목요일, 13th 2월 2025
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Growth forecasts dip as high rates, inflation weigh on Korean economy

A store closure notice is posted at a shop in a traditional market in Seoul, June 30. Yonhap

Economic forecasts for Korea in 2024 are being downgraded as domestic demand struggles to rebound amid persistently high interest rates and inflation. The timing of a key interest rate cut is considered a crucial variable that could determine growth in the remaining months, according to experts, Sunday.

The most recent downgrade came from the government-run Korea Development Institute (KDI). In its revised economic outlook announced on Thursday, the KDI lowered its 2024 growth forecast from 2.6 percent to 2.5 percent, citing sluggish domestic demand.

“The Korean economy is projected to experience a slight delay in recovery compared to previous projections, as domestic demand is likely to remain subdued while export growth is expected to surpass earlier forecasts,” it wrote.

The report noted that private consumption is forecast to expand by 1.5 percent, down from the previous projection of 1.8 percent. Facility investment is expected 홀짝게임 to grow by only 0.4 percent, significantly below the earlier forecast of 2.2 percent.

The KDI’s projection aligns with those of global investment banks (IBs) and the domestic brokerage industry.

Following the announcement regarding the second quarter for gross domestic product, eight global IBs lowered the projection to 2.5 percent, a 0.2 percentage point decrease from one month ago. Similarly, the Korean brokerage industry has adjusted its forecasts downward from the upper 2 percent range to the mid 2 percent range.

“A critical factor for the Korean economy in the second half of the year will be whether the momentum spreads to the domestic sector,” Hana Securities economist Chun Kyu-yeon said.

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