November 22, 2024

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(Asian Development Bank)

The Asian Development Bank (ADB) kept its outlook for South Korea's economic growth this year unchanged at 2.2 percent and the forecast for the country's inflation at 2.5 percent, Seoul's finance ministry said Thursday.

The ADB's outlook for 2024 is on par with that of the South Korean government and the Organization for Economic Cooperation and Development, while the International Monetary Fund presented a 2.3 percent expansion.

The Manila-based bank said rising global demand for semiconductors will lead the growth, and private consumption is forecast to improve in the second half of this year.

The growth of the global artificial intelligence sector has led the recovery of the semiconductor industry, and South Korea has enjoyed rising demand for memory chips as a major supplier, it added.

Exports, a key growth engine for South Korea, increased for the sixth consecutive month in March, government data showed, with the bank expecting solid exports to continue through 2025 to expedite growth.

Consumer prices, a key gauge of inflation, rose 3.1 percent on-year in March, staying over 3 percent for the second month in a row on record prices of fruits and rising global oil prices.

The South Korean government has said consumer prices are forecast to ease at a slower pace than earlier expected before reaching the target rate of 2 percent by around the end of this year.

The finance ministry expected this year's prices to rise 2.6 percent.

The ADB also forecast the economy would expand 2.3 percent for next year and inflation to ease to 2 percent, the ministry said.

The bank, meanwhile, revised up its forecast for economic growth in Asia in 2024 by 0.1 percentage point to 4.9 percent, as the upturn of the semiconductor industry and the growth by India will offset an economic slowdown in China.

Inflation for Asian nations is expected to come to 3.2 percent this year before easing gradually to 3 percent in 2025.

The ADB cited geopolitical risks in the Middle East, uncertainties over the monetary policy of the United States, the unstable real estate market in China and the possibility of changes in the climate as major downside risk factors. (Yonhap)