Citi Lifts South Korea's 2026 Nominal GDP Forecast to 20.7%, Expects August Rate Hike

According to Citi economist Kim Jin-wook on July 23, the Bank of Korea is expected to raise its base rate by 25 basis points in August following a similar increase this month, driven by strong second-quarter GDP and GDI growth. Citi raised its 2026 nominal GDP growth forecast to 20.7% from 15.5%, marking the strongest expansion since 1991. For inflation, Citi expects the August headline consumer price index to rise 3.2% year-over-year and core CPI to climb 3.3%, after forecasting July inflation to moderate to 2.7%. The bank projects the final base rate in the current tightening cycle to reach 3.50% if additional increases occur in August, November, and February 2027.
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