Possibility to increase to the mid-3% level in May
OECD/Goldman also rises ahead of forecast
It is not only the International Monetary Fund (IMF) that has raised Korea’s forecast for this year’s economic growth rate. The Organization for Economic Co-operation and Development (OECD) and domestic and foreign investment banks (IB) were also striving to upgrade. There are observations that the Bank of Korea will also increase its previous growth rate forecast of 3.0% to the mid-3% range in May.
BOK Governor Lee Joo-yeol said on the 24th that “this year’s growth rate will exceed the previous forecast” through the “Questions and Answers by the BOK Governor on Major Pending Issues”. Governor Lee said, “The increase in export and facility investment will be higher than originally expected. If the additional budget is executed, it will act as a factor to further increase the growth rate this year.”
It is highly likely that the BOK will officially raise its growth rate forecast in May. This is because the economic outlook report is released at this time. In the market, the BOK is expected to present a 3.3~3.4% level. The point is export and facility investment. It is highly likely that the growth rate of exports and facility investment will be adjusted upward in line with the global economic recovery. In February, the BOK suggested an increase in product exports of 7.1% and an increase in facility investment of 5.3%. The rate of increase in private consumption is projected to be a relatively low 2%.
The IMF announced that it increased its forecast in January to 3.6% on the 26th. It is reported that the IMF presented 3.4%, a 0.3 percentage point increase in the draft report. However, it was raised to 3.6% by reflecting the contents of the first supplementary budget drafted by the government earlier this month. The IMF suggested that in order to speed up the recovery of the real economy, the Korean government should expand targeted transfer of the content that focuses on the victims. It also mentioned the necessity of introducing fiscal rules to manage national debt in preparation for an aging population.
On the 9th, the OECD released an estimate of this year’s economic growth rate in Korea at 3.3%. It was 0.5 percentage points higher than last December’s forecast (2.8%). As the global economy shows a recovery trend, Korea’s exports, which are highly dependent on trade, are expected to improve. The average growth rate of 7 global investment banks (IBs) including Goldman Sachs JP Morgan has recently risen from 3.4% to 3.9%.
Reporter Kim Ik-hwan [email protected]
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