Seoul: The Asian Development Bank (ADB) has sharply revised down its economic growth forecast for South Korea this year to 0.8 percent, the finance ministry said Wednesday.
According to Yonhap News Agency, the latest projection marks a 0.7 percentage-point drop from the ADB's previous forecast released in April, as cited by the ministry from the Manila-based bank's latest report. This 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, whereas 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.
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 South Korean economy to expand by 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, covering 49 member economies in the Asia-Pacific region, excluding Japan, Australia, and New Zealand.