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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] Seoul/Washington, October 14 — The International Monetary Fund (IMF) forecast that South Korea’s economy will stage a “V-shaped rebound” next year, escaping from near-zero growth to become one of the fastest-recovering economies among advanced and emerging nations.
In its October World Economic Outlook (WEO) released on Monday (local time), the IMF projected Korea’s 2025 GDP growth rate at 1.8%, double this year’s estimated 0.9%. The report noted that Korea will see the largest year-on-year recovery in growth among major economies.
IMF: Fiscal Expansion and Rate Cuts to Boost Recovery
According to the IMF,
“As uncertainty eases and the effects of expansionary fiscal policy and rate cuts take hold, combined with base effects from the previous slowdown, Korea’s real GDP is expected to expand by 1.8% next year.”
The projection assumes that U.S. tariffs — including 15% reciprocal duties, 25% on automobiles, and 50% on steel — remain in place through 2025.
Analysts suggest that if Seoul and Washington reach a breakthrough on their stalled $350 billion investment and tariff negotiations, the IMF’s forecast could be revised upward.
Growth Nearing Korea’s Potential
The forecast implies that Korea’s economy could return to its potential growth rate, which the OECD currently estimates at 2.02% for 2024 and 1.98% for 2025.
A senior government official said:
“This year’s growth gap with potential GDP was around 1 percentage point, but next year’s outlook suggests the economy could perform close to its potential level.”
The Lee Jae-myung administration has made “restoring potential growth to 3%” a key national objective. A 2% rebound next year, the official noted, “could help reverse the current downward trend in potential output.”
알파경제 Paul Lee 특파원(hoondork1977@alphabiz.co.kr)
