IMF cuts Korea's 2023 growth forecast to 1.5 percent

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IMF cuts Korea's 2023 growth forecast to 1.5 percent

Published: 11 Apr. 2023, 22:00

People walk past a sign for the 2023 Spring Meetings of the World Bank/International Monetary Fund on the IMF building in Washington, DC, on April 5, 2023. [AFP/YONHAP]

The International Monetary Fund (IMF) revised down the outlook for Korea’s economic growth this year to 1.5 percent on Tuesday.

In the April edition of the World Economic Outlook, the IMF lowered the forecast for 2023 GDP growth by 0.2 percentage points.

The figure is lower than local projections.

The Korean government in December forecast 1.6 percent growth for this year, and state-run Korea Development Institute 1.8 percent. Bank of Korea projected 1.6 percent in February, though central banker Rhee Chang-yong said Tuesday that growth is expected to “slightly fall short."

The IMF's growth forecast for Korea next year was also revised down by 0.2 percentage points, to 2.4 percent.

Its global growth forecast for the next five years is an average of 3.0 percent, the lowest since the World Economic Outlook was first published in April 1990.

The IMF forecast 2.8 percent growth for the global economy this year, down 0.1 percentage points from the January projection.

It revised up the annual growth for the United States to 1.6 percent, up 0.2 percentage points, and 0.8 percent for the eurozone, up 0.1 percentage points.

The institution slightly lowered the annual outlook for emerging economies, including 5.9 percent for India, down 0.2 percentage points, and 0.9 percent for Brazil, down 0.3 percentage points.

It said the global economy will go through “a rocky recovery,” citing uncertainties, including the Russia-Ukraine war, inflation and the recent banking crisis involving Silicon Valley Bank and Credit Suisse.

High debt levels and widening credit spreads centered on emerging and developing economies were also cited by the IMF as potential risks.

The IMF also noted the need to maintain monetary tightening until inflation is sufficiently reduced. It advised financial authorities to tighten government spending and provide selective support to the financially vulnerable.

Managing debt and the fiscal deficit at a manageable level and converting to low-carbon economics in a mid-to-long term were also encouraged by the IMF.

BY JIN MIN-JI [jin.minji@joongang.co.kr]