IMF Projects South Korea's Economic Growth Rate at 2.5% This Year

The International Monetary Fund (IMF) has forecast South Korea's economic growth rate for this year to remain at 2.5%, the same as its previous projection.

On the 22nd (local time), the IMF released its October World Economic Outlook and announced this forecast. The IMF publishes its global economic outlook four times a year (in January, April, July, and October). In January and April, the IMF had projected South Korea's economic growth rate at 2.3%, but it raised this by 0.2 percentage points in its July forecast. This is lower than the government's projection of 2.6% but higher than the Bank of Korea's forecast of 2.4%.

The global economic growth rate is expected to remain at 3.2%, the same as in July, converging to the potential growth rate level. In particular, the growth rate for the advanced economies group (41 countries including the United States, United Kingdom, Germany, and France) was raised by 0.1 percentage points to 1.8% compared to the previous forecast. For the United States, the forecast was revised upward from 2.6% to 2.8%, reflecting improved consumption due to real wage increases. Most European countries, including the United Kingdom (1.1%), France (1.1%), and Spain (2.9%), also saw growth rate increases due to the easing of monetary policy.

However, Germany, where manufacturing weakness continues, saw its growth forecast lowered from 0.2% to 0.0%, indicating a continued slowdown. Japan's growth rate was also revised downward from 0.7% to 0.3%. The IMF explained that this reflects negative impacts such as disruptions in automobile production.

The emerging and developing economies group (155 countries including China, India, Russia, and Brazil) saw its growth rate lowered from 4.3% to 4.2%. In China’s case, the forecast was reduced from 5.0% to 4.8% due to a slump in the real estate market and deteriorating consumer sentiment. Brazil’s growth rate was expected to improve from 2.1% to 3.0%, supported by expanded private consumption and investment in the first half of the year.

Overall, the IMF analyzed that downside risks to the global economy have expanded compared to July. Upside factors include investment recovery in major advanced economies and potential growth rate improvements driven by the spread of structural reform momentum. On the other hand, downside risks include the negative effects on growth and employment from the lagged impact of tight monetary policies, contraction in China’s real estate sector, strengthening global protectionism, and rising commodity prices due to geopolitical crises.

The IMF advised central banks to implement monetary policy cautiously and flexibly, taking into account inflation, growth, and employment conditions comprehensively. For fiscal authorities, it recommended strengthening sound fiscal policies to secure fiscal capacity while providing targeted support to vulnerable groups.