Wall Street banks lift growth forecasts for S. Korea as exports, trade outlook improve

South Koreas flag Getty Images Bank — South Korea's flag/ Getty Images Bank

SEOUL, August 6 (AJP) - Major international investment banks are turning more optimistic about South Korea’s economic prospects, with J.P. Morgan raising its 2025 growth forecast for the country for the second time in a month.

J.P. Morgan has lifted its projection for South Korea’s real gross domestic product growth to 0.7 percent on July 24, up from 0.5 percent at the end of June.

The 0.2 percentage-point upward revision follows stronger-than-expected second-quarter growth, driven by resilient exports and a rebound in manufacturing, the bank said in a release, citing data from the Bank of Korea.

Until late June, J.P. Morgan had held the lowest forecast among eight major global investment banks tracked by the Korea Center for International Finance.

The Wall Street firm maintained its average annualized growth forecast for the second half of 2025 at 1.8 percent. It cautioned, however, that third-quarter momentum may taper due to base effects, though ongoing fiscal stimulus should cushion any slowdown.

Goldman Sachs also adjusted its outlook upward on Aug. 1, raising its 2025 growth forecast to 1.2 percent from 1.1 percent. The bank cited easing trade-related uncertainty following recent Korea-U.S. negotiations.

“The trade announcement alleviates tariff-related risks for key sectors such as semiconductors,” Goldman Sachs said in a note, adding that South Korea now faces no worse conditions than its global peers.

This latest revision follows an earlier upgrade in June, when Goldman increased its forecast from 0.7 percent to 1.1 percent, citing reduced U.S. tariff threats, stronger growth outlooks in the United States and China, and expected fiscal support from Seoul.

Despite the individual upgrades, the average 2025 GDP growth forecast among the eight international banks remained steady at 0.9 percent as of late July, unchanged for a second consecutive month, according to the Korea Center for International Finance.

The Bank of Korea may also revise its growth outlook upward later this month when it releases its August economic update.

In May, the central bank projected 0.8 percent growth for the year and said a second supplementary budget could add about 0.1 percentage point to that figure.

Kim Dong-young davekim0807@ajupress.com