Japanese Economy Likely to Grow Faster than South Korean This Year

Japan’s annual economic growth rate is forecast to exceed South Korea’s this year for the first time in 25 years. The IMF recently lowered its 2023 South Korean economic growth forecast from 2 percent to 1.7 percent and adjusted its forecast for Japan from 1.7 percent to 1.8 percent.

According to experts, this is because South Korea’s exports and consumption are declining and travel to Japan is increasing. In January this year, approximately 1.5 million people visited Japan, including 570,000 or so South Koreans and about 260,000 Taiwanese. In December last year, less than 550,000 foreigners entered South Korea.

The Bank of Korea raised its key rate from August 2021 to January this year in order to curb inflation, which has led to a decline in real purchasing power and a decrease in household consumption. By contrast, the Bank of Japan is still adhering to its low-interest policy.

When it comes to 2024 growth forecasts, the IMF’s figures for South Korea and Japan are 2.6 percent and 0.9 percent, respectively. “South Korea’s exports are expected to begin to rebound in the second half of this year and Japan’s economic stimulus measures are likely to lose their effects next year,” it said.