Korean economy set to recover gradually over 2023: ADB economist

The Korean economy is set to rebound gradually in 2023, a senior economist at the Asian Development Bank (ADB) said Thursday, citing China's reopening and the recovery of the chip industry.

The Korean economy is set to rebound gradually in 2023, a senior economist at the Asian Development Bank (ADB) said Thursday, citing China's reopening and the recovery of the chip industry.

"We do expect that Korea's economy will strengthen, but only gradually over the course of 2023 and from a very weak position late last year and early this year," Yothin Jinjarak, a senior economist at the Manila-based bank, told reporters in the Philippines.

Earlier this month, the ADB maintained its 1.5 percent growth outlook for Asia's No. 4 economy in 2023, remaining unchanged from the previous outlook released in December when it slashed the forecast by 0.8 percentage point.

"Prospects will gradually improve over the course of this year, as reopening in China provides a boost to external demand, and as the semiconductor cycle bottoms out and starts recovering later this year," the economist added.

Jinjarak said the growth outlook for Korea nevertheless remains weak compared to developing nations in Asia, as it depends heavily on external demand for its manufacturing exports.

"China buys one-fifth of the country's exports, so China's reopening will provide a boost. But advanced economies buy half of Korea's exports, and so the much weaker demand from those economies explains why we expect Korea's growth to slow this year," he added.

"In addition, global demand for semiconductors, one of Korea's key exports, has been particularly weak."

The economist pointed out that inflation, monetary tightening, and the Russia-Ukraine war pose downside risks for the Korean economy, although there is also the possibility that growth in China will be stronger than expected.

Yonhap