AMRO’s 2018 Annual Consultation Report on Korea

2019-01-31T22:28:04+00:00December 21, 2018|Annual Consultation Reports|

AMRO’s 2018 Annual Consultation Report on Korea

The Korean economy is projected to grow at 2.7 percent in 2018 and moderate to 2.6 percent in 2019. Headline inflation is expected to settle at 1.6 percent in 2018 and rise to 1.9 percent in 2019, just below the 2-percent inflation target set by the Bank of Korea. The external position is resilient against external shocks on the back of sustained current account surpluses and ample international reserves. Moreover, Korea has continued to build up its net creditor position. In the near term, weaker-than-expected growth in China and advanced economies as well as an escalating U.S.-China trade conflict pose downside risks to Korea’s highly-open economy. Over the medium- to- long-term, Korea’s potential growth continues to face structural challenges stemming from an aging population, youth underemployment and excessive concentration on ICT industries. Hence, an appropriate policy mix should be calibrated to support the economic growth while maintaining financial stability. Structural reforms in the service sector and non-ICT manufacturing industries should be stepped up to enhance productivity and competitiveness as well as to create more quality jobs.

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