According to Yonhap News, economist Kim Jin-wook from Citi Bank reported on June 17 that the GDP growth forecast for South Korea has been adjusted from 3.0% to 3.1%, an increase of 0.1 percentage points. The forecast for consumer price inflation has been lowered from 2.9% to 2.6%.
The key variable in this adjustment is international oil prices. Kim stated, "We revised our economic outlook based on the assumption that international oil prices will drop by about $10 per barrel, averaging around $78, from the second half of this year into the first half of next year."
The decline in oil prices is expected to have a positive impact on consumer spending. Stabilized gasoline prices will reduce household energy expenditures, allowing for increased spending in other areas. Rising asset prices, such as stocks, are also seen as a factor supporting private consumption.
From an inflation perspective, falling energy prices will help alleviate upward pressure on overall consumer prices. A decrease in international oil prices can lower not only fuel costs but also transportation and production expenses, providing justification for a downward revision in price forecasts.
However, Kim cautioned that inflationary pressures will not disappear immediately. He projected that core inflation could remain elevated due to rising prices in services, petrochemical products, and memory semiconductors.
* This article has been translated by AI.
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