IMF lowers Korea's growth forecast to 1.4% in 5th straight downward revision

The logo of the International Monetary Fund (IMF) is seen outside its headquarters in Washington, D.C., in this 2018 file photo. Reuters-Yonhap

By Yi Whan-woo

The International Monetary Fund (IMF) lowered its 2023 growth forecast for Korea to 1.4 percent, Tuesday, in its fifth straight downward revision of the country's economic outlook for this year.

Updated every three months, the IMF's latest growth estimate of Asia's fourth-largest economy is down from a forecast of 2.1 percent made in July 2022, 2 percent in October 2022, 1.7 percent in January and 1.5 percent in April.

The institution did not comment on the reasons behind the lowered growth forecast for Korea.

The forecast by the Washington D.C.-headquartered IMF is the same as the Ministry of Economy and Finance's projection, as well as the outlook by the Bank of Korea (BOK), and is slightly lower than OECD's 1.5 percent.

Tuesday's forecast adds to concerns that Korea is falling short of keeping up with the global economic recovery trend, because the projection contrasts with the upward revision of the global economic growth estimate as well as the expansion outlooks of multiple major economies.

The IMF forecast the global economy to grow 3 percent in 2023, up from a 2.8 percent projection in April.

The growth estimate for the advanced economies as a whole was revised up to 1.5 percent from 1.3 percent.

The growth outlook for the United States was raised to 1.8 percent from 1.6 percent, while China remained steady at 5.2 percent.

Japan's economy is projected to grow 1.4 percent, up from the previous forecast of 1.3 percent, while the euro area's is estimated to climb 0.9 percent from the previous projection of 0.8 percent.

The British economy is forecast to advance 0.4 percent, faring well compared to its previous outlook of a 0.3 percent contraction.

The economic growth forecast was revised up to 0.8 percent from 0.7 percent for France, to 1.1 percent from 0.7 percent for Italy, to 1.7 percent from 1.5 percent for Canada and to 2.5 percent from 1.5 percent for Spain.

For the world economy, the IMF assessed investor jitters in global financial markets have eased as fiascos concerning Silicon Valley Bank (SVB) in the United States and Credit Suisse in Europe were settled.

It also assessed travel and other service sectors are recovering fast with an end to the COVID-19 emergency.

The IMF attributed its upward revisions of growth forecasts for the U.S., the United Kingdom and Japan to higher-than-expected spending and investments.

For Italy and Spain, the IMF said recoveries in their respective tourism sectors were taken into account in revising up the growth estimates.

The IMF noted that the global economy is showing “near-term resilience,” but added that there are “persistent challenges.” It recommended vigilance over financial market risks as well as fiscal soundness, labor market flexibility and carbon neutrality as mid to long term goals.