The Organization for Economic Cooperation and Development (OECD) forecast that the South Korean economy would grow 2.6 percent this year on rising exports, Seoul’s finance ministry said Thursday.
The latest figure remained unchanged from its projection in May when the organization markedly raised the forecast from 2.2 percent.
The latest projection is on par with that of the South Korean government. The Bank of Korea (BOK) presented a 2.5 percent expansion, and the International Monetary Fund forecast 2.3 percent growth.
“Growth has strengthened after a soft patch, largely reflecting the fortunes of semiconductor exports,” the OECD said in its latest report.
Exports, a key growth engine, rose 5.1 percent on-year to $57 billion in June, the ninth straight monthly gain, as chip exports surged 50.9 percent to reach an all-time monthly high.
“Global trade volumes have picked up, semiconductor export volumes and prices are recovering, the sentiment of exporters has bottomed out, the real effective exchange ra
te has stabilized and the current account is back into a solid surplus,” the report read.
The OECD also maintained the 2025 growth outlook for South Korea at 2.2 percent.
Private consumption and investment will continue to be affected by accumulated inflation and high interest rates, but domestic demand “should strengthen,” beginning in the second half of the year, the OECD said.
Inflation is expected to continue to trend toward the target rate of 2 percent this year, and this year’s inflation is expected to come to 2.5 percent, down by 0.1 percentage point from its May projection, the OECD said.
In June, consumer prices rose 2.4 percent on-year, the lowest level since July 2023.
The BOK has kept the policy rate at 3.5 percent since February 2023 after a cumulative tightening of 3 percentage points.
On Thursday, the BOK again froze the rate for the 12th straight session, and chief Rhee Chang-yong said it will review the timing of a pivot in consideration of foreign exchange rates, household debt and rea
l estate prices, among other factors.
“Monetary policy easing is on the horizon,” the OECD said. “But high household debt remains a concern.”
It also pointed to real estate project financing as a key factor of financial market volatility.
As another major challenge, the organization mentioned the intensifying Sino-U.S. rivalry.
“South Korea’s geographical concentration of trade with the United States and China and rising tensions between the two create vulnerabilities, accentuated by the fact that Korea’s trade with China and the United States is to a large extent centered on strategic high-tech sectors,” the OECD said.
Source: Yonhap News Agency
