BOK likely to raise this year’s growth outlook to 1.9–2.0%

The Bank of Korea (BOK) is expected to raise its forecast for this year’s real gross domestic product (GDP) growth from 1.8% to 1.9–2.0% in its revised economic outlook to be released on the 26th. Analysts say upside factors for growth include a robust semiconductor upcycle, improving exports, a recovery in domestic demand, and wealth effects driven by rising stock prices.

According to the results of a survey of six economists conducted by Yonhap News on the 22nd, a majority of experts predicted the BOK would lift its growth outlook for this year to either 1.9% or 2.0%, citing export gains and improved domestic demand as key drivers.

Nomura Securities said stronger-than-expected momentum in the semiconductor cycle is underpinning exports and capital investment, adding that the bank is likely to raise its forecasts for this year and next by 0.1% point each to 1.9% and 2.0%, respectively. Korea Investment & Securities, Kiwoom Securities, and the Hyundai Research Institute also put the figure in the 1.9–2.0% range.

Wealth effects from a strong domestic equity market are also seen as a variable. NH Research Institute and the Korea Institute of Finance said rising stock prices could support consumption through wealth and income effects, and are likely to have a positive impact on this year’s growth.

If the BOK raises its forecast to 1.9%, it would match projections by the Korea Development Institute (KDI) and the International Monetary Fund (IMF) (both 1.9%). A revision to 2.0% would align with the government’s forecast (2.0%). However, it would still be below the Organisation for Economic Co-operation and Development (OECD) forecast (2.2%) and the average projection by major investment banks (IBs) (2.1%).

Views were mixed on the impact on the Korean economy of the U.S. Supreme Court ruling invalidating reciprocal tariffs and President Donald Trump’s warning of a 10% global tariff. While expectations generally lean toward reduced downside risks to growth as tariff uncertainty eases, some caution that side effects—such as upward pressure on U.S. interest rates—could emerge.

Experts said that even if tariffs on exports to the U.S. fall from 15% to 10% and autos are exempted from product-specific tariffs, the tariff shock would be mitigated but factors that would directly lift growth are likely to be limited. They noted that while eliminating tariffs could be positive by easing trade frictions and stabilizing exchange rates, worsening U.S. fiscal conditions and increased Treasury issuance could intensify upward pressure on interest rates.

Some experts said the sustainability of the semiconductor cycle and the domestic investment trend matter more than tariffs. They warned that if the investment boom in artificial intelligence (AI) cools or the recovery in the construction sector is delayed, it could weigh on growth. Others also said that the pace of growth in facility investment will be a key variable amid an expansionary fiscal stance.

The prevailing view is that this year’s consumer price inflation forecast will remain broadly unchanged around 2.1%. Despite the burden of a weak currency and the possibility of rising international oil prices, many see a high likelihood the BOK will keep its existing outlook, given the government’s efforts to stabilize prices and the recent trend of exchange-rate stabilization.

By Song-ryeol Lee, Hankyung.com yisr0203@hankyung.com