Korea skyline

Korea Economic Forecast

Korea Economic Outlook

GDP grew at the fastest rate in over a year in Q2 quarter on quarter. However, the reading was largely due to a plunge in imports. Private spending weakened, pointing to the effect of high interest rates on Korean households, whose average debt burden is among the highest in the world. Moreover, exports declined, largely owing to weak growth among Korea’s main trading partners. Turning to Q3, quarter-on-quarter GDP growth is projected to slow. Private spending and exports are likely to remain weak in the face of still-high interest rates and an anemic recovery in China. Retail sales fell in July, and merchandise exports slumped the most since May 2020 in July and continued to decline sharply in August. In other news, the government said its proposed budget for 2024 would be 2.8% bigger than in 2023—the smallest rise since 2006, when budgetary statistics were last remodeled.

Korea Inflation

Inflation rose more than had been expected by the market in August, to 3.4% from 2.3% in July. Inflation is expected to decline on average through December from current levels, before averaging close to the Central Bank’s 2.0% target in 2024. However, rising oil prices and sticky core inflation pose upside risks.

This chart displays Economic Growth (GDP, annual variation in %) for Korea from 2013 to 2022.

Korea Economic Data

2018 2019 2020 2021 2022
Population (million) 51.6 51.8 51.8 51.7 51.6
GDP (USD bn) 1,725 1,651 1,645 1,817 1,673
GDP per capita (USD) 33,441 31,888 31,738 35,114 32,409
GDP (KRW tn) 1,898 1,924 1,941 2,080 2,162
Economic Growth (Nominal GDP, ann. var. %) 3.4 1.4 0.8 7.2 3.9
Economic Growth (GDP, ann. var. %) 2.9 2.2 -0.7 4.3 2.6
Private Consumption (ann. var. %) 3.2 2.1 -4.8 3.6 4.1
Government Consumption (ann. var. %) 5.3 6.4 5.1 5.5 4.0
Fixed Investment (ann. var. %) -2.2 -2.1 3.5 3.2 -0.5
Exports (G&S, ann. var. %) 4.0 0.2 -1.7 11.1 3.4
Imports (G&S, ann. var. %) 1.7 -1.9 -3.1 10.1 3.5
Industrial Production (s.a. ann. var. %) 1.5 -0.1 -0.1 8.1 1.3
Retail Sales (ann. var. %) 4.3 2.4 -0.4 8.4 -2.4
Wages (ann. var. %) 5.1 3.3 0.7 5.0 4.9
Unemployment (% of active population, eop) 3.4 3.4 4.1 3.5 3.0
Unemployment (% of active population, aop) 3.8 3.8 3.9 3.7 2.9
Fiscal Balance (% of GDP) 1.6 -0.6 -3.7 -1.5 -3.0
Public Debt (% of GDP) 40.0 42.1 48.7 51.3 54.3
Money (ann. var. of M2 %) 6.7 7.9 9.8 12.9 4.0
Inflation (CPI, ann. var. %, eop) 1.3 0.7 0.6 3.7 5.0
Inflation (CPI, ann. var. %, aop) 1.5 0.4 0.5 2.5 5.1
Inflation (Core, ann. var. %, aop) 1.2 0.7 0.4 1.4 3.6
Inflation (PPI, ann. var. %, aop) 1.9 0.0 -0.5 6.4 8.4
BOK Base Rate (%, eop) 1.75 1.25 0.50 1.00 3.25
3-Month KORIBOR (%, eop) 1.90 1.51 0.81 1.41 4.04
10-Year Bond Yield (%, eop) 1.95 1.68 1.71 2.25 3.73
Stock Market (ann. var. of KOSPI %) -17.3 7.7 30.8 3.6 -24.9
Exchange Rate (KRW per USD, eop) 1,116 1,156 1,086 1,189 1,265
Exchange Rate (KRW per USD, aop) 1,100 1,166 1,180 1,145 1,292
Current Account Balance (USD bn) 77.5 59.7 75.9 85.2 29.8
Current Account Balance (% of GDP) 4.5 3.6 4.6 4.7 1.8
Merchandise Trade Balance (USD bn) 69.7 38.9 44.9 29.3 -47.8
Merchandise Exports (USD bn) 605 542 512 644 684
Merchandise Imports (USD bn) 535 503 468 615 731
Merchandise Exports (ann. var. %) 5.4 -10.4 -5.5 25.7 6.1
Merchandise Imports (ann. var. %) 11.9 -6.0 -7.1 31.5 18.9
Foreign Direct Investment (USD bn) 12.2 9.6 8.8 22.1 18.0
International Reserves (USD bn) 404 409 443 463 423
International Reserves (months of imports) 9.1 9.7 11.4 9.0 6.9
External Debt (USD bn) 441 471 551 631 665
External Debt (% of GDP) 25.6 28.5 33.5 34.7 39.8

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