South Korea: Oil shock lifts inflation outlook – Standard Chartered

Standard Chartered economists Chong Hoon Park and Arup Ghosh update their South Korea forecasts following higher Oil prices linked to Middle East tensions. They now see 2026 CPI inflation at 2.4% versus 2.0% previously, with Oil averaging USD 85/bbl. Growth is trimmed to 1.9% in 2026, while 2027 projections for growth and CPI remain unchanged.

Oil-driven inflation and growth revisions

"We raise our average 2026 CPI inflation forecast to 2.4% from 2.0% prior, reflecting the impact of higher oil prices due to the Middle East conflict."

"For the Korean economy’s import-dependent energy structure, rising oil prices would impact growth, CPI and KRW levels through rising import prices, a widening trade deficit and a slowdown in economic activity."

"We slightly lower our 2026 growth forecast to 1.9% (2.0% prior), reflecting the interplay between oil-driven headwinds and fiscal support (including the proposed KRW 25tn supplementary budget."

"We maintain our 2027 growth and CPI inflation forecasts at 1.8%."

"Downside risks to our 2027 forecasts include a prolonged conflict and higher-for-longer oil prices."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)