The Asian Development Bank headquarters in Manila (Reuters)
The Asian Development Bank on Wednesday maintained its previous 4 percent growth outlook for the South Korean economy this year, on the back of robust exports and mild recovery in private consumption.
The ADB kept its earlier growth scenario for Korea, which was released in July. It also left its 2022 growth outlook unchanged at 3.1 percent, according to the bank’s report titled “Asian Development Outlook Update.”
However, it forecast that Korea’s inflation rate will pick up to 2 percent, up 0.2 percentage point from its July estimate.
ADB’s growth projection for the Korean economy was in line with the estimate made by the Organization for Economic Cooperation and Development on Tuesday, which raised its 2021 growth forecast for Korea to 4 percent.
“While the OECD revised down the growth estimate for the world economy by 0.1 percentage point considering the delta variant’s spread, the agency raised the growth outlook for Korea, mainly due to the nation’s strong exports and policy efforts for economic recovery,” Finance Minister Hong Nam-ki said on a Facebook post.
The ADB joined other organizations that have anticipated that the Korean economy would achieve a 4 percent range expansion.
The International Monetary Fund expected the local economy to grow 4.3 percent this year, while the Bank of Korea projected 4.0 percent. Three global credit appraisers -- Moody’s Investors Service, S&P Global Ratings and Fitch Ratings -- also forecast that the Korean economy would expand 4 percent this year.
Despite the fourth wave of COVID-19, Asia’s fourth-largest economy maintained the 4 percent level outlook as its exports and private spending have extended a solid growth momentum.
The nation’s outbound shipments increased 34.9 percent on-year to $53.2 billion in August, extending their gains to 10 months, led by strong demand for chips and automobiles, according to data from the Ministry of Trade, Industry and Energy.
In the meantime, credit-card spending grew 7.9 percent on-year last month, marking the seventh straight month of gains. Sales at department stores increased 14.4 percent.
Meanwhile, the ADB set this year’s growth forecast for 46 developing countries, including Korea, at an average of 7.1 percent, slightly down from its July estimate of 7.2 percent. The bank’s 2022 growth forecast for the region remained unchanged from the previous 5.4 percent
“Developing Asian countries are vulnerable to the COVID-19 pandemic, as new variants spark outbreaks, leading to renewed restrictions on mobility in some economies,” said ADB acting Chief Economist Joseph Zveglich Jr.
“Policy measures should not only focus on containment and vaccination, but also on continuing support to firms and households and reorienting sectors in the economy to adapt to a ‘new normal’ once the pandemic subsides to kickstart the recovery.”
By Choi Jae-hee (firstname.lastname@example.org