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S. Korea Upgrades Growth Projection for 2025 to 0.9 Percent
(MENAFN) South Korea's government-backed research institution upgraded its economic growth projection for 2025 on Tuesday, driven by strengthening export performance and revitalized consumer spending.
The Korea Development Institute (KDI) now anticipates real gross domestic product (GDP), adjusted for inflation, will climb 0.9 percent in 2025—an upward revision from the 0.8 percent expansion predicted just three months ago. The economy recorded 2.0 percent real GDP growth in 2024.
The enhanced forecast stems from simultaneous improvements in export activity and domestic consumption, which fueled a third-quarter economic rebound. Seasonally-adjusted real GDP surged 1.2 percent in the third quarter compared to the previous three-month period, following a 0.7 percent advance in the second quarter. The economy had contracted 0.2 percent during the first quarter.
KDI significantly elevated its export projections, now forecasting goods exports by volume will expand 2.9 percent this year—more than double the previous 1.2 percent estimate.
On the domestic front, private consumption is anticipated to increase 1.3 percent while facility investment shows projected growth of 2.5 percent. However, the construction sector faces continued headwinds, with investment expected to plunge 9.1 percent in 2025.
Looking ahead to 2026, the think tank projects real GDP will accelerate to 1.8 percent growth as robust consumer spending compensates for anticipated deceleration in overseas shipments. Private consumption and goods export volume are predicted to rise 1.6 percent and 0.4 percent respectively next year.
The current account surplus is forecast to reach 115.9 billion US dollars in 2025 before moderating to 103.7 billion dollars in 2026.
Inflation expectations remain moderate, with consumer price increases projected at 2.1 percent for 2025 and 2.0 percent for 2026—both hovering near the central bank's target range.
Employment growth is expected to add 170,000 jobs this year and 150,000 positions in 2026, signaling gradual labor market recovery.
The Korea Development Institute (KDI) now anticipates real gross domestic product (GDP), adjusted for inflation, will climb 0.9 percent in 2025—an upward revision from the 0.8 percent expansion predicted just three months ago. The economy recorded 2.0 percent real GDP growth in 2024.
The enhanced forecast stems from simultaneous improvements in export activity and domestic consumption, which fueled a third-quarter economic rebound. Seasonally-adjusted real GDP surged 1.2 percent in the third quarter compared to the previous three-month period, following a 0.7 percent advance in the second quarter. The economy had contracted 0.2 percent during the first quarter.
KDI significantly elevated its export projections, now forecasting goods exports by volume will expand 2.9 percent this year—more than double the previous 1.2 percent estimate.
On the domestic front, private consumption is anticipated to increase 1.3 percent while facility investment shows projected growth of 2.5 percent. However, the construction sector faces continued headwinds, with investment expected to plunge 9.1 percent in 2025.
Looking ahead to 2026, the think tank projects real GDP will accelerate to 1.8 percent growth as robust consumer spending compensates for anticipated deceleration in overseas shipments. Private consumption and goods export volume are predicted to rise 1.6 percent and 0.4 percent respectively next year.
The current account surplus is forecast to reach 115.9 billion US dollars in 2025 before moderating to 103.7 billion dollars in 2026.
Inflation expectations remain moderate, with consumer price increases projected at 2.1 percent for 2025 and 2.0 percent for 2026—both hovering near the central bank's target range.
Employment growth is expected to add 170,000 jobs this year and 150,000 positions in 2026, signaling gradual labor market recovery.
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