South Korea’s 2025 growth outlook cut to 1.9 pct
The Bank of Korea (BOK) on Thursday lowered its outlook for South Korea's economic growth this year to 2.2 percent while also slashing its forecast for 2025 to 1.9 percent amid slowing export growth and weak domestic demand, Yonhap reports.
The latest figure marked a 0.2 percentage point fall each from its projections presented in August.
Presenting a bleaker outlook for growth, the BOK unexpectedly slashed its key rate by a quarter percentage point to 3 percent.
In its latest report released last week, the International Monetary Fund (IMF) forecast the South Korean economy to grow 2.2 percent this year and 2 percent in 2025.
Earlier, the finance ministry presented a 2.6 percent expansion this year for Asia's fourth-largest economy, and 2.2 percent growth in 2025. The ministry is expected to release its newest projections in December.
As for inflation, the BOK lowered its forecast for 2024 to 2.3 percent from its earlier projection of 2.5 percent, and its estimate for next year by 0.2 percentage point to 1.9 percent.
The BOK's reduction of its growth outlooks came as exports, a key growth engine, logged slower-than-anticipated growth in recent months amid dwindling global demand and uncertainties stemming from the new Donald Trump administration.
Exports rose 4.6 percent from a year earlier to US$57.5 billion in October, marking the 13th straight monthly gain, but it was the smallest increase since March, according to government data.
South Korea is also grappling with weak private consumption and investment due mainly to high borrowing costs over an extended period of time and various systemic factors.
Retail sales, a gauge of private spending, shed 0.4 percent from a month before in September. On an on-year basis, retail sales sank 2.2 percent, the seventh straight monthly fall.
Industrial production fell 0.3 percent from a month earlier in September. In on-year terms, factory output went down 1.1 percent, government data showed.
The South Korean central bank had kept its key rate frozen at 3.5 percent after delivering a series of rate hikes between August 2021 and January 2023, before slashing it by a quarter percentage point last month in its first pivot in over three years.
