The Asian Development Bank (ADB) predicted that South Korea's growth rate would decline to 1.5%, a drop of 0.5 percentage points from the forecast announced in December of last year, due to trade uncertainties stemming from changes in U.S. trade policy.
In its '2025 Asia Economic Outlook' announced on the 9th, the ADB significantly revised downward its growth rate forecast for the South Korean economy. The ADB assessed that South Korea's economy is facing downward factors, including weakened household consumption and sluggish construction due to high interest rates, household debt, and political uncertainties domestically, as well as intensified export competition with the U.S. and China and trade uncertainties externally.
However, it anticipated that the growth trend would recover starting in the second half of the year. Despite challenging domestic and external conditions, the ADB's observation is that the growth trend will recover starting in the second half, thanks to robust exports of artificial intelligence (AI) related semiconductors, increased government spending, political stability, and the effects of an expansionary currency policy. The growth rate for 2026 is projected to return to an upward trend at 1.9%.
The ADB predicted that South Korea's inflation rate for this year would be 1.9%, influenced by falling international oil prices and stable prices for food and energy. This figure is 0.1 percentage points lower than the previous forecast. The inflation rate for the next year is also projected to be 1.9%.
The ADB forecasted that the economic growth rate for the Asia-Pacific region in 2025 would be 4.9%, a revision upward by 0.1 percentage points from the forecast made last December. However, it is predicted that the growth rate will slightly decline to 4.7% in 2026 due to U.S. tariff actions, expanded trade uncertainties, and sluggishness in the Chinese real estate market.