The Asian Development Bank upgraded its GDP growth forecast for South Korea to 5.1% for this year from its earlier estimate of 4.6%. The revision is based on stronger exports and rebound in domestic consumption. ADB expects South Korea’s exports to grow at a double-digit on the back of a recovery in global electronics sales and a favourable global economic environment. However, export growth would be affected by any further appreciation of the South Korean Won against the U.S. dollar or Yen.
ADB’s forecast is in line with the Bank of Korea’s projection of 5% GDP growth in this year from 4% in the previous year. Meanwhile, ADB warned that recovery in domestic demand and recent appreciation of the Won would result in higher imports leading to narrowing of trade surplus. ADB expects GDP growth to slow down to 4.9% in 2007.