SEOUL– Global credit appraiser Moody’s Investors Service on Thursday cut its 2022 growth outlook for the South Korean economy to 2.7 percent, citing the economic fallout of the Ukraine crisis.
The revised outlook marked a 0.3 percentage-point cut from its February estimate of 3 percent. Moody’s also lowered its 2023 growth forecast for Asia’s fourth-largest economy to 2.6 percent from 2.7 percent.
Of the Group of 20 economies in the Asia-Pacific region, South Korea and Japan could face new supply challenges due to disruptions of key inputs to the production of semiconductors and cars, according to the agency.
“Higher energy costs will also weigh down growth in the two countries, which are both reliant on imported crude oil,” Moody’s said.
Moody’s sharply raised its 2022 estimate of South Korea’s inflation growth rate to 3.9 percent from its earlier forecast of 2.8 percent.
In February, the Bank of Korea maintained its growth outlook for the South Korean economy at 3 percent for this year. But the country’s central bank raised its inflation growth outlook to 3.1 percent from 2 percent.
Asia’s fourth-largest economy is on a recovery track on the back of robust exports. But it faces growing downside risks from the upsurge in COVID-19 cases and the Ukraine crisis.
Moody’s also lowered its 2022 growth outlook for the G-20 economies to 3.6 percent from 4.3 percent, citing spillover effects from the military conflict between Russia and Ukraine, and ensuing sanctions on Moscow.
Moody’s has maintained its credit rating on South Korea at “Aa2,” the third-highest level on the company’s table, with a stable outlook.
Source: Yonhap News Agency