International organizations predict that thanks to the recovery of private consumption and improved exports, South Korea's economy will grow by 1.0% this year and 1.9% next year. Regarding the benchmark interest rate, the agency stated that the current monetary policy stance is appropriate and suggested maintaining the possibility of further rate cuts should future risks expand.
The ASEAN+3 Macroeconomic Research Office (AMRO) released the above growth rate forecast in its (2025 South Korea Annual Consultation Results) on December 19. AMRO is an international organization involving the ten ASEAN countries, South Korea, China, and Japan, responsible for monitoring regional economic trends and providing policy recommendations. Based on this analysis, South Korea is expected to maintain moderate growth this year, driven by the recovery of private consumption and the growth of global semiconductor exports. With the same background, the assessment believes that the external sector related to trade balance will also remain stable.
On price outlook, AMRO predicts that the consumer price increase rate will close this year at 2.1%, slightly slowing to 1.9% next year. The agency assesses that with certain controls on inflationary pressures, foreign exchange reserves have reached 2.6 times the level of short-term foreign debt, having the capacity to absorb shocks in the foreign exchange market.
On monetary policy, the analysis believes that the recent decision by the Bank of Korea to freeze the benchmark interest rate is appropriate at this time. AMRO points out that the continuous rise in housing prices in Seoul and recent exchange rate volatility pose threats to financial market stability, and given these variables, maintaining the interest rate freeze stance is reasonable. However, it also states that if signs of economic growth slowing or increased global uncertainty reappear, lowering interest rates should be considered as a policy option.
Regarding the real estate market, the diagnosis indicates that although the upward trend in prices still exists, some stabilization measures are beginning to take effect. However, it also points out that in overheated areas such as speculative hotspots, time is still needed for adjustments. AMRO suggests that to address the supply-demand imbalance, comprehensive measures should be taken, including expanding supply plans, relaxing reconstruction and redevelopment restrictions, and adjusting green belts. It particularly adds that strategies advancing alongside social infrastructure such as education, transportation, and healthcare in the capital region will help stabilize housing.
Regarding fiscal policy, the assessment considers the government's proposed budget of 727.9 trillion won for the year 2026 to be generally appropriate, while emphasizing the need for targeted fiscal responses in the event of economic downturn risks. It also states that to ensure medium to long-term fiscal sustainability, temporary budget measures should be gradually phased out after economic normalization, alongside promoting structural fiscal reforms.
In terms of medium to long-term growth strategies, the core issues raised include improving productivity and enhancing demographic structure. AMRO suggests that to strengthen the resilience of the supply chain in key industries such as semiconductors, production base diversification should be promoted, and workforce participation rates should be increased by improving work-life balance systems. Additionally, it indicates that while substantively extending the retirement age, a gradual reform of the immigration system should be strategically considered to introduce customized talent by industry.
This trend indicates that the South Korean economy is gradually entering a recovery phase under the dual pressures of external uncertainty and weak domestic demand. However, given its high sensitivity to monetary policy, fiscal operations, and real estate supply policies, it is expected that the policy coordination capabilities of the government and the Bank of Korea will become key to future economic trends.