People walk through Seoul’s Myeong-dong shopping district last April. /Yonhap

Several major global investment banks have raised their growth forecasts for South Korea this year, citing expectations of stronger fiscal support and easing U.S.-China trade tensions.

According to financial industry sources on June 8, Goldman Sachs, Barclays, and Morgan Stanley all revised their outlooks upward in reports published in late May, ahead of South Korea’s presidential election.

Goldman Sachs raised its forecast from 0.7% to 1.1% in a report released on May 16. The bank cited reduced U.S. tariff risks, improved growth prospects in the U.S. and China, and the possibility of another stimulus package in Korea. It projected that if China’s exports recover by 5%, South Korea’s exports to China could rise by 1.6%, boosting GDP by 0.1 percentage point. It also expects a second supplementary budget worth at least 1% of GDP, which could lift growth by another 0.3 point.

Barclays, in its May 30 report, raised its forecast from 0.9% to 1.0%, saying expansionary fiscal policy is likely to continue regardless of the election outcome. Morgan Stanley also increased its projection from 1.0% to 1.1% in a report released on May 22.

However, the average forecast from eight major global banks remained at 0.8% at the end of May, unchanged from the previous month. Despite some upward revisions, they were not enough to shift the overall average, according to the Korea Center for International Finance.