Jun Ji-hye, a reporter at the finance desk of The Korea Times, focuses primarily on economic policy and government agencies, mainly covering the Ministry of Finance and Economy, the Ministry of Budget and Planning, the National Tax Service and the Korea Customs Service. She previously covered financial authorities, including the Financial Services Commission and the Financial Supervisory Service, and earlier worked on the political, city and business desks, reporting on a wide range of issues.
Korea's growth outlook cut to 1.7% from 2.1% as OECD warns of energy risks
Containers await shipment at Pyeongtaek Port in Gyeonggi Province, March 12. Yonhap
By Jun Ji-hye
The OECD on Thursday revised Korea’s 2026 growth forecast downward to 1.7 percent from 2.1 percent in its December 2025 outlook, citing potential strains from the Middle East conflict and rising energy costs.
According to the OECD's mid-year economic outlook, global economic growth for 2026 is projected at 2.9 percent, unchanged from the December 2025 forecast.
The OECD noted that geopolitical tensions in the Middle East this year have offset global growth drivers, and most countries are likely to face common pressures on growth and inflation.
Korea’s growth projection, along with that of the United Kingdom, which was lowered by 0.5 percentage points, and the eurozone, which was lowered by 0.4 percentage points, was revised downward due to its high dependence on Middle Eastern energy.
The OECD also stressed that a prolonged Middle East conflict could strain energy supplies and weigh on production activity for Korea and other Asian economies heavily reliant on energy imports.
Inflationary pressures are also expected to rise.
Korea’s consumer price inflation for 2026 is now projected at 2.7 percent, up 0.9 percentage points from the December 2025 forecast. This exceeds the country’s 2 percent price stability target and may weigh on monetary policy decisions, as sustained inflation above the target could prompt tighter measures to stabilize prices.
Looking ahead to 2027, both the Korean and global economies are expected to recover as the effects of the Middle East conflict ease.
Korea’s growth for 2027 is forecast at 2.1 percent, up 0.4 percentage points from 2026 and outpacing the global growth rate, which is expected to rise by 0.1 percentage points to 3 percent.
Inflation is also expected to stabilize at the 2 percent target.
“Given these factors, the downward adjustment in Korea’s 2026 growth forecast and the upward revision of inflation are considered temporary effects of external shocks, while economic fundamentals remain solid,” an official from the Ministry of Economy and Finance said.