Seven in 10 see growth above 3%

Half project at or above Bank of Korea forecast

Next year's outlook trails central bank estimate

Containers await export and import processing at the Singamman and Gamman terminals in Busan. [Yonhap]
Containers await export and import processing at the Singamman and Gamman terminals in Busan. [Yonhap]

Major domestic and international institutions have been raising their growth forecasts for South Korea this year, with roughly one in three now projecting expansion of 3.5% or higher. The median forecast stands at 3.3%, matching the Bank of Korea's most recent projection. The median forecast for next year is 2.3%, falling short of the central bank's 2.9% estimate.

According to Bloomberg and other sources, 14 of 42 domestic and international institutions surveyed as of Friday projected South Korea's real GDP growth at 3.5% or higher this year — more than double the six institutions that held such a view in June.

The number of institutions forecasting growth of 3 percent or more also rose sharply over the same period, from 11 to 29. That means roughly seven in 10 surveyed institutions now expect South Korea to grow at least 3 percent this year.

Among individual institutions, Capital Economics of the United Kingdom and ING Financial Markets offered the highest forecasts, each projecting 4 percent growth.

JPMorgan and NAB/BNZ each forecast 3.8 percent, while Citi, Bloomberg Economics, Korean Reinsurance and Moody's each projected 3.7 percent. iM Securities forecast 3.6 percent, and ANZ, Credit Agricole, DBS, Deka Bank and Deutsche Bank each projected 3.5 percent.

Several institutions made substantial upward revisions. ING raised its forecast by 1 percentage point, from 3 percent in June to 4 percent this month. Credit Agricole and DBS each lifted their projections by 0.9 percentage points, from 2.6 percent to 3.5 percent, while Deutsche Bank raised its estimate by 0.8 percentage points, from 2.7 percent to 3.5 percent.

Citi revised its forecast up from 3.1 percent to 3.7 percent, and Moody's raised its projection from 2.9 percent to 3.7 percent.

The median growth forecast compiled by Bloomberg also rose 0.7 percentage points, from 2.6 percent in June to 3.3 percent this month — matching the 3.3 percent projection the Bank of Korea issued in its revised economic outlook on Friday.

Looking at individual forecasts, 20 of the 42 institutions projected growth above the Bank of Korea's estimate, while one matched it at 3.3 percent. In total, half of the surveyed institutions see this year's growth at or above the central bank's forecast.

The picture for next year is markedly different. The median forecast for South Korea's growth next year among the same 42 institutions stands at 2.3 percent, trailing the Bank of Korea's projection of 2.9 percent by 0.6 percentage points.

Of the 42 institutions, 39 forecast lower growth than the Bank of Korea for next year. Only three — Korean Reinsurance at 3.5 percent, JPMorgan at 3.3 percent and Citi at 3.0 percent — projected higher growth than the central bank.

The Bank of Korea raised its next-year growth forecast by 0.8 percentage points, from 2.1 percent to 2.9 percent, projecting that the ripple effects of an expanding semiconductor cycle will spread across the broader economy, supporting both exports and domestic demand simultaneously.

Market forecasters also lifted their median next-year projection, from 2.1 percent in June to 2.3 percent this month, though the revision fell short of the central bank's upward adjustment.

The inflation outlook showed little change. The median forecast for South Korea's consumer price growth this year held steady at 2.7 percent from June through this month, according to Bloomberg. The Bank of Korea likewise kept its inflation forecast for this year at 2.7 percent in its latest economic outlook.


kimstar@heraldcorp.com