Seoul: The finance ministry on Tuesday signaled that it may raise its growth forecast for the country’s economy by 0.1 percentage point to 1 percent for this year, citing signs that the economy has entered a “typical recovery phase.”
According to Yonhap News Agency, the Bank of Korea announced earlier in the day that South Korea’s gross domestic product (GDP) rose 1.2 percent in the July-September period from the previous quarter, recording the fastest GDP growth in 1 1/2 years on strong exports and rising private consumption.
“While uncertainties remain, including tariff negotiations with the United States and U.S.-China relations, the likelihood of achieving 1 percent growth has increased,” said Kim Jae-hoon, the ministry’s director-general for economic policy, during a media briefing.
It marked the ministry’s first GDP-related policy briefing following a temporary suspension since early this year, a move that market watchers say reflects the government’s growing confidence in the economy.
“We are seeing a typical recovery phase where both exports and imports are rising,” Kim said. “Corporate performance has been relatively strong, and the recovery trend has become more evident.”
The ministry highlighted that private consumption rose at its fastest pace in three years since the third quarter of 2022, driven by improved consumer sentiment and policy measures such as cash handouts, called “consumption coupons.”
Facility investment also turned bullish, led by machinery amid a solid semiconductor sector, while construction investment recovered from previous weakness. Imports of machinery, equipment and automobiles increased 1.3 percent combined, reflecting a recovery in domestic demand.
Overall, the ministry said exports remain solid, assessing fiscal policy played a key role in helping the private sector leading the recovery.