South Korea’s economic growth outlook in 2024 has been revised to 2.7 percent, up from its previous projection of 2.2 percent, a new report suggested.
According to a Korean research firm, Hyundai Research Institute (HRI), the robust export emerged as the driving force behind the upward revision.
The paper expected Korea’s exports to grow by 9.3 percent year-over-year in 2024, reversing a 7.5 percent decline in 2023. The strong export performance is forecast to help the country report a trade surplus of $43.4 billion this year, a shift from the $10.3 billion deficit seen in 2023. Korea’s current account surplus is also projected to expand to $61 billion from $35.5 billion over the same period.
Domestic challenges remain
However, the research center noted that high inflation and interest rates will continue to weigh on domestic demand this year. HRI called on the government to take necessary measures to support consumption and investment in line with the robust export outlook, in order to achieve the projected 2.7 percent economic growth.
Outpacing other forecasts
The HRI’s growth forecast is higher than the projections made by the Korean government, central bank, and global organizations. The Organisation for Economic Cooperation and Development revised up its outlook for South Korea’s 2024 economic growth to 2.6 percent, while the International Monetary Fund, the Korean government, and the Bank of Korea projected growth of 2.3 percent, 2.2 percent, and 2.1 percent, respectively.
South Korea remains among top foreign reserve holders
South Korea’s foreign reserves declined in May, due to a drop in deposits and the central bank’s foreign currency swap with the country’s national pension fund.
The latest data from the Bank of Korea (BOK) shows that South Korea’s foreign reserves stood at $412.83 billion at the end of May.
The central bank reported that deposits fell and it provided dollars to the national pension fund under their foreign currency swap agreement.
Foreign reserves consist of assets like securities and deposits denominated in foreign currencies, IMF reserve positions, special drawing rights, and gold bullion.
The value of foreign securities, such as U.S. Treasuries, was $370.41 billion at the end of May, a decrease of $200 million from the previous month. These securities made up 89.7 percent of the total foreign reserves.
The value of deposits was $18.5 billion at the end of May, down $350 million over the cited period.
According to the BOK, South Korea was the world’s ninth-largest holder of foreign reserves at the end of April.
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