The National Assembly Budget Office (NABO) has lowered its domestic economic growth forecast for this year to 2.5 percent. Likewise, the Asian Development Bank (ADB) lowered its forecast by 0.1 percentage point to 2.5 percent. At present, the South Korean government’s estimate is 2.6 to 2.7 percent and those of the IMF and the OECD are 2.6 percent.
NABO said in its report on April 3 that this year’s real GDP growth is estimated at 2.5 percent, 0.2 percentage point less than the previous year. Six months ago, NABO’s estimate for this year was 2.7 percent. The ADB cut its estimate by one percentage point to 2.5 percent in four months on April 3 as well. The ADB’s estimate was 2.8 percent in September 2018 and 2.6 percent in December 2018.
These downward adjustments have to do with the ongoing global economic recession, decreasing domestic private consumption and decreasing export growth.
The ADB explained that the adjustment was because the American and European economies are slowing down and trade tensions are escalating. It mentioned the ongoing trade war between the United States and China, the United States’ fiscal policy and Brexit-related uncertainties as downside risk factors.
NABO pointed out that South Korea’s private consumption and export indices, not to mention the global recession, are sending warning signals. In the report, the office said that South Korea’s private consumption growth is estimated to fall from 2.7 percent to 2.6 percent due to deteriorating employment and income conditions and consumer sentiment.