[DigitalToday Online Team] Global investment banks have been raising their forecasts for South Korea's economic growth this year. A surprise rebound in first-quarter GDP is the main reason. Inflation pressure is also rising due to high oil prices and a strong dollar.

The average 2026 growth forecast for South Korea from 42 institutions, compiled by Bloomberg, stands at 2.1% as of end-April. That is up 0.1 percentage point from 2.0% a month earlier.

Revisions were larger at individual institutions. Capital Economics raised its forecast to 2.7% at end-April from 1.6% at end-March, up 1.1 percentage points. JPMorgan Chase raised its forecast to 3.0% from 2.2%, up 0.8 percentage point. Citigroup lifted its estimate to 2.9% from 2.2%, up 0.7 percentage point. BNP Paribas raised its forecast to 2.7% from 2.0%, up 0.7 percentage point.

Of the 42 institutions in the survey, 25 issued their forecasts in mid-April and did not reflect the first-quarter GDP result. If they publish revisions, the average forecast is likely to rise further.

Real GDP grew 1.7% in the first quarter from the previous quarter. That was the highest since the third quarter of 2020, when it rose 2.2%. It was nearly double the 0.9% forecast the Bank of Korea presented in February. Strong semiconductor exports and a recovery in domestic investment drove the gain.

Inflation forecasts also rose. The average forecast for this year's consumer inflation rate from 38 institutions climbed to 2.5%, up 0.2 percentage point in a month. No institution lowered its forecast.

JPMorgan raised its inflation forecast to 2.7% from 1.7%, up 1.0 percentage point. DBS raised its forecast to 2.6% from 1.8%, up 0.8 percentage point. Bank of America Merrill Lynch lifted its estimate to 2.9% from 2.1%, up 0.8 percentage point.

The Bank of Korea said consumer inflation would rise faster from April due to the impact of a sharp increase in international oil prices. The consumer price index in March rose 2.2% from a year earlier.