Bank of Korea Governor Shin Hyeon-song: "Korea's Growth Rate for This Year Expected to Be Revised Up from 2.6%"

Emphasizing the Importance of "Nominal GDP"

Shin Hyeon-song, Governor of the Bank of Korea, stated on June 19 that the central bank's annual economic growth forecast for this year could be revised upward in the future.

Shin Hyun-song, Governor of the Bank of Korea, is speaking at a press briefing on the operation status check of the 2026 first half price stabilization target held on the 17th at the Hana Bank annex in Jung-gu, Seoul. Photo by Yonhap News

During his keynote speech at the dinner of the Korea Money & Finance Association’s regular academic conference held at a hotel in Jung-gu, Seoul, Governor Shin remarked, "According to the latest preliminary figures, the real gross domestic product (GDP) growth rate for the first quarter was revised upward from 1.7% to 1.8% compared to the previous quarter." He went on to say, "The annual growth rate forecast for this year is also likely to be revised upward from 2.6%, even if only mechanically." The new forecast will be announced on August 27.

Governor Shin repeatedly emphasized the importance of paying attention to the trend of the 'nominal GDP growth rate,' which does not exclude price fluctuations. He said, "There has not been a time in the past 26 years when the nominal GDP growth rate was this high." He explained, "This is not due to domestic inflation, but because export prices have surged rapidly." He added, "It is difficult to fully explain the current economic situation with only real GDP, so nominal GDP should be noted as an indicator that can reflect the domestic economic environment." Governor Shin further commented, "In macroeconomics, it is common to focus on real GDP and disregard nominal GDP, but that approach does not fit current conditions. Since exports are performing well, nominal GDP has a substantial impact on the real economy."

Regarding the 13.2% surge in real gross domestic income (GDI) in the first quarter compared to the same period last year, Governor Shin explained, "Although oil prices rose significantly, the terms of trade improved, which ultimately was due to a sharp increase in semiconductor prices."

He also suggested that if artificial intelligence (AI) and the semiconductor boom raise the long-term growth rate, it is necessary to consider whether the currently low growth rate and neutral interest rate due to demographic structure could change, stating, "We should question the assumption that demographic structure must determine the fate of the economy."

This content was produced with the assistance of AI translation services.