Morgan Stanley reportedly expects South Korea’s economy to grow just 1.5% this year, citing weak consumer spending, slowing exports and external headwinds. The global investment bank noted that despite the Bank of Korea’s (BOK) two rate cuts in late 2024, consumption recovery could take three to four more quarters due to soft wage growth and labor market weakness.

The investment bank suggested a $13.8-billion (20-trillion-won) supplementary budget could boost GDP growth by 0.2 percentage points, but it remains skeptical about a quick turnaround. Notably, BOK Governor Rhee Chang-yong made similar calls for a supplementary budget on Jan. 16. Morgan Stanley’s projection is lower than the BOK’s revised 1.6 to 1.7% estimate, which factors in political uncertainty and weaker-than-expected Q4 2024 growth.