IMF lowers Korea's 2023 economic growth to 1.7 percent

The International Monetary Fund revised down its 2023 economic growth outlook for Korea to 1.7 percent on Tuesday. [REUTERS]

The International Monetary Fund (IMF) on Tuesday revised down its 2023 economic growth outlook for Korea to 1.7 percent amid growing global uncertainties.

The downward revision marked a 0.3 percentage-point drop from the growth forecast of 2 percent that the Washington-based organization made in October. The IMF also slashed next year's growth estimate for Korea to 2.6 percent from the previous forecast of 2.7 percent.

The updated outlook for this year still hovers above the Korean finance ministry's estimate of 1.6 percent made in December. In November, the Bank of Korea (BOK) suggested 1.7 percent growth for 2023.

Korea's gross domestic product is estimated to have grown 2.6 percent in 2022, compared with a 4.1 percent increase tallied in the previous year, according to the BOK.

The Korean central bank said the country's growth could be slower than its projection in 2023, citing the possibility of a global recession and the impact of steep rate hikes on the overall economy.

Meanwhile, the IMF revised up its growth forecast for the global economy in 2023 by 0.2 percentage point to 2.9 percent, citing the reopening of the Chinese economy as it lifts Covid-19 restrictions.

The better-than-expected private spending and investment from the United States and the eurozone also backed the improved estimate despite the prolonged war between Russia and Ukraine, the IMF added.

Still, the IMF warned that the rising energy prices following the war may continue to put inflationary pressure on the global economy this year.

The so-called fragmentation of the economy amid the trade disputes between the U.S. and China will also hamper multilateral cooperation, it added.

The organization projected the U.S. economy to grow 1.4 percent this year, up 0.4 percentage point from the previous estimate.

The Chinese economy is anticipated to grow 5.2 percent this year, up 0.8 percentage point from the October report.

Yonhap