South Korean Economy Set to Expand by 2.3% in 2024, According to AMRO


South Korean Economy Set to Expand by 2.3% in 2024, According to AMRO

The South Korean economy is expected to grow by 2.3 percent this year, according to the ASEAN+3 Macroeconomic Research Office. The organization predicts that the recovery of the semiconductor sector will boost exports and drive overall economic growth. Last year, the Korean economy expanded by 1.4 percent despite a global economic slowdown. However, exports, a key growth driver, have been increasing following a yearlong downturn since the end of 2023 as the chip sector has bounced back. AMRO forecasts that South Korea will see lower growth of 2.1 percent in 2025.

In terms of inflation, South Korea is expected to reach 2.5 percent this year, down from 3.6 percent in 2023. The inflation rate is projected to further decrease to 2 percent in 2025, though the pace has been slower than expected due to high oil and fresh food prices. The ASEAN countries plus South Korea, Japan, and China are anticipated to achieve 4.5 percent economic growth in 2024 and 4.2 percent in 2025, driven by the recovery of the tourism sector and increasing domestic demand. Inflation for the bloc is predicted to reach 4.3 percent this year and 3.7 percent in 2025.

AMRO highlights uncertainties in the regional economy, including geopolitical risks, higher raw material prices, and the slow recovery of the Chinese economy. Long-term risks such as the aging population, climate changes, and geopolitical issues are also mentioned. Most countries in the region have adopted tight or neutral monetary stances to address high inflation rates. AMRO calls for continuous efforts to ensure financial stability and curb still-elevated inflation levels. Established in 2011, the Singapore-based organization aims to promote macroeconomic and financial stability in the Asian region, consisting of the 10-member ASEAN and its three Northeast Asian partners of South Korea, China, and Japan.

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