Korea's economic growth likely to top 1% this year: BOK chief
BOK Gov. Rhee Chang-yong speaks during a press briefing in Seoul, Oct. 23. Yonhap
Bank of Korea (BOK) Gov. Rhee Chang-yong said Wednesday that the Korean economy is likely to grow at a higher-than-earlier forecast rate, probably expanding by more than 1 percent, though structural reforms will be needed to support sustainable growth.
In the July–September period, the economy expanded 1.2 percent on-quarter, surpassing the BOK's forecast of 1.1 percent growth.
For the full year of 2025, the BOK expects the economy to grow 0.9 percent and plans to release a revised outlook next month.
"Chances are that this year's growth rate will come in above 1 percent, rather than the 0.9 percent projected in August," Rhee said during a parliamentary audit of the central bank.
"The third-quarter figure was better than expected as the government's consumption coupon programs had a positive effect and exports performed well," he added.
Rhee cautioned, however, that the outcome of tariff negotiations with the United States could affect the economic situation and stressed the need for longer-term structural reforms.
In July, Korea and the U.S. reached a framework agreement under which Washington would impose a 15 percent tariff on Korean goods, rather than the initially threatened 25 percent, while Seoul would establish a $350 billion fund for investments in the U.S.
But no formal agreement has been finalized, and negotiations over the details are still under way.
"Even if growth exceeds 1 percent, it will still fall short of the potential growth rate," he said. "Structural reforms are necessary to support sustainable growth over the long term."
Korea's potential growth rate is estimated at around 2 percent, which represents the maximum pace at which the economy can expand without triggering inflationary pressures, according to the BOK.