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ADB maintains S. Korea's 2023 growth forecast at 1.3 pct

All News 09:00 September 20, 2023

By Kang Yoon-seung

SEOUL, Sept. 20 (Yonhap) -- The Asian Development Bank (ADB) on Wednesday maintained its growth outlook for the South Korean economy at 1.3 percent but suggested that the country will experience weaker-than-expected inflation.

The Manila-based bank had revised down the growth outlook on South Korea by 0.2 percentage point in July, citing sluggish exports and investment. It suggested a 2.2 percent growth rate for 2024, also unchanged from the previous report.

The outlook for this year hovers below the 1.4 percent growth projection suggested by the South Korean government in July. The Organization for Economic Cooperation and Development (OECD) expected a 1.5 percent rise the previous day.

The bank said the latest projection came as South Korea is expected to experience a rebound in exports, and high borrowing costs are also set to weigh down domestic consumption and investment.

South Korea's central bank held its key interest rate steady at 3.5 percent last month for the fifth straight time as it weighs a slowdown in growth amid moderating inflation.

The rate freezes came after it delivered seven consecutive rate hikes from April 2022 to January 2023.

The ADB, meanwhile, estimated South Korea's inflation for 2023 at 3.3 percent, down 0.2 percentage point from the previous report, citing the latest signs of a slowdown.

Consumer prices rose 3.4 percent on-year in August amid higher prices of agricultural goods, but the government has been attributing the latest hike to temporal factors, noting inflation is anticipated to begin slowing down next month.

The ADB added that major countries' monetary tightening measures, the slowdown in China's property market, and growing concerns about food security in Asia due to climate change are regarded as potential risks for the region in the future.

ADB maintains S. Korea's 2023 growth forecast at 1.3 pct - 1


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