Korea to grow 1% in 2025: OECD

(Gettyimagesbank)

The Organization for Economic Cooperation and Development (OECD) downgraded its forecast for South Korea’s economic growth rate in 2025 to 1 percent, a 0.5 percentage point cut from just three months ago.
The Ministry of Economy and Finance said on Tuesday that the OECD released its global economic outlook report on the same day, in which it projected Korea’s economy to grow only 1 percent this year.
The OCED issues the report twice a year (May to June and November to December), with interim updates in March and September.
This latest revision is an interim forecast and while slightly higher than recent estimates from Korean institutions such as the Bank of Korea (BOK) and the Korea Development Institute (KDI), which stood at 0.8 percent, it is a significant drop from the organization’s March 2025 forecast of 1.5 percent and less than half the 2.1 percent projection made in December 2024.
According to the finance ministry, the OECD noted that “tariffs and external uncertainties are restricting Korea’s exports and investment while its private consumption is expected to recover in the latter half of the year, supported by easing political uncertainties and rising real wages.”
The OECD also warned that tariff measures by the U.S. Trump administration are expanding trade-related and external uncertainties, leading to a general decline in global economic activity. It revised its global growth forecast for 2025 to 2.9 percent, down 0.2 percentage points from three months ago, as well as lowering its growth forecasts for the United States (2.2 percent to 1.6 percent), Japan (1.1 percent to 0.7 percent), and China (4.8 percent to 4.7 percent).
Nevertheless, Korea’s downgrade stands out as the largest cut among G20 countries excluding the United States, which saw a 0.6 percentage point cut. This steep revision is attributed to Korea’s export-driven economic structure, which is particularly vulnerable to a tightening global trade environment.
Meanwhile, the OCED maintained Korea’s growth rate for 2026 at 2.2 percent while projecting the country’s consumer price inflation to be 2.1 percent in 2025 and 2 percent the following year.