Bank of Korea to Revise 2026 Growth Forecast in August Amid External Gap

The Bank of Korea stated on July 8 that it will consider domestic and external condition changes since its May economic outlook when revising the country's 2026 economic growth forecast. In a written response to lawmaker Park Soo-young of the People Power Party on the National Assembly's Finance and Economy Committee, the BOK said it plans to release a new forecast in August reflecting developments since the last projection. The central bank's May forecast projected 2.6% growth for 2026, while the average forecast from eight major global investment banks as of end-June stands at 3.0%, highlighting a notable gap between the BOK's outlook and external assessments.

BOK May Forecast Shows 0.4 Percentage Point Gap with Global Banks

The Bank of Korea presented a 2.6% growth forecast for 2026 in its revised economic outlook in May. As of end-June, the average forecast from eight major global investment banks reached 3.0%, creating a 0.4 percentage point difference with the BOK's projection. When asked about the divergence between the BOK and external institutions, the central bank responded that "while major forecasting institutions show some differences in their projections, they generally share a similar view that the Korean economy will continue relatively solid growth due to sustained favorable conditions in the semiconductor sector and easing Middle East instability with declining international oil prices."

Governor Shin Signals Mechanical Upward Revision from Q1 GDP Data

BOK Governor Shin Hyeon-song previously indicated the possibility of an upward revision to the growth forecast. At a keynote dinner speech for the Korea Money and Finance Association's regular academic conference on the 16th of last month, Governor Shin stated that "the first-quarter real GDP growth rate was recently revised upward from 1.7% to 1.8% quarter-on-quarter with the release of preliminary figures," adding that "the annual growth forecast for this year will also be mechanically revised upward from 2.6%."

Bond Market Already Pricing 3% Growth Level

The bond market is placing weight on the possibility that the BOK will raise this year's growth forecast to around the 3% level. A bond dealer at a securities firm said, "The bond market is already keeping growth in the 3% range in mind," adding that "a future upward revision by the BOK will not have a significant impact as additional bearish material."

FAQ

What growth forecast did the Bank of Korea provide in May for 2026?

The Bank of Korea presented a 2.6% growth forecast for 2026 in its revised economic outlook released in May.

When will the Bank of Korea release its updated growth forecast?

The BOK stated on July 8 that it plans to release a new forecast in August, reflecting domestic and external condition changes since the May projection.