ADB Lowers Korea's Growth Forecast for This Year from 1.5% to 0.8%… Last Place in Asia-Pacific
Summary
- The ADB has announced a sharp reduction in Korea's economic growth rate forecast for this year, from 1.5% to 0.8%.
- It reported that factors such as the U.S. tariff hikes, global trade uncertainty, and a weak real estate market are acting as downward pressures on growth.
- While a domestic demand recovery is expected in the second half, the growth forecast for next year was also lowered to 1.6%, highlighting the need for a cautious investment approach.
The Asian Development Bank (ADB) has sharply downgraded Korea's economic growth forecast for this year from the previous 1.5% to 0.8%. This adjustment reflects concerns that exports will shrink as the United States raises tariffs.
On the 23rd, ADB released its 'Asian Economic Outlook, July 2025' report, which included these details. The newly announced growth outlook for Korea has been revised down by 0.7 percentage points compared to the forecast in April. This downward revision is the largest among major countries in the Asia-Pacific region.
The ADB forecasts that Korea’s exports will contract as the United States increases tariffs and global trade uncertainty deepens. Persistent declines in construction investment and a sluggish real estate market have also increased downward pressure on growth. However, it projected that political uncertainty will subside after the June presidential election, and that the supplementary budget's effects will help domestic demand gradually recover in the second half of the year.
The ADB also lowered next year’s growth projection for Korea from 1.9% to 1.6%, a 0.3 percentage point cut. Ongoing trade uncertainty was cited as the reason for the downward revision. The consumer price inflation forecast for Korea remains at 1.9% for both this year and next, unchanged from the April projection.
The overall 2025 growth projection for Asia-Pacific has been lowered by 0.2 percentage points to 4.7%, and the forecast for next year has been revised down by 0.1 percentage points to 4.6%. These adjustments reflect tightened protectionism in the United States, geopolitical tensions in the Middle East, and the downturn in China’s real estate market. China's growth outlook for this year has been revised down from 4.7% to 4.3%, Thailand's from 2.8% to 1.8%, and India’s from 6.7% to 6.5%.
Ikhwan Kim, Reporter lovepen@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
