[News Today] “This year’s growth outlook to 0.8%”

[LEAD]
As Korea's economic outlook worsens, the Korea Development Institute has officially projected 0% range growth this year. With the presidential office vacant ahead of the election, policy response is effectively on hold. But signs of stagnation are only growing stronger.

[REPORT]
The Korea Development Institute's growth rate projection for this year continues to plunge.

The economic think tank's growth outlook in May 2024 stood at 2.1% and in November at 2.0%. It was lowered to 1.6% this February and then once again revised to 0.8% this month.

The projected growth rate has been halved since three months ago.

Jung Kyu-chul/ Korea Development Institute
Tariffs have been raised to negatively impact Korea's export sector and partially worsen domestic demand.

The lowered growth outlook has been mostly blamed on slumping export and domestic demand caused by increased tariffs.

Financial institutions forecast Korea's growth at under 1%.

JP Morgan and Bloomberg foresaw 0.7%, Hyundai Research Institute 0.8%, and the IMF 1.0%, a rather generous number compared to other institutions.

Korea's finance ministry and the Bank of Korea forecast 1.8% and 1.5%, respectively, but they will soon have to lower the figures substantially.

The BOK is to announce an adjusted growth rate on May 29th.

It must also be said that Korea's slow growth does not solely ride on smooth tariff negotiations.

The nation's potential growth rate, one of the economic fundamentals, continues to move downwards without signs of rebounding.

Kwon Hyo-sung / Bloomberg macroeconomic analyst
Korea needs policies that can slow down the falling potential growth rate or boost productivity or maintain it at a high level.

The KDI urged the government to use all its fiscal, monetary and financial resources but the office of the president remains vacant until June 3rd.