OECD Raises South Korea's Growth Forecast for This Year from 1.7% to 2.6%

The Organisation for Economic Co-operation and Development (OECD) forecast on the 3rd that South Korea's economy will grow 2.6% this year. That is an upward revision of 0.9 percentage points from the 1.7% forecast in March, the largest increase among the Group of Twenty (G20) economies. It also projected inflation at 2.6%, 0.1 percentage point higher than its March estimate.
In its March outlook, the OECD had lowered South Korea's growth forecast from 2.1% to 1.7% because of the impact of the Middle East War. Three months later, it sharply raised the forecast into the mid-2% range, reflecting South Korea's economic conditions, including a boom in semiconductor exports and expanding investment.
For South Korea, the OECD said stronger exports, including semiconductors, will drive growth and private investment, while consumption is expected to continue a gradual recovery.
It said exports have surged since the beginning of the year, with clear gains in both prices and volumes. Private investment is rising, led by semiconductors, and is expected to remain strong as investment growth spreads to other sectors toward the end of the year.
Consumption is expected to recover gradually between this year and next, supported by fiscal measures such as supplementary budgets to respond to the energy crisis.
The OECD estimated South Korea's nominal economic growth for this year at 10.4%, taking into account a Gross Domestic Product (GDP) deflator forecast of 7.6%.
It also revised down general government debt as a share of GDP to 48.2%, compared with its December forecast of 52.0%. Consumer prices are expected to average 2.6% this year, and the OECD forecast that they will return to the low 2% target range next year.
skjung@fnnews.com Jung Sang-gyun Reporter