The ASEAN (Association of Southeast Asian Nations) + 3 (Korea, China, and Japan) Macroeconomic Research Organization (AMRO) predicted that Korea’s economic growth rate would be 1.9% next year.
The Ministry of Strategy and Finance announced on the 16th that this evaluation was made by AMRO, which held annual consultations with Korea from the 28th of last month to the 9th of this month.
According to AMRO, Korea’s economic growth rate is expected to slow from 2.6% this year to 1.9% in 2023. Compared to the 3% and 2.6% forecasts for Korea’s growth rate for this year and 2.6% for next year, which the agency presented in April last year, respectively, they fell by 0.4 percentage points and 0.7 percentage points, respectively.
The reason for lowering the growth rate forecast is that investment will be sluggish due to a decrease in private consumption and exports in Korea, a tight financial situation and deteriorating external demand.
AMRO believes that Korean inflation (inflation) has passed its peak. The inflation rate is expected to gradually decline from 5% this year to an average of 3% next year.
In the short term, he said that uncertainty about the Korean economy is high and there are many downside risk factors. Short-term risks include the resumption of raw material price hikes, supply chain disruption, the Fed’s faster-than-expected rate hike, household and corporate debt, a sharp economic slowdown in developed countries, and a slower-than-expected economic recovery in China.
As for the mid-term risks, he cited the difficulties of vulnerable households and businesses due to the increase in interest burden and slowing demand, and the vulnerabilities of some real estate developers and small securities companies with high exposure to real estate project financing (PF) risks.
AMRO said, “Monetary and fiscal tightening is necessary in the short term, but they must be carefully coordinated to support the economy and contain inflation.” necessary,” he said.
“The current monetary policy stance is appropriate. However, the Bank of Korea needs to adjust the pace with a flexible and forward-looking attitude,” he said. did.
Lee Sang-ryeol, Hankyung.com reporter [email protected]