Global Economic Growth Forecast at 3.21% for 2025
IMF Releases October World Economic Outlook
The International Monetary Fund (IMF) projected on October 14 that South Korea’s economic growth rate for this year would be 0.9 percent. This is an upward revision of 0.1 percentage points from the 0.8 percent forecast in July. The IMF maintained its projection for South Korea’s economic growth rate next year at 1.8 percent, the same as in July. However, this forecast is based on the assumption that current tariff levels will remain in place.
According to the Ministry of Economy and Finance, the IMF, in its “World Economic Outlook” released on October 14, raised South Korea’s growth rate forecast for this year by 0.1 percentage points. The projection for next year’s growth rate remained unchanged at 1.8 percent, as in July. This suggests that the South Korean economy is expected to return to a normal growth trajectory at its potential level next year.
The IMF’s latest forecast is similar to those released by other major domestic and international institutions. It matches the 0.9 percent growth rate forecasted by both the government and the Bank of Korea, and is slightly lower than the 1 percent projection made by the Organisation for Economic Co-operation and Development (OECD) in September. It is somewhat higher than the projections by the Korea Development Institute (KDI) and the Asian Development Bank (ADB), both at 0.8 percent.
The IMF revised its forecast for global economic growth this year upward to 3.2 percent, an increase of 0.2 percentage points, while maintaining next year’s forecast at 3.1 percent. Due to factors such as tariff reductions in the United States, the passage of tax cut bills, and the easing of financial conditions, the average growth rate for advanced economies (including South Korea, the United States, the United Kingdom, Germany, France, Japan, and 41 countries in total) was projected to remain at 1.6 percent, the same as previous estimates.
By country, the IMF raised its forecast for the United States’ growth rate this year by 0.1 percentage points to 2.0 percent. For next year, the growth rate was also revised upward by 0.1 percentage points to 2.1 percent, citing tariff reductions, the passage of tax cut bills, and the easing of financial conditions. The eurozone (20 countries using the euro) saw its growth rate forecast for this year raised to 1.2 percent (up 0.2 percentage points), and Japan’s to 1.1 percent (up 0.4 percentage points). The eurozone’s improved outlook was attributed to strong exports from Ireland and a recovery in private consumption in Germany.
For the group of emerging and developing economies (including China, India, Russia, Brazil, and 155 countries in total), the IMF forecasted growth of 4.2 percent this year (up 0.1 percentage points) and maintained next year’s projection at 4.0 percent. China’s growth rate was set at 4.8 percent, as early shipments and expansionary fiscal policy helped offset the negative impact of trade uncertainty. India’s forecast was revised upward by 0.2 percentage points to 6.6 percent, driven by robust performance in the service sector.
The IMF projected that global inflation would slow to 4.2 percent this year and 3.7 percent next year. Inflation in advanced economies was expected to be 2.5 percent this year, while inflation in emerging economies was projected at 5.3 percent. In the United States, the IMF anticipated that tariffs would begin to be partially reflected in consumer prices from the second half of this year, leading to heightened inflationary pressures through the end of the year and a projected inflation rate of 2.7 percent next year.
The IMF assessed that risks to the global economy remain tilted to the downside. The main risk factors identified were trade uncertainty, geopolitical tensions, productivity declines due to immigration and fiscal policies, and potential changes in the assessment of new technologies such as artificial intelligence (AI).
The IMF emphasized the need to establish a predictable trade environment by designing rules-based industrial policies and expanding regional and multilateral trade agreements in order to lay the foundation for sustainable growth. Regarding fiscal policy, the IMF recommended restoring fiscal capacity by increasing revenue and improving spending efficiency, as well as establishing a medium-term fiscal framework that includes clear benchmarks.
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