(LEAD) ADB maintains 1.5 pct growth outlook on South Korea for 2023

(LEAD) ADB-economic outlook

(LEAD) ADB maintains 1.5 pct growth outlook on South Korea for 2023

(ATTN: UPDATES with AMRO's outlook in last 4 paras)

By Kang Yoon-seung

SEOUL, April 4 (Yonhap) -- The Asian Development Bank (ADB) on Tuesday maintained its 1.5 percent growth outlook for South Korea in 2023, citing continued uncertainties in the global economy.

The latest estimate by the Manila-based bank remains unchanged from the previous outlook released in December when it slashed the forecast on the growth of Asia's No. 4 economy for this year by 0.8 percentage point.

The figure is just below the 1.6 percent growth projected by the Bank of Korea (BOK) and the Organization for Economic Cooperation and Development.

As for inflation, the ADB expected prices in South Korea to rise 3.2 percent on-year in 2023, maintaining its previous estimate, citing its continued monetary tightening moves.

In February, the Bank of Korea kept the benchmark interest rate unchanged at 3.5 percent for the first time in 10 months as worries are growing that aggressive monetary tightening could hurt economic growth.

The inflation is expected to gradually lose steam to reach 2 percent in the following year, it added.

The ADB added the reopening of the Chinese economy will give upward momentum for the entire Asian economy down the road, although the global inflation and monetary tightening moves remain challenges.

In a separate report released Tuesday, ASEAN+3 Macroeconomic Research Office (AMRO) suggested that Asia's No. 4 economy is expected to expand 1.7 percent in 2023, with inflation set to reach 3.3 percent.

"Short-term risks include renewed commodity price hikes, an increase in supply chain disruptions, more aggressive policy rate hikes by the Fed, a sharper economic slowdown in advanced economies and a weaker-than-expected recovery in China," the AMRO said, referring to the U.S. Federal Reserve.

"As headwinds have mounted and uncertainties remain elevated, the authorities need to be ready to recalibrate the monetary and fiscal policy stance flexibly and prudently to contain inflation, support growth and preserve financial stability."

The AMRO said the current restrictive monetary policy stance is appropriate as inflation is expected to remain above the BOK's target for some time.

(END)

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