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IMF slashes South Korea's 2023 economic outlook to 1.7 percent

By Park Yoon-bae Posted : January 31, 2023, 16:05 Updated : January 31, 2023, 18:20

Pierre-Olivier Gourinchas, left, chief economist and director of the research department at the International Monetary Fund (IMF), speaks to reporters during a press conference to release the fund’s World Economic Outlook update report in Singapore on January 31. [ EPA/Yonhap]

SEOUL -- The International Monetary Fund (IMF) lowered its 2023 growth projection for South Korea to 1.7 percent from its earlier figure of 2 percent.
The fund made the 0.3 percentage-point downward revision in a quarterly update to its World Economic Outlook report released in Singapore on January 31. It also revised down its 2024 outlook for Korea to 2.6 percent from the previous prediction of 2.7 percent.
The lowered projection is in contrast to the IMF’s upward revision of its global economic growth outlook by 0.2 percentage point. The fund raised the outlook to 2.9 percent from its October projection of 2.7 percent. It also forecast global growth to accelerate to 3.1 percent next year.
The upward revision for the world economy was based on upbeat expectations about an economic recovery following China’s reopening and an expected stable growth in consumption and investment in the U.S. and European countries.
The IMF raised next year’s growth outlook for China to 5.2 percent from the previous forecast of 4.4 percent. It also revised up the projection for the U.S. to 1.4 percent from 1.0 percent. In addition, the fund ramped up the eurozone outlook to 0.7 percent from 0.5 percent.
The IMF did not specify the reason for the third consecutive growth cut for South Korea. It already lowered the outlook to 2.0 percent last October after cutting the projection from 2.9 percent to 2.1 percent in July.
The revised 1.7 percent projection for Korea is lower than the 1.8 percent outlook made by the Organization for Economic Cooperation and Development (OECD) and the Korea Development Institute (KDI). It is the same as the prediction by the Bank of Korea (BOK). However, it was higher than the Ministry of Economy and Finance’s forecast of 1.6 percent and the Asian Development Bank’s 1.5 percent.
Despite the revised-up outlook for the global economy, the IMF warned against some challenges to a sustainable recovery, including the fight against inflation, China’s downside risks, the U.S.-China trade frictions, and the prolonged Russian war with Ukraine.

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