Korea growth forecast lowered amid Middle East shock

Mar 27, 2026, 09:23 am

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Containers are stacked at Pyeongtaek Port in Gyeonggi Province, reflecting export activity. / Yonhap

The OECD has lowered its 2026 economic growth forecast for South Korea to 1.7%, reflecting the impact of rising energy prices and supply chain instability triggered by escalating tensions in the Middle East.

According to the Ministry of Economy and Finance on March 26, the OECD revised down its projection from 2.1% in December, marking a 0.4 percentage-point drop. Among G20 economies, this was the second-largest downgrade after the United Kingdom.

The revision was primarily driven by surging energy costs and disruptions in global supply chains. The OECD noted that countries like South Korea, which rely heavily on Middle Eastern energy imports, could face significant pressure on production if the conflict persists.

Inflation expectations were also raised. The OECD projected South Korea’s consumer price growth at 2.7% this year, up 0.9 percentage points from its previous estimate. Inflation is expected to ease to 2.0% next year, indicating a gradual return to stability.

Despite the downgrade, the OECD assessed that South Korea’s economic fundamentals remain solid. Growth is expected to rebound to 2.1% in 2027, outpacing the projected increase in global economic growth over the same period.

The report suggests that the current slowdown is likely due to temporary external shocks rather than structural weaknesses.

The government said it would prepare for worst-case scenarios, warning that prolonged conflict in the Middle East could further amplify economic risks.

#OECD #South Korea economy #growth forecast #energy crisis #Middle East conflict