Standard Chartered economists Chong Hoon Park and Arup Ghosh update their forecasts for South Korea as oil prices rise amid tensions in the Middle East. They now forecast CPI inflation in 2026 to be 2.4%, up from 2.0% previously, with an average oil price of $85 per barrel. Growth will be circumscribed to 1.9% in 2026, while economic growth and CPI forecasts for 2027 will remain unchanged.
Oil-driven inflation and growth revisions
“We are raising our average CPI inflation forecast for 2026 to 2.4% from 2.0% previously, reflecting the impact of higher oil prices due to the conflict in the Middle East.”
“With the import-dependent energy structure of the Korean economy, rising oil prices will impact economic growth, CPI and KRW levels through rising import prices, rising trade deficit and slowing economic activity.”
“We are slightly lowering our 2026 growth forecast to 1.9% (previously 2.0%), reflecting the interplay of oil headwinds and fiscal support (including the proposed supplementary budget of KRW 25 trillion).
“We maintain our economic growth and CPI inflation forecasts for 2027 at 1.8%.”
“Downside risks to our 2027 outlook include prolonged conflict and higher oil prices for an extended period of time.”
(This article was created with the aid of an artificial intelligence tool and has been reviewed by an editor.)
