Bank of Korea sees 2024–25 growth undershooting its previous path amid political uncertainty while CPI inflation stays slightly below 2%

The Bank of Korea published its January 2025 Recent Economic Developments assessment, indicating Korea’s economic growth is likely to fall short of the previously projected path in both 2024 and 2025 as heightened political uncertainty weakens economic sentiment. The shortfall is expected to be most pronounced in consumption and construction investment, while CPI inflation is projected to remain stable at slightly below the 2% target. The outlook for growth is described as highly sensitive to when domestic political uncertainty subsides and to the implementation and pace of economic policies, including supplementary budgets. Inflation dynamics are framed as a balance between upward pressures from a higher exchange rate and oil prices and downward forces from weak demand-side pressures and government price-stabilization measures, with increased uncertainty around exchange rates and oil prices, the timing of public utility rate hikes, and the trajectory of domestic demand.