IMF cuts Korea’s 2024 growth outlook to 2.2%

Rahul Anand, Chief of the Korea Mission at the International Monetary Fund (IMF), presents the results of the annual IMF-Korea consultation at the Government Complex Seoul on the morning of the 20th. (Yonhap)

The International Monetary Fund (IMF) lowered its growth forecast for South Korea for 2024, citing slow recovery in domestic demand and weak global economy.

An IMF team, led by Korea mission chief Rahul Anand, announced on Wednesday the results of its annual review.

Regular staff visits are a standard practice for countries with annual program reviews and aim to engage with the authorities on the country‘s economic and industrial developments.

The mission said the IMF downgraded Korea’s 2024 growth forecast to 2.2 percent from 2.5 percent, partially due to a weak recovery of domestic demand.

Anand noted in a press briefing that robust chip exports supported the growth rate but were offset by weak domestic demand.

He said that despite record-high exports, sluggish recovery in domestic demand has dampened growth.

Anand added that the outlook remains highly uncertain, with downside risks, as Korea‘s export-reliant economy has become vulnerable to slowdowns among key trading partners, rising geopolitical tensions, and potential impacts of Middle Eastern instability on raw material prices.

The mission also repeatedly warned of challenges posed by low birth rates and the aging population in Korea.

Anand said that structural reforms are urgently needed to bolster potential growth, with more focus on the domestic challenges caused by an aging population and low fertility rates than external risks.

For 2025, the IMF projected Korea’s economy will expand by 2 percent.