IMF Boosts South Korea’s 2024 Economic Growth Forecast to 2.3%

SEOUL – The International Monetary Fund (IMF) has adjusted its growth forecast for South Korea in 2024 upwards to 2.3 percent, attributing the revision to stronger than anticipated resilience in major global economies. According to the IMF's latest report released on Tuesday, this updated projection represents a slight increase from the 0.1 percentage point forecast made in October and aligns with the Organization for Economic Cooperation and Development's prediction.

According to Yonhap News Agency, this new outlook slightly surpasses the South Korean government's prediction of 2.2 percent growth and the Bank of Korea's expectation of a 2.1 percent expansion for the same year. Economists attribute this optimistic forecast to potential expansions in the South Korean economy, fueled by increasing exports influenced by economic advancements in the United States, China, and other countries, though the pace of growth is anticipated to be gradual.

After experiencing a downturn for a year, South Korea's exports, a crucial driver of its economy, have shown signs of recovery since the latter part of last year, particularly due to robust demand for semiconductors among other products. In a broader perspective, the IMF has also enhanced its global economic growth forecast for 2024 to 3.1 percent, up by 0.2 percentage points, thanks to unexpected economic resilience in the U.S. and other economies, coupled with fiscal support from China.

The IMF report highlighted a reduced likelihood of a harsh economic downturn, with risks to global growth appearing to be more evenly distributed. Factors such as quicker disinflation and the potential for financial conditions to ease further, along with stronger momentum in structural reforms, could enhance productivity and have positive effects beyond borders.

Notably, the IMF anticipates a decline in global headline inflation, projecting a drop to 5.8 percent in 2024 and further to 4.4 percent in 2025, from a rate of 6.8 percent last year. However, the forecast for 2024-25 falls below the historical average of 3.8 percent, influenced by high interest rates and sluggish productivity growth. The report also outlined potential downside risks, including increases in commodity prices due to geopolitical tensions, such as the ongoing conflict in the Red Sea, challenges in the property sectors in China and elsewhere, supply chain disruptions, and persistently high underlying inflation that could maintain tight monetary conditions.

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