The Organization for Economic Cooperation and Development (OECD) lowered Korea's economic growth forecast for this year by 0.5 percentage points (p) after three months. This reflects the economic shock triggered by the tariff measures implemented by the United States.
According to the Ministry of Economy and Finance on the 3rd, the OECD presented Korea's growth forecast for this year at 1.0% in the 'World Economic Outlook' announced that day. This is a further downgrade after it was lowered from 2.1% in Dec. last year to 1.5% in March this year.
The OECD's outlook for Korea's growth rate is similar to forecasts from other institutions. The Bank of Korea, in its revised economic outlook released on Feb. 29, adjusted its forecast to 0.8%, a decrease of 0.7 percentage points. Prior to this, the Korea Development Institute (KDI) also projected 0.8%.
Expectations from private institutions are similar. According to a Bloomberg survey on the 30th of last month, the distribution of growth forecasts for Korea this year from 41 domestic and foreign institutions was between 0.3% and 2.2%, with an average of about 0.985%.
The OECD noted, "The emergency declaration on Dec. 3 last year had already shocked the weakening domestic demand and impacted the decrease in the Gross Domestic Product (GDP) in the first quarter," adding, "The impeachment of the president may help restore consumer and corporation confidence, but uncertainties related to the tariff and international trade will adversely affect exports and investment."
However, next year's growth rate was maintained at 2.2%, the same as the forecast in March. The OECD projected that "private consumption will rebound from the end of this year due to easing political uncertainties and rising real wages."
The inflation rate for Korea this year is expected to be 2.1%, close to the target of 2.0%. This is an increase of 0.2 percentage points compared to the March forecast. The forecast for next year was adjusted to 2.0%, down 0.1 percentage points from March.
In regards to Korea's fiscal policy, the OECD stated, "In the short term, financial support might be appropriate, but a sustainable long-term fiscal operation framework must be established." This suggests that while support like a supplementary budget is necessary, the mid- to long-term fiscal conditions must be reviewed.
Meanwhile, the global economic growth forecast for this year has been lowered from 3.1% to 2.9%. For 2026, the growth rate is projected to be 2.9%, the same as this year. In the case of the United States, this year's growth forecast has fallen from 2.2% to 1.6%, and for Japan, it has decreased from 1.1% to 0.7%.
Among emerging countries, the forecasts for countries such as ▲ Argentina (5.7→5.2%) ▲ Brazil (2.1→2.1%) ▲ China (4.8→4.7%) ▲ India (6.4→6.3%) ▲ Indonesia (4.9→4.7%) ▲ South Africa (1.6→1.3%) have dropped compared to three months ago.