{"id":2206913,"date":"2024-10-25T08:00:23","date_gmt":"2024-10-24T23:00:23","guid":{"rendered":"https:\/\/koreapro.org\/?p=2206913"},"modified":"2024-10-24T18:52:11","modified_gmt":"2024-10-24T09:52:11","slug":"imf-maintains-koreas-2024-growth-at-2-5-cuts-2025-forecast-to-2-2","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2024\/10\/imf-maintains-koreas-2024-growth-at-2-5-cuts-2025-forecast-to-2-2\/","title":{"rendered":"IMF maintains Korea’s 2024 growth at 2.5%, cuts 2025 forecast to 2.2%"},"content":{"rendered":"
The International Monetary Fund (IMF) estimates South Korea’s per capita gross domestic product (GDP) will reach $36,132 this year, an increase of 1.6% from $35,563 in 2023, according to its <\/span>World Economic Outlook<\/span><\/a> report released earlier this week. The IMF maintained its 2024 economic growth forecast for Korea at 2.5%, aligning with projections from other institutions including the OECD (<\/span>2.5%<\/span><\/a>), Korea Development Institute (<\/span>2.5%<\/span><\/a>) and the Bank of Korea (BOK) (<\/span>2.4%<\/span><\/a>).<\/span><\/p>\n The IMF projects the GDP will surpass $40,000 for the first time in 2027, the BOK noted Thursday. Central bank officials emphasized Korea’s strengthening economic position in the region, noting Japan’s relatively lower dollar-denominated per capita GDP due to the weak yen and prolonged low growth. South Korean media highlighted that this projection would put Korea ahead of both Japan and Taiwan in per capita GDP terms.\u00a0<\/span><\/p>\n WHY IT MATTERS<\/b><\/p>\n The <\/span>seemingly<\/span><\/a> positive<\/span><\/a> GDP figures mask deeper fiscal concerns. The IMF’s <\/span>Fiscal Monitor<\/span><\/a> report that was separately released on Wednesday shows South Korea’s government expenditure will amount to 22.6% of GDP this year, ranking second-lowest among 37 advanced economies and reaching only half the advanced economy average. The country’s fiscal revenue-to-GDP ratio also ranks among the lowest in developed nations. This limited fiscal capacity raises concerns about South Korea’s ability to address emerging challenges, particularly rapidly increasing welfare spending needs due to its demographic crisis of low birth rates and an aging population. The IMF already warned in <\/span>April<\/span><\/a> that Seoul\u2019s debt-to-GDP ratio could approach 60% by 2029.<\/span><\/p>\n The fund’s decision to maintain the 2024 growth forecast comes alongside a downward revision of the 2025 growth forecast to 2.2%, amid growing downside risks to the <\/span>global<\/span><\/a> economy<\/span><\/a> since its July assessment. It also noted that global growth is expected to remain stable yet \u201cunderwhelming.\u201d The BOK on <\/span>Thursday<\/span><\/a> also noted that Q3 exports struggled and Seoul may not be able to reach the initially expected 2.4% growth, due to issues such as weakening consumption in electric vehicles and global trade uncertainties.The <\/span>risk<\/span><\/a> of slowing export growth in 2025, coupled with persistently weak domestic consumption, appears to be key factors behind the downward revision.<\/span><\/p>\n