below 1 percent. Another nine institutions, including Barclays, Fitch and Nomura Securities, forecast growth of 1 percent, bringing the total number projecting 1 percent or less to 30.

Only 16 institutions had such conservative forecasts on May 2 — nine for the below 1-percent range and seven for 1 percent.

Looking at the scale of revisions, Credit Agricole CIB slashed its growth forecast by 0.8 percentage points, from 1.6 percent to 0.8 percent. HSBC and Singapore-based DBS Group also lowered their forecasts by 0.7 percentage points.

Citizens walk by a supermarket near Mia Station in Gangbuk District, northern Seoul where a fatal stabbing incident took place on April 22. [NEWS1]

Société Générale made the deepest cut, slashing its forecast from 1 percent to 0.3 percent — the lowest among the 41 institutions surveyed. That figure is 0.5 percentage points below the Bank of Korea’s revised estimate of 0.8 percent, released on Wednesday.

Twelve other institutions — including Citigroup, with 0.6 percent, ING Group, with 0.6 percent, and JPMorgan Chase, with 0.5 percent — also forecast lower growth than the central bank.

The Bank of Korea lowered its own outlook from 1.5 percent to 0.8 percent, citing sluggish domestic demand such as private consumption and construction investment, as well as export risks from U.S. tariff policies. But some institutions view even that outlook as overly optimistic.

A view of the Seomun Market in Daegu, seen on May 7, a day after the collapse of a proposed meeting between presidential candidates Kim Moon-soo of the People Power Party and independent candidate Han Duck-soo [JOONGANG ILBO]

A few institutions, however, slightly raised their forecasts. Barclays revised its outlook from 0.9 percent to 1.0 percent, Bloomberg Economics from 0.7 percent to 0.8 percent and Morgan Stanley from 1 percent to 1.1 percent.

On May 22, Morgan Stanley cited easing trade tensions between the United States and China, and a 90-day suspension of reciprocal tariffs by the United States, as the basis for its more positive outlook.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY LEE HAY-JUNE [[email protected]]