ADB cuts 2023 growth outlook for S. Korean economy to 2.3 pct

SEOUL– The Asian Development Bank (ADB) on Wednesday slashed its 2023 growth outlook for the South Korean economy to 2.3 percent amid growing concerns that monetary tightening in the United States and other major countries will likely slow down global economic growth.

The latest revision by the Manila-based bank marked a drop from its July estimate of 2.6 percent. The ADB maintained its 2022 growth outlook for Asia’s fourth-largest economy at 2.6 percent.

The ADB also left unchanged its 2022 and 2023 inflation estimates for South Korea at 4.5 percent and 3 percent, respectively.

The ADB’s 2022 growth outlook for Korea is the same as the Bank of Korea (BOK)’s forecast. But its economic growth forecast for next year is higher than the BOK’s 2.1 percent projection.
The South Korean economy faces the growing risk of stagflation, a mix of slowing growth and high inflation, due to heightened external uncertainty.

The country’s exports, the main driver for economic growth, showed signs of weakening amid the global economic slowdown. It posted a trade deficit for the fifth straight month in August due to high energy costs.

South Korea’s consumer prices jumped 5.7 percent on-year in August, slowing from a 24-year high of 6.3 percent the previous month, as global oil prices retreated. But the nation’s still-high inflationary pressure will likely prompt the BOK to further raise its policy rate in the coming months.

Concerns are growing that the Federal Reserve’s aggressive monetary tightening and rate hike drives by its peers in major economies could cause the global economy to slip into a recession.

Meanwhile, the ADB lowered its 2022 average growth outlook for 46 developing Asian countries to 4.3 percent from 4.6 percent. It also slashed its 2023 growth forecast for those countries to 4.9 percent from 5.2 percent.

The ADB said “stronger-than-expected” monetary tightening by major economies, the prolonged war between Russia and Ukraine, and China’s “deeper-than-expected” economic downturn will serve as downside economic risks for the Asian region.

Source: Yonhap News Agency

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