[News Today] KDI lifts growth outlook on chip boom

[LEAD]

The Korea Development Institute has sharply raised its growth forecast for this year, despite the fallout from the Middle East conflict.

It says the robust semiconductor boom has more than offset the shock from higher oil prices.

[REPORT]

The Korea Development Institute has issued a new growth forecast for this year at 2.5%.

Despite the Middle East conflict, the agency raised its outlook by 0.6 percentage points in just three months.

The figure is significantly higher than projections made by the Bank of Korea, the government as well as the OECD and the International Monetary Fund.

KDI cited the robust semiconductor boom as the biggest reason for raising the growth outlook.

Chip exports have not only increased in volume but have also surged in price.

As a result, this year’s current account surplus is expected to post USD 240 billion, an all-time high which the KDI described as 'exceptional'.

It predicts corporate facility investment to rebound, income to rise and private spending to recover.

Over half of its latest upward revision in the outlook was driven by semiconductors.

Jung Kyu-chul / Korea Development Institute

The Middle East conflict pushed down growth rate but semiconductors reached a level that can more than make up for this.

As for consumer inflation growth, KDI projects the rate to reach 2.7% this year.

As private consumption improves, the institute believes rising global oil prices have increased inflationary pressure.