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4mo ago

South Korea’s Growth Forecast Slashed to 0.8% as Trade Woes Deepen

The Korea Development Institute cites rising global trade tensions and weak exports for the sharp downgrade, urging accommodative policies to counter slowing momentum.

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This Sept. 30, 2024, file photo shows shipping containers stacked at a port in the southeastern city of Busan. (Yonhap)

Overview

  • The Korea Development Institute (KDI) has halved its 2025 GDP growth projection for South Korea to 0.8%, down from 1.6% in February.
  • The revision reflects worsening global trade conditions, including U.S. tariff hikes in April, and continued sluggish export performance.
  • KDI’s forecast is more pessimistic than those of the IMF (1%), OECD, and Bank of Korea (1.5%).
  • Inflation is projected to remain subdued, with consumer prices rising 1.7% in 2025 and 1.8% in 2026, while core inflation edges slightly higher.
  • The think tank warns of labor market pressures, forecasting employment gains to slow significantly and unemployment to rise to 3% in 2025 and 2026.