Korean 2022 growth forecast upped to 2.6 percent by IMF

A customer shops at a store in Seoul on Tuesday. Consumer price is expected to continue to affect global economy in 2023. [YONHAP]

Korea's economy is expected to grow 2.6 percent this year, according to the latest forecast from the International Monetary Fund (IMF).

The estimate is higher than the previous forecast of 2.3 percent, which was issued in July. The IMF maintained a 3.2 percent growth forecast for the global economy in its latest announcement.

In the outlook report, the international organization notes a number of "storm clouds," such as high inflation, the strong dollar, the energy crisis and a slowing Chinese economy.

The IMF lowered the U.S. growth outlook 0.7 percentage points to 1.6 percent for this year citing negative growth for two consecutive quarters. China’s growth outlook for 2022 dipped 0.1 percentage points to 3.2 percent. The IMF said Covid lockdowns and a weak real estate market were factors.

The latest projection by the IMF is aligned with that of the Korean government.
Last week Finance Minister Choo Kyung-ho said he expects the economy at around 2.6 percent in 2022.

The OECD is looking for 2.8 percent, up from its previous forecast of 2.7 percent.

"What we are concerned with currently is next year's economic growth," Choo said last week.

The IMF lowered its outlook for Korea's growth next year to 2.0 percent from 2.1 percent. For the world, it is looking for 2.7 percent, down 0.2 percentage points from three months ago.

The OECD is forecasting 2.2 percent and the Bank of Korea 2.1 percent. Fitch is looking for 1.9 percent.

U.S. growth in 2023 is forecast to be 1 percent, unchanged, while the forecast for China was lowered to 4.4 percent from 4.6 percent.

The inflation rate in 2023 will be 8.5 percent globally, down from 8.8 percent this year. The most recent estimate is up 0.8 percentage points from the last estimate.

Korea’s inflation is forecast at 3.8 percent next year, a 1.3 percentage point increase from July. The IMF is projecting inflation at 5.5 percent this year.

The IMF report noted that because of inflation, excessively tight monetary policies are a risk.

Tensions are intensifying over the strengthen of the dollar, while the debt vulnerability of emerging countries is a major risk, the IMF said.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]