Roundup: S. Korean gov't revises down 2025 growth outlook to 1.8 pct

SEOUL, Jan. 2 (Xinhua) -- South Korea's government on Thursday revised down this year's growth outlook amid the expected export slump following the launch of the new U.S. administration.

Real gross domestic product (GDP), adjusted for inflation, was forecast to grow 1.8 percent in 2025, down from 2.2 percent estimated in July 2024, according to the Ministry of Economy and Finance.

This year's growth forecast was lower than an estimate of 2.1 percent by the Organization for Economic Cooperation and Development (OECD), 2.0 percent by the International Monetary Fund (IMF), and 1.9 percent by the Bank of Korea (BOK).

The steep downward revision came as concerns mounted over export slowdown on intensifying competition among manufacturers of semiconductors, the country's biggest export item, and the scheduled inauguration of the new U.S. administration heralding the trade policy changes.

Export, which accounts for about half of the export-driven economy, was forecast to rise 1.5 percent this year after surging 8.1 percent in 2024.

Import was predicted to increase 1.6 percent in 2025, rebounding from an expected decline of 1.6 percent in 2024.

Private consumption, another growth engine of the Asian economy, was projected to expand 1.8 percent this year, higher than an increase of 1.2 percent in 2024.

Real purchasing power among local households was expected to recover this year as pressure would weaken from high inflation and high interest rates.

The BOK cut its benchmark interest rate by 25 basis points in October and November 2024 each to 3.00 percent, hinting at additional rate cuts this year citing the stable inflation and the still high downside pressure to economic growth.

The finance ministry, however, cautioned that the consumption recovery would be restricted on the back of lingering uncertainties at home and abroad such as massive debt among domestic households.

The outlook for consumer price inflation was set at 1.8 percent for 2025, down from 2.3 percent for 2024.

The ministry noted that uncertainties remained over geopolitical risks and weather conditions that could raise price volatility for raw materials and farm goods.

Facility investment was expected to expand 2.9 percent this year on strong demand for capital expenditure especially among chipmakers, after growing 1.3 percent in 2024.

Intellectual property investment was predicted to surge 3.8 percent this year, much faster than a gain of 0.6 percent in 2024 thanks to robust demand for artificial intelligence (AI)-relevant software and the higher government budget for research and development.

Investment in the construction sector was projected to shrink 1.3 percent this year amid the continued real estate market downturn.

The country's labor market could freeze solid this year owing to the sluggish economic growth. The number of jobs was expected to climb 120,000 in 2025 after going up 170,000 in the previous year.