Economic data prior to the Middle East war reflected stronger-than-expected growth than previously assessed, driven by both domestic demand and merchandise exports. However, the impacts from the war would decelerate economic growth in 2026 and 2027 to 1.5 and 2.0 percent, respectively. Private consumption is pressured by a higher cost of living and a weakening income outlook. In addition, foreign tourist arrivals are expected to decline due to higher costs and travel constraints. However, merchandise exports are projected to continue expanding at a favorable pace, supported by global demand for technology products. Moreover, in case the government implements additional fiscal stimulus measures, economic growth this year could turn out higher than expected. However, growth would decrease next year due to the dissipation of stimulus effects and a higher base effect. Going forward, the Committee views that the economic outlook is subject to high uncertainty. It is necessary to monitor downside risks arising from a prolonged war and supply disruptions, which could have significant adverse effects on the manufacturing sector and employment.

(Forecast as of 29 April 2026)