IMF cuts growth outlook of Korea to 2.7 percent

The International Monetary Fund on Tuesday revised its outlook on the 2015 economic growth of South Korea down to 2.7 percent, from its forecast of 3.1 percent in May.

The Washington-based organization also lowered its forecast of the world’s gross domestic product growth by 0.2 percentage point from 3.3 percent (estimate in July) to 3.1 percent.

Apart from the likelihood of Korea’s growth falling short of the global average, there is a possibility that the United States ― the world’s second-largest economy on the basis of purchasing power parity ― will overtake Korea in its growth pace.

The IMF revised its outlook on the U.S. growth upward to 2.6 percent from its earlier estimate of 2.5 percent.
 

Concerning Korea’s GDP, investment bank Morgan Stanley has predicted it would expand only 2.2 percent this year. Citigroup and Nomura Securities said the country’s growth is projected to stay at 2.3 percent and 2.5 percent, respectively.

The Asian Development Bank recently cut its forecast on Korea’s economic growth to 2.7 percent, and Moody’s Investors Service also lowered it to 2.5 percent.

The outlook from local think tanks is also gloomy. Korea Economic Research Institute and LG Economic Research Institute expected a 2.4 percent and 2.6 percent growth, respectively.

The IMF forecasts that Spain, whose GDP is similar in size to Korea, will post a 3.1 percent growth, and five major Southeast Asian countries ― Indonesia, Malaysia, Thailand, Vietnam and the Philippines ― will grow 4.6 percent on the average.

It also said major emerging countries in the world are expected to post a 4 percent growth on the average, while it set China and India’s growth outlook at 6.8 percent and 7.3 percent, respectively.

In addition, for the 2016 growth of Korea, the IMF revised its forecast down ― from its earlier 3.5 percent to 3.2 percent.

By Kim Yon-se (kys@heraldcorp.com)