BOK to release revised growth outlook for 2026 on Nov. 27

(Yonhap)

While the Bank of Korea is expected to release its growth outlook for next year on November 27, attention is mounting over how much it will raise its real gross domestic product (GDP) growth in its revised projection.

According to the BOK and other sources on Thursday, Governor Rhee Chang-yong said in a foreign media interview on Wednesday that there is an “upside potential” for next year‘s growth forecast that will be released two weeks later.

The BOK’s forecast for 2026 stands at 1.6 percent, which was presented in its economic outlook released in August.

Analysts view Rhee’s remarks as going a step further than the language used in the BOK Monetary Policy Board’s policy statement on October 23.

At that time, the Board noted only that “the growth rate for next year is expected to be broadly in line with the August forecast.”

The BOK projection is more than 0.2 percentage point lower than those of other major institutions, and more than 0.5 percentage point lower than some institutions.

The Organization for Economic Co-operation and Development (OECD) offered the highest forecast at 2.2 percent, while the Korea Institute of Finance (KIF) projected 2.1 percent.

The Ministry of Economy and Finance, along with the Korea Development Institute (KDI) and the International Monetary Fund (IMF) projected growth at 1.8 percent.

According to the Korea Center for International Finance (KCIF), the average growth rate forecast for next year by eight major global investment banks rose from 1.8 percent at the end of September to 1.9 percent at the end of October.

Only the Asian Development Bank (ADB) and Bank of America (BoA) currently project 1.6 percent.

Market attention is now centered on whether the BOK’s interest-rate-cut cycle is coming to an end.

Rhee said during that interview that the BOK’s official position for now is to maintain the rate-cut cycle. He added that the scale or timing of rate cuts, or even the possibility of reversing the direction of rate cuts depends on new data.

Regarding Korea’s potential growth rate, he assessed it as “probably in the 1.8 to 2 percent range.”

If the BOK raises its forecast for next year’s growth rate to 1.8 percent, it would effectively align with the estimated potential growth rate, making it harder to justify the need for interest-rate cuts aimed at stimulating the economy.

Regarding this, a BOK official noted that the governor’s remarks did not imply that a rate hike is under consideration and that they were “a general statement consistent with past explanations.”