KDI Predicts South Korea’s Economic Growth to Remain Stable at 1.5 Percent for 2023


By Kang Yoon-seung

SEOUL, Aug. 10 (Yonhap) — The Korea Development Institute (KDI) has forecasted that South Korea’s economic growth will remain unchanged at 1.5 percent in 2023, the same as its estimate three months prior.

Last month, the South Korean government revised their growth outlook for this year downward by 0.2 percentage point to 1.4 percent. In June, the Organization for Economic Cooperation and Development lowered their 2023 growth outlook for the Asian powerhouse by 0.1 percentage point to 1.5 percent.

“Compared with the previous report, while the growth in consumption is expected to slow, the weak construction investment and commodity exports are anticipated to improve,” the KDI said. It also maintained 2.3 percent growth for 2024.

The KDI stated that the South Korean economy has been showing signs of recovery, driven by the manufacturing sector, specifically the automobile and semiconductor industries.

“With the U.S. economy continuing its stable growth, exports in the second half are expected to maintain similar growth as projected earlier,” it added, suggesting growth of 1.4 percent.

The KDI, however, said the recovery may be further delayed if China’s economy experiences a further slump, or inflation remains high, prompting major countries to keep up their monetary tightening moves.

“If inflation expands due to higher crude and grain prices in the face of the war between Russia and Ukraine, along with the deteriorating weather conditions, major countries may bolster monetary tightening, led by the U.S.,” the KDI said.

The KDI projected South Korea’s annual inflation for this year at 3.5 percent, slightly higher than a 3.4 percent outlook released in May, citing higher global crude prices.


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