The Asian Development Bank (ADB) has lowered South Korea’s 2025 growth outlook to 2%, down 0.3 percentage points from its earlier forecast.
The Manila-based bank announced Korea’s revised gross domestic product (GDP) growth rate outlook in its latest report, according to the Ministry of Economy and Finance on Dec. 11.
The ADB’s forecast is on par with the International Monetary Fund’s recent projection and slightly higher than the Bank of Korea’s 1.9% outlook. However, it is lower than those of the Organization for Economic Cooperation and Development (2.1%) and the Korean government (2.2%). The bank also cut Korea’s growth projection for this year from 2.5% to 2.2%.
The ADB anticipates that lower interest rates and government policies aimed at bolstering spending will improve Korea’s domestic demand. But it expects growth to slow as export momentum driven by AI chips wanes due to the semiconductor sector downturn. The ADB’s recent forecast does not factor in recent developments such as President Yoon Suk-yeol’s short-lived martial law declaration and subsequent efforts by lawmakers to impeach the president.
For the broader Asian region, the ADB revised its 2024 growth forecast downward by 0.1 percentage points to 4.8%. Projections for Asian countries include 4.5% for China, 2.5% for Taiwan, 2.3% for Hong Kong, 7.0% for India, and 2.6% for Singapore.
The region’s growth outlook for this year was also lowered by 0.1 percentage points to 4.9%, reflecting weaker-than-expected domestic spending in East Asia and South Asia.
“Policy changes in the U.S., including potential tariff hikes imposed by the second Trump administration, ongoing geopolitical tensions, and China’s real estate slump are downside risks to growth in the Asia-Pacific region,” said the ADB.
