The Asian Development Bank (ADB) on Wednesday lowered its 2022 growth outlook for the South Korean economy to 3 per cent amid the upsurge in COVID-19 cases and the Ukraine crisis.
The latest estimate by the Manila-based bank is lower than the 3.1 per cent growth forecast made in December last year, reported Yonhap news agency, adding that ADB forecast the South Korean economy will grow 2.6 per cent next year.
Despite the downward revision, the ADB assessed the South Korean economy is expected to settle into more sustainable growth this and next year as exports will likely remain robust and private spending will improve.
The ADB’s growth forecast is on par with the 3 per cent estimates by the Bank of Korea (BOK) and the International Monetary Fund. It is higher than the 2.7 per cent growth forecasts by global credit appraisers Moody’s Investors Service and Fitch Ratings.
The Asia’s fourth-largest economy has been on a recovery track on the back of robust exports. But it also faces growing uncertainty at home and abroad amid the fast spread of the Omicron variant and Russia’s invasion of Ukraine.
The ADB sharply raised its 2022 inflation outlook for South Korea to 3.2 per cent from its December forecast of 1.9 per cent. The bank expected South Korea’s inflation growth to slow to 2 per cent next year.
South Korea’s consumer prices grew more than 4 per cent for the first time in more than 10 years in March as the Ukraine crisis has jacked up oil prices.
Consumer inflation grew 4.1 per cent on-year in March, accelerating from a 3.7 per cent gain the previous month, according to government data.
The BOK said inflation will be under more upward pressure going forward, saying the growth of consumer prices will likely stay over 4 percent for the time being. The country’s central bank expects annual inflation to rise 3.1 per cent this year.
The ADB, meanwhile, lowered its 2022 growth outlook for 46 developing Asian countries to 5.2 per cent from 5.3 per cent. It forecast such countries to grow 5.3 per cent in 2023.