WASHINGTON – The International Monetary Fund (IMF) has released its annual Article IV report, projecting consistent annual GDP growth for South Korea from now through 2028, with an expected peak in 2024. The IMF anticipates a high real GDP growth rate of 2.9% in 2024, followed by a steady pace of around 2.7% for the subsequent years, before a slight decrease to about 2.1% by the end of the forecast period.
The report, which does not take into account potential economic changes in China, suggests that South Korea’s economy is demonstrating robustness and effective policy response strategies. Despite this positive outlook, the IMF has revised its inflation forecasts upward and emphasized the need for structural reforms to enhance productivity. These reforms are seen as vital in addressing demographic challenges and maintaining output levels without causing inflationary pressures.
South Korea’s potential output rate, which measures the maximum sustainable growth without triggering inflation, is projected to follow a similar trajectory to the GDP estimates. This projection suggests a marginally decreasing trend towards the end of the reviewed period.
Further details from the Article IV consultation report indicate that Korea’s GDP growth is expected to oscillate between 2.1%-2.3% until the end of this decade. Starting from a modest growth projection of 1.4% for this year, it is forecasted to reach a high of 2.3% in three years before settling down again to approximately 2.1%. The current inflation level is around 3.6%, with expectations of a modest increase to next year’s figure at about 2.4%.
IMF executive directors praised Korea’s policy responses and highlighted that structural reforms are crucial amid demographic pressures on productivity growth rates. The potential output is slated for a pattern similar to GDP growth projections, aiming to maintain stability without inciting inflationary pressures.
This outlook underscores South Korea’s economic resilience and the importance of continued vigilance and strategic policy-making to sustain growth and manage inflation effectively in the coming years.
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