According to Yonhap News, Kim Jin-wook, an economist at Citi Bank Korea, reported on June 17 that the forecast for South Korea's gross domestic product (GDP) growth has been adjusted from 3.0% to 3.1%, an increase of 0.1 percentage points. The projected consumer price inflation rate has been lowered from 2.9% to 2.6%.
The key variable in this adjustment is international oil prices. Kim stated, "We revised our economic outlook based on the assumption that international oil prices will drop by about $10 per barrel, averaging around $78, from the second half of this year to the first half of next year."
The decline in oil prices is expected to have a positive impact on consumption. Stabilized gasoline prices will reduce household energy expenditures, allowing for greater spending on other goods and services. Additionally, rising asset prices, such as stocks, are seen as factors supporting private consumption.
From an inflation perspective, falling energy prices will help alleviate overall consumer price pressures. A decrease in international oil prices can lower not only fuel costs but also transportation and production expenses, providing grounds for a downward revision of inflation forecasts.
However, Kim cautioned that inflationary pressures will not disappear immediately. He projected that core inflation could remain elevated due to rising prices in services, petrochemical products, and memory semiconductors.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.