IMF raises growth outlook for S. Korea to 3.1% this year

The International Monetary Fund has raised its growth outlook for South Korea this year to 3.1 percent from the earlier figure of 2.9 percent estimated in October last year, the Ministry of Economy and Finance said Tuesday.

The nation’s economic growth projection improved largely thanks to the government’s aggressive policy responses to the COVID-19 crisis, including economic stimulus packages as well as strict quarantine measures, according to a report released by the ministry on the IMF’s update to the World Economic Outlook.

The IMF also adjusted last year’s growth estimate to minus 1.1 percent, an improvement from the October figure of minus 1.9 percent. 

The combined growth projections for 2020 and 2021 reached 2.0 percent, the highest figure among major economies. Next were the US (1.5 percent), Japan (minus 2.2 percent), Germany (minus 2.1 percent), France (minus 4.0 percent), Italy (minus 6.5 percent) and Spain (minus 5.9 percent).

The IMF’s growth estimate for Asia’s fourth-largest economy is almost on a par with the Korean government’s growth forecast. In December last year, the Finance Ministry said in a 2021 economic policy plan that the local economy could be expected to grow 3.2 percent this year, following last year’s estimated contraction of 1.1 percent amid the protracted pandemic.

In its World Economic Outlook Update, the IMF said the global economy would increase 5.5 percent this year on the back of coronavirus vaccine developments. The latest growth estimate is up 0.3 percentage point from the earlier figure of 5.2 percent projected in October last year. 

The world growth projection is forecast to be adjusted to 4.2 percent in 2022, it added. The IMF cited the COVID-19 resurgence, stricter lockdown measures around the globe and dampened sentiment in the financial sector as possible downside risks.

Meanwhile, the Finance Ministry and an IMF team led by Andreas Bauer, the global agency’s Korea mission chief, will jointly hold a press briefing Thursday to announce the outcome of their annual meeting on the country’s overall economic situation, especially its response to the COVID-19 crisis. 

Every year the IMF officials visit Korea to discuss the country’s economic conditions and policies. But this year the international organization held videoconferences with the Finance Ministry and related institutions in an effort to combat the COVID-19 pandemic.

By Choi Jae-hee (cjh@heraldcorp.com)