OECD Sharply Cuts South Korea's 2025 Growth Outlook To 1.5 Pc

(MENAFN- IANS) Seoul, March 17 (IANS) The Organisation for Economic Cooperation and Development (OECD) has sharply lowered its growth forecast for the South Korean Economy this year to 1.5 per cent, the finance Ministry said on Monday.

The latest projection marks a 0.6 percentage-point drop from the OECD's previous forecast in December, the ministry said, citing the organisation's latest report.

The OECD attributed the downward revision to increasing trade barriers, and heightened geopolitical and policy uncertainties, without providing further details.

The latest estimate is in line with the bank of Korea's (BOK) forecast but more pessimistic than projections by other major institutions, including the finance ministry's earlier growth estimate of 1.8 percent and the Korea Development Institute's 1.6 percent expansion.

"Growth in both (South) Korea and Australia is expected to hold up but will be weaker than previously anticipated," the report said.

For 2026, the OECD projects South Korea's economy will grow by 2.2 percent on-year, up 0.1 percentage point from its projection made in December.

The organisation also identified "further fragmentation" of the economy and higher-than-anticipated inflation as major downside risks to the global economy.

The OECD issued policy recommendations, stressing that the central bank should address high uncertainty and a potential rise in trade costs in its monetary policy decisions.

South Korea's benchmark interest rate currently stands at 2.75 percent, following the BOK's most recent quarter-percentage-point cut in February.

The report also underscored the importance of maintaining "fiscal discipline" to ensure the government retains the capacity to respond effectively to future economic shocks.

Meanwhile, South Korean stocks finished markedly higher on Monday led by gains of top-cap Samsung Electronics and other tech shares tracking their Wall Street peers despite lingering concerns about US President Donald Trump's sweeping tariff scheme. The local currency rose against the US dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) added 44.33 points, or 1.73 percent, to close at 2,610.69, ending a two-day losing streak.

MENAFN17032025000231011071ID1109322898