Busan Port (Image courtesy of Yonhap)
SEOUL, Apr. 25 (Korea Bizwire) — An economic surveillance organization in Asia on Thursday expected the South Korean economy to expand 2.3 percent this year on rising exports, calling for maintaining tight monetary policy to safeguard macroeconomic stability amid uncertainties, Seoul’s finance ministry said.
The ASEAN+3 Macroeconomic Research Office (AMRO) made the assessment in a report drawn up after an annual consultative meeting with the South Korean government and relevant agencies in December, according to the Ministry of Economy and Finance.
“The (South Korean) economy is forecast to rebound to an above-potential rate of 2.3 percent in 2024, supported by continued strengthening in goods exports, especially semiconductors,” the organization said.
“Headline inflation declined to 3.6 percent in 2023 from 5.1 percent in 2022, driven by declines in energy prices, and is expected to continue its downward trend toward the target of 2 percent at the end of 2024,” it added.
Exports, a key growth engine, have been rising after a yearlong downturn since the end of 2023 on strong chip sales.
In March, exports advanced 3.1 percent on-year to $52.2 billion, the sixth consecutive monthly gain, according to government data.
Consumer prices, a key gauge of inflation, increased 3.1 percent on-year last month, rising over 3 percent for the second consecutive month on high prices of fruits, fresh food items and energy.
Inflation has been trending down steadily, though officials have said that the pace has been slower than earlier expected due to high oil and fresh food prices.
“As the economic outlook remains highly uncertain, the authorities are encouraged to stand ready to recalibrate monetary and fiscal policy stance to safeguard economic and financial stability, while continuing with efforts to boost growth,” the report read.
As a near-term challenge, the organization noted still-high inflation and higher-for-longer interest rates, as well as the possibility of the faltering economic recovery of China.
It pointed to rising government debts and the deteriorating demography and its impact on economic potential as longer-term challenges, according to the report.
The Singapore-based organization was established in 2011 to promote macroeconomic and financial stability in the Asian region, which involves the 10-member ASEAN and its three Northeast Asian partners of South Korea, China and Japan.
(Yonhap)
