Containers for export are stacked at Pyeongtaek Port in Gyeonggi Province, May 8. Yonhap
The OECD significantly upgraded its growth outlook for the Korean economy this year, raising the forecast to 2.6 percent from 1.7 percent on expectations that booming semiconductor exports will outweigh risks stemming from the Middle East conflict, according to the Ministry of Finance and Economy, Wednesday.
The ministry said Korea recorded the largest upward revision among G20 economies in the OECD’s latest projections.
After lowering Korea’s growth outlook to 1.7 percent from 2.1 percent in its March report over concerns about the Middle East conflict, the OECD has now reversed course with a substantially more optimistic assessment.
The sharp upward revision appears to reflect Korea’s stronger-than-anticipated economic performance in the first quarter. According to preliminary data released by the Bank of Korea (BOK), real gross domestic product (GDP) expanded 1.7 percent from the previous quarter.
The OECD’s new forecast is in line with the BOK’s latest projection announced last month and stands slightly above the Korea Development Institute’s 2.5 percent estimate. It remains below the Korea Institute of Finance’s 2.8 percent outlook.
Pointing to semiconductors as the key growth driver, the OECD said Korea has seen a sharp rise in exports since the start of the year, with both export prices and shipment volumes posting solid gains.
The organization also forecast continued strength in private investment, led by semiconductor-related spending, with the momentum expected to spread to broader industries later this year.
Despite the improved outlook, the OECD warned of several downside risks facing the Korean economy, citing potential supply disruptions linked to tensions in the Middle East and labor unrest in industrial sectors.
Additionally, the organization projected the country's consumer inflation to average 2.6 percent this year before easing to 2.2 percent next year.
Source: Korea Times News
