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ADB slashes Korea's 2025 growth forecast to 0.8 percent

Published: 23 Jul. 2025, 16:15 Updated: 23 Jul. 2025, 16:56

Containers for export shipments are piled up at a port in Pyeongtaek, Gyeonggi on July 21. [NEWS1]

The Asian Development Bank (ADB) has sharply revised down its economic growth forecast for Korea this year to 0.8 percent, the finance ministry said Wednesday.

The latest projection marks a 0.7 percentage-point drop from the ADB's previous forecast released in April, according to the ministry, citing the latest report by the Manila-based bank.

The revised outlook is more pessimistic than those of other major institutions. The Organization for Economic Cooperation and Development (OECD) and the International Monetary Fund (IMF) have forecast 1 percent growth, while the Bank of Korea projected 0.8 percent.

The ADB attributed the downgrade to several factors, including a decline in construction investment, slowing exports and continued weakness in the local real estate market.

Additionally, the ADB warned that further export contraction could occur due to rising U.S. tariff measures and growing trade uncertainties.

However, the bank noted that domestic demand is expected to rebound in the second half of the year, supported by expansionary fiscal policy and the resolution of political uncertainty following the June presidential election.

For 2026, the ADB projected the Korean economy to expand 1.6 percent, down 0.3 percentage point from its previous forecast. The bank cited ongoing trade uncertainties and the lingering impact of global tariff hikes as persistent downside risks.

The ADB issues its regional economic outlook four times a year. Its assessments cover 49 member economies in the Asia-Pacific region, excluding Japan, Australia and New Zealand.

Yonhap