South Korean Finance Minister considers adjusting annual growth target amid strong Q1 data

South Korea’s Finance Minister, Choi Sang-mok, has hinted at a potential upward revision of the country’s 2024 economic growth forecast, currently set at 2.2%.

South Korea’s Finance Minister Choi Sang-mok has indicated that the government is considering revising upward its economic growth forecast for 2024 from the current 2.2% projection. This consideration comes after the country’s economy exhibited stronger-than-anticipated performance in the first quarter of the year.

Speaking to reporters during a meeting in Tbilisi on Saturday, Choi stated that preparations are underway to adjust the growth target. He noted that other economic institutions are likely to follow suit in revising their forecasts as well.

Choi’s remarks were prompted by South Korea’s economy experiencing its fastest growth rate in over two years during the January-March period. This robust expansion was driven by a continued recovery in exports and an increase in construction investment.

The finance minister mentioned that South Korea’s real gross domestic product (GDP), a key indicator of economic growth, increased at a rate of 1.3% every quarter in the first three months of 2024, surpassing expectations. In light of this robust data, the Organization for Economic Cooperation and Development recently raised its growth outlook for Asia’s fourth-largest economy to 2.6% for the current year, which is 0.4 percentage points higher than its previous estimate.

While acknowledging that the general public may not have felt the impact yet, Choi expressed encouragement that various indicators, such as exports and domestic production, were improving. However, he noted that the government would nevertheless maintain vigilance.

Choi stated that South Korea was projected to achieve a GDP per capita of US$40,000 during the current administration, although the country needed to continue monitoring the growth rate and foreign exchange rates closely.

The finance minister stated that the government is striving to maintain inflation within the low to mid-2 per cent range in the latter half of the year. In April, South Korea’s inflation increased by 2.9 per cent compared to the previous year, marking the first time in three months that it dipped below 3 per cent.

Regarding the opposition party’s suggestion of providing cash handouts of 250,000 won (US$183) to all citizens, Choi emphasized the importance of directing assistance towards those who are most in need.

Choi delivered these statements while participating in the 27th ASEAN+3 Finance Ministers’ and Central Bank Governors’ Meeting held in Georgia.