ADB maintains Korea's 2024 growth forecast at 2.2%

President Yoon Suk Yeol delivers congratulatory remarks at the Opening Ceremony of the 56th Annual Meeting of the Asian Development Bank, Incheon, west of Seoul, May 2. Korea Times photo by Seo Jae-hoon

The Asian Development Bank (ADB) on Wednesday maintained its outlook for the Korean economic growth next year at 2.2 percent, while revising up its forecast for the country's inflation.

The Manila-based bank also kept its forecast for this year's Korean economic growth unchanged at 1.3 percent, according to the Ministry of Economy and Finance.

The outlook for next year is on par with that by the International Monetary Fund, while the Organization for Economic Cooperation and Development expected a 2.3 percent expansion for the Korean economy in 2024.

The Bank of Korea put the figure for next year at 2.1 percent.

The ADB said rising exports are expected to lead the growth, but lingering uncertainties in the global economy could weigh down the economy.

"Despite a stronger-than-expected Q3 (in Korea), the growth forecasts are maintained given the uncertain global economic outlook and the lack of major policy stimulus," the bank said in its latest report on the global economic outlook.

Asian nations are also facing multiple challenges stemming from the continued monetary tightening policy by major economies, the Russia-Ukraine war and the weak real estate market in China, according to the ADB.

The bank, meanwhile, revised up its forecast for Korea's inflation for next year to 2.5 percent from its earlier forecast of 2.2 percent. It also raised the forecast for this year's inflation by 0.3 percentage point to 3.6 percent.

"As core inflation remains stubbornly high because post-pandemic services inflation continues to be elevated and expectations of higher-for-longer U.S. interest rates are weakening the won, inflation forecasts are revised up to 3.6 percent for 2023 and 2.5 percent for 2024," the report read.

Consumer prices in Korea, a key gauge of inflation, rose 3.3 percent on-year in November, staying above 3 percent for the fourth consecutive month.

Inflationary pressure has eased at a slower pace than earlier expected as unfavorable weather conditions and geopolitical risks have pushed up prices of energy and farm products, though the country is expected to reach its target rate of 2 percent by the end of next year, officials said. (Yonhap)