Growth projections lowered from 1.7% to 0.9%

Global investment bank J.P. Morgan has projected that South Korea will experience growth in the 0% range this year. The analysis suggests that the prolonged slump in domestic demand, coupled with the tariff shock from the United States, is hindering export growth, leaving no visible growth momentum. Amid the soaring won-dollar exchange rate, inflation has remained in the 2% range for three consecutive months, signaling a “red alert” for the economy.

According to the Ministry of Economy and Finance and other related departments on April 2, J.P. Morgan recently lowered its growth forecast for South Korea this year from the previous 1.2% to 0.9%, a reduction of 0.3 percentage points. J.P. Morgan had initially forecast a growth rate of 1.7% in November last year, but has since lowered it three times, effectively halving the figure. Among global investment banks, J.P. Morgan is the first to predict growth in the 0% range. In its report, J.P. Morgan stated, “The U.S. administration’s industry-specific tariff measures will slow down South Korea’s exports,” adding that “annual export growth will remain at 1.3%.”

Amid gloomy forecasts for the economy, inflation continues to show an unstable trend. According to the March Consumer Price Trends released by Statistics Korea, prices in March rose by 2.1% compared to the previous year, exceeding the Bank of Korea’s inflation target of 2% for three consecutive months. Typically, interest rates need to be raised to control inflation, but the slump in domestic demand and high exchange rates make it difficult to implement monetary policy. While the government self-assesses that prices are generally stable, experts note that food prices are rising, leading to a perceived inflation rate that is higher.

Kim Sang-bong, a professor of economics at Hansung University, stated, “Contrary to the government’s announcement, the perceived inflation rate, reflecting housing prices, is in the 4% range,” adding, “With growth rates remaining in the 1% range and prices continuing to rise, signs of an economic crisis are emerging.”

Source: Businesskorea