Red Sea crisis to push inflation up 0.4 percentage points

The Organization for Economic Cooperation and Development (OECD) predicted on Monday that inflation in major economies could rise by 0.4 percentage points in 2025 if global shipping rates continue to rise due to the crisis in the Red Sea. The OECD also revised down its economic growth forecast for South Korea to 2.2 percent in 2024.

According to the Ministry of Economy and Finance, the OECD said in its interim economic outlook on Monday that “the recent rise in freight rates and transportation delays, heightened by geopolitical risks in the Red Sea, could put upward pressure on commodity costs.” The situation in the Red Sea has led to a doubling of maritime freight rates, and if this trend continues, the import prices for the 38 OECD member countries could increase by 5 percentage points annually. The OECD estimated that this increase in import prices could push up consumer prices in major countries by 0.4 percentage points in 2025.

The OECD also expected the South Korean economy to grow by 2.2 percent in 2024, a slight decrease from the 2.3 percent growth forecasted in November 2023.