The Asian Development Bank(ADB) has sharply raised its inflation outlook while lowering its economic growth projection for South Korea this year.

The finance ministry said on Thursday cited ADB's Asian Development Outlook Supplement report which forecast South Korea’s inflation rate will expand four-and-a-half percent in 2022, up from its earlier three-point-two percent projection in April.

The report said “strong inflationary trend is driven by a combination of rising global commodity prices and a post-pandemic surge in consumer spending.”

The ADB’s inflation forecast is lower than the four-point-eight percent projection by the Organization for Economic Cooperation and Development(OECD) but higher than the four percent outlook from the International Monetary Fund(IMF).

Meanwhile, the ADB report forecasts that South Korea’s economy will grow two-point-six percent this year, zero-point-four percentage point lower than its April outlook.

Rising interest rates will increase the debt burden of businesses and households, further limiting growth in household spending and business investment, the bank said in its report.

The ADB’s economic growth forecast is lower than the OECD’s two-point-seven percent projection but higher than the IMF’s two-and-a-half percent outlook.