ADB slashes Korea's growth outlook for 2023 to 1.3%
President Yoon Suk Yeol delivers congratulatory remarks at the Opening Ceremony of the 56th Annual Meeting of the Asian Development Bank, Incheon, May 2. Korea Times photo by Seo Jae-hoon
The Asian Development Bank (ADB) on Wednesday slashed its growth outlook for the Korean economy to 1.3 percent, citing sluggish exports and investment.
The downward revision came three months after the Manila-based bank suggested a 1.5 percent rise for Asia's fourth-largest economy.
Earlier this month, the Korean government also cut its growth forecast for this year by 0.2 percentage point to 1.4 percent. In June, the Organization for Economic Cooperation and Development lowered its 2023 growth outlook for Korea by 0.1 percentage point to 1.5 percent.
The revision came as the export-driven economy continued to post sluggish outbound shipments, despite some signs of recovery.
Last month, Korea reported a trade surplus for the first time in 16 months, but its outbound shipments fell for the ninth consecutive month due mainly to weak demand for semiconductors.
Outbound shipments fell 6 percent on-year to $54.24 billion last month, which marked the smallest on-year export decline so far this year, possibly indicating that exports may rebound in the second half of this year.
The government earlier anticipated the country's facility investment would decrease by 1.2 percent on-year due mainly to the sluggish performance of the chip industry as well.
The ADB, however, maintained a 2.2 percent growth outlook for 2024.
As for inflation, the ADB expected prices in Korea to rise 3.5 percent on-year in 2023, up from the previous outlook of 3.2 percent, citing the continued upward trend in consumer prices despite indications of stability from the energy and food sectors.
Last week, Korea's central bank kept its key interest rate unchanged at 3.5 percent.
It marked the fourth straight time that the BOK has stood pat following rate freezes in February, April and May. The rate freezes came after the BOK delivered seven consecutive rate hikes from April 2022 to January 2023. (Yonhap)