Seoul: The Organization for Economic Cooperation and Development (OECD) on Thursday revised down its growth forecast for South Korea to 1.7 percent this year amid a prolonged conflict in the Middle East, according to Seoul's finance ministry. The latest forecast represents a 0.4 percentage-point decrease from its previous forecast of 2.1 percent growth issued in December, the ministry said.
According to Yonhap News Agency, citing the intensifying conflict in the Middle East, the OECD stated that 2026 will be "testing the resilience of the global economy." The ministry noted that South Korea, among Group of 20 (G20) nations, is highly dependent on energy imports from the Middle East, which it said contributed to the downward revision.
The latest outlook is more pessimistic than projections by the International Monetary Fund and the Korea Development Institute, both of which forecast 1.9 percent growth this year, and 2 percent by the Bank of Korea. The OECD report also projected inflation in South Korea at 2.7 percent in 2026, 0.9 percentage points higher than its earlier projection.
The OECD expected next year's inflation to stabilize at around the 2 percent target, compared with a 2.7 percent average for the G20. The finance ministry added that the OECD expects South Korea's economy to recover faster than the global average in 2027.