IMF Lowers South Korea’s Economic Growth Forecast to 1.4%
The International Monetary Fund (IMF) has revised its forecast for South Korea’s economic growth rate to 1.4% for this year, marking a 0.1 percentage point decrease from its previous forecast in April. The IMF’s review of the World Economic Outlook (WEO) for April was published by the Ministry of Strategy and Finance on July 25th.
The IMF typically projects growth rates in January, April, July, and October each year. Last year in April, the IMF projected a growth rate of 2.9% for Korea in 2023, but this estimate has been lowered five times in a row. The forecast for this year was initially reduced to 1.7% in January, then further down to 1.5% in April, and now stands at 1.4% in July.
Compared to other organizations, the IMF’s forecast is slightly lower than the 1.5% projected by the Korea Development Institute (KDI) and the Organization for Economic Cooperation and Development (OECD), yet higher than the 1.3% projected by the Asian Development Bank (ADB). It aligns with the predictions made by the Bank of Korea and the government.
Looking ahead to next year, the IMF has maintained its previous forecast for South Korea’s economic growth rate at 2.4%.
On a global scale, the IMF has raised its forecast for global economic growth from 2.8% to 3%. This upward revision of 0.2 percentage points from the April forecast is attributed to the easing of financial market volatility following the resolution of the US debt ceiling negotiations and the subsidence of the Silicon Valley Bank and Credit Suisse crisis.
In terms of regional growth rates for this year, the advanced group, including South Korea, has seen a 0.2 percentage point increase from 1.3% to 1.5%. Notably, the US (0.2% point), the UK (0.7% point), Japan (0.1% point), Italy (0.4% point), and Spain (1% point) have all experienced an upward revision in their forecasts. However, South Korea and Germany have both seen their growth prospects downgraded by 0.2 percentage points.
According to the Ministry of Strategy and Finance, the IMF’s increase in forecasts for the US, the UK, and Japan is a result of better-than-expected consumption and investment performance in the first quarter. Italy and Spain have raised their forecasts due to the recovery of tourism demand. In the case of Germany, the sluggish manufacturing industry and poor first-quarter results have negatively impacted the forecast.
The IMF has emphasized the need to strengthen control and supervision of financial market risks and ensure medium to long-term fiscal soundness. Additionally, they urge the implementation of labor market flexibility and the pursuit of carbon neutrality.
It is worth noting that while the world economy shows signs of improvement in the short term, there are still significant risk factors to consider.
[Photo source: Yonhap News]
The International Monetary Fund (IMF) has presented Korea’s economic growth rate forecast at 1.4% this year.
This is a decrease of 0.1 percentage point from the forecast of 1.5% in April.
The Ministry of Strategy and Finance announced today (25th) that the International Monetary Fund (IMF) has published a review of the World Economic Outlook (WEO) for April.
The IMF, which projects growth rates in January, April, July, and October every year, projected Korea’s growth rate in 2023 at 2.9% in April last year and lowered it five times in a row.
This year, the forecast was reduced to 1.7% in January, 1.5% in April, and 1.4% in July.
The forecast presented by the IMF is lower than the 1.5% presented by the Korea Development Institute (KDI) and the Organization for Economic Cooperation and Development (OECD), and higher than the 1.3% presented by the Asian Development Bank (ADB).
It is the same as the Bank of Korea and the government’s forecast of 1.4%.
Korea’s economic growth rate forecast for next year has maintained its previous forecast of 2.4%.
The global economic growth forecast was raised from 2.8% to 3%, 0.2 percentage points higher than the April forecast.
The IMF said, “Financial market volatility has eased, as the US debt ceiling negotiations have ended and the Silicon Valley Bank and Credit Suisse crisis has receded.”
The forecast for this year’s growth rate by region increased by 0.2 percentage points from 1.3% to 1.5% for the advanced group including Korea.
This is due to the increase in forecasts in the US (0.2% point), the UK (0.7% point), Japan (0.1% point), Italy (0.4% point), and Spain (1% point).
In the advanced group, countries with lower growth prospects include Korea and Germany (-0.2 percentage points).
The Ministry of Strategy and Finance analyzed that the IMF reflected that the United States, the UK and Japan recorded a higher than expected consumption and investment performance in the first quarter, and that Italy and Spain raised their forecasts according to the recovery of tourism demand.
In the case of Germany, he said the sluggish manufacturing industry and poor results in the first quarter appeared to be affecting the downgrade.
The IMF recommended that the world economy “is improving in the short term, but there are still many risk factors.”
He also emphasized that “the control and supervision of financial market risks must be strengthened” and “we must ensure medium to long-term fiscal soundness, and realize the flexibility of the labor market and carbon neutrality.”
[사진 출처 : 연합뉴스]
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