Many international organizations lower growth forecasts for the Korean economy.

According to information from the Ministry of Finance of Korea recently, the ASEAN + 3 Macroeconomic Research Office (AMRO) - a regional financial organization established by the Association of Southeast Asian Nations (ASEAN) and Japan, China, and Korea since 2011, has lowered its economic growth forecast for Korea from 1.9% in December 2024 to 1.6%.

Meanwhile, in less than 3 months, international credit rating agency Fitch Ratings has also lowered its growth forecast for South Korea twice in a row from 2% in December 2024 to 1.7% in February and 1.3% on March 19. The forecast rate reduction of the Organization for Economic Cooperation and Development (OECD) is even stronger than the above two organizations with 6 points in just 1 adjustment, from 2.1% to 1.5%.

Headquarters of the Ministry of Finance of Korea - Photo: Yonhap News

Analyzing the economic situation of Korea, international organizations all pointed out negative factors for the country's development, such as the prolonged political crisis, the US's protectionist tariff policy under President Donald Trump, the sharp decline in domestic consumption... and shared the view that the Korean economy contains many unstable and unpredictable factors, and in the medium term cannot regain the necessary stability.

While AMRO emphasized the negative impacts from declining exports, rising prices, out-of-control fuel prices, the slowdown of the Chinese and European economies, concerns of foreign investors, the Russia-Ukraine conflict, the Middle East war, etc., Fitch Ratings highlighted the impact of the political crisis stemming from the martial law decree issued and revoked by President Yoon Suk Yeol on the night of December 3, 2024.

South Korea's domestic economic and financial institutions are also pessimistic about the country's economic prospects in the medium and long term. After adjusting the growth forecast down to 1.5% last month, the Bank of Korea has just released a growth scenario for 2025 and 2026, in which the analysis shows that the forecast rate of 1.5% for 2025 and 1.8% for 2026 are both at risk of being reduced to 1.4%.

According to the agency, the US's protectionist tariff policy and the spreading trade war are among the factors most negatively affecting the growth of the Korean economy.