Bank of Korea: Says in statement

Bank of Korea: Says in statement

The Bank of Korea (BOK) has revised its economic growth forecast for 2025, citing the positive impact of the government's fiscal stimulus. In its latest statement, the central bank expects the South Korean economy to expand by 0.9% this year, an increase from its previous estimate of 0.8% [1]. This upward revision is attributed to the combined effect of two supplementary budgets worth 45.6 trillion won ($32.9 billion), which have been channeled into household support, including consumption vouchers of up to 520,000 won per person [1].

The BOK's decision to raise its growth forecast comes after a sluggish start to the year, with gross domestic product (GDP) contracting by 0.25% quarter on quarter in the first three months of 2025—the steepest contraction among OECD members [1]. However, the economy showed signs of improvement in the second quarter, expanding by 0.6% from the previous three months [1]. This partial rebound prompted the BOK to adjust its projections.

The central bank has also revised its inflation outlook, increasing its consumer price growth forecast for 2025 to 2.0% from its earlier projection of 1.9% [1]. The inflation forecast for 2026 was nudged up by 0.1 percentage point to 1.9% [1].

Despite the modest upgrade in the growth outlook, the BOK has kept its benchmark interest rate unchanged at 2.5% for the second consecutive session. This decision aims to ensure financial stability amid persistent concerns about rising housing prices and household debt [1]. The central bank's Monetary Policy Board held its base rate steady at 2.5% at its rate-review meeting, with five out of six board members supporting the rate freeze decision [1].

The BOK's revised growth forecast brings it in line with the Finance Ministry's projection of 0.9% but remains below the OECD's 1% projection and above the 0.8% expected by the IMF, the Korea Development Institute (KDI), and the Asian Development Bank (ADB) [1].

References:

[1] https://www.kedglobal.com/economy/newsView/ked202508280005