Korea's growth could exceed IMF projection: finance minister

BANGKOK — Korea's economic growth could exceed projections by international organizations, including the International Monetary Fund (IMF), barring unexpected external shocks, the finance minister has said, citing robust exports and facility investment data.

Finance Minister Lee Hyoung-il made the assessment during a meeting with reporters in Bangkok on Friday. He visited Thailand to attend the Annual Meetings of the IMF and the World Bank Group last week, marking his first participation in a major international event since taking office last month.

His remarks came after the IMF projected Korea's economy would grow 3.3 percent this year, raising its forecast by 0.7 percentage point from its July projection amid the global semiconductor supercycle.

"I believe exports and facility investment remained robust in the third quarter," the minister said.

"If that is the case, we think growth could exceed the 3.3 percent projected by the IMF," Lee said. "Barring new external events that significantly impact the economy, I think even the mid-3 percent range could be possible."

Lee later hinted that the mid-3 percent range would cover figures from 3.4 percent to 3.6 percent.

The finance minister said Korea's economy grew 1.8 percent and 0.6 percent in the first and second quarters, respectively, noting annual growth could exceed expectations if the momentum continued into the third quarter, for which signs were already positive.

Lee added the country's potential growth rate could soon rebound.

"Given recent growth trends and the composition of growth, I believe our potential growth rate could reverse its downward trend and rebound," Lee said. "That turning point is approaching and may even be imminent."

The potential growth rate refers to the potential rate of increase in the GDP a country can sustain by fully utilizing labor, capital and other resources without triggering inflation.

Lee said officials he met during the event, including representatives of credit rating agencies and multilateral development banks, offered positive assessments of Korea's robust economic growth amid the country's strong chip exports.

"We exchanged views on the Korean economy with officials from various countries," Lee said.

"Most agreed when I said growth might not be sustainable without addressing disparities and that I intended to focus on the issue," Lee said.

The finance minister said those he met noted how much progress Korea makes in addressing disparities would depend on the government's efforts, but its attention to the issue itself could help sustain growth momentum.

When asked to identify a specific area of focus in addressing disparities, the finance minister said all sectors are closely linked, making the issue difficult to resolve.

"To tackle these challenges, we are seeking to implement social policies in three key areas, namely housing, jobs and financial services for vulnerable groups, which would likely cover most issues," Lee said.

The finance minister particularly stressed the need to address disparities in the job market, as they are linked to income gaps and disparities across regions and businesses.

In addition, Lee said he is considering increasing the frequency of the government's economic forecasts from twice to three times a year, with an annual outlook at year-end followed by two updates.

"With the economy moving so quickly, I am contemplating whether issuing two projections a year is appropriate under the circumstances," Lee said, noting the ministry could provide one additional update each year.

"If I still hold this view at the end of the year, I think we may stop issuing an economic growth strategy report specifically for the second half of the year starting next year," he said.