Citi: South Korea’s 2025 GDP Growth to Slow, Three Rate Cuts Expected

In Brief:

Citi downgrades South Korea’s 2025 GDP growth forecast from 1.2% to 1.0%.

Bank of Korea expected to cut rates three times—May, August, and November.

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Citi analysts Jin-Wook Kim and Jiuk Choi anticipate a weaker-than-expected economic outlook for South Korea in 2025. In a new report, they cite subdued economic activity in Q1, delayed fiscal stimulus, and the upcoming U.S. tariff adjustments in April as major drags on growth.

The analysts now project South Korea’s GDP to expand by just 1.0% next year, down from their previous 1.2% estimate. They also suggest that the Korean government may step in with supplementary budgets totaling ₩30 trillion—₩10 trillion in Q2 and ₩20 trillion in Q3—to counteract the slowdown.

To further support the economy, Citi expects the Bank of Korea to initiate three rate cuts over the course of the year. These reductions are likely to be spaced across May, August, and November.

The revised forecast comes amid growing concern over global macroeconomic headwinds and the ripple effects of new trade barriers. Policymakers are under increasing pressure to implement accommodative measures as external demand and domestic consumption remain fragile.

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