OECD

March 26 (Asia Today) — The Organization for Economic Cooperation and Development cut South Korea’s 2026 growth forecast to 1.7% from 2.1%, citing the economic fallout from rising energy prices and supply disruptions linked to the conflict in the Middle East.

The OECD released the revised outlook Thursday in its interim economic report, which said the conflict has disrupted shipments through the Strait of Hormuz, pushed up energy costs and added uncertainty to global demand.

South Korea’s downgrade of 0.4 percentage points was one of the largest among Group of 20 economies, according to the report. The OECD kept its 2027 growth forecast for South Korea unchanged at 2.1%.

The OECD also raised its forecast for South Korea’s inflation this year to 2.7%, up 0.9 percentage points from its previous projection. It said inflation is expected to ease to 2.0% next year as energy price pressures fade.

The report said countries that depend heavily on imported energy are especially vulnerable if the Middle East conflict drags on, as higher fuel costs can weigh on output and feed broader price pressures.

Despite the downgrade, the OECD said South Korea’s medium-term outlook remains relatively stable, with growth expected to recover next year if current energy disruptions prove temporary. The organization said its projections assume energy prices begin easing in mid-2026.

South Korea’s Ministry of Economy and Finance said it would maintain emergency readiness, warning that the economic impact could widen if the Middle East war continues longer than expected.

— Reported by Asia Today; translated by UPI

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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260326010008288