IMF raises Korea's GDP growth forecast to 1.8% next year... "Economic recovery starting in the second half"

Improved consumption and investment due to supplementary budget effects

Largest increase among major advanced economies

Global growth this year revised up to 3.0%

US tariff hikes lower than expected

The International Monetary Fund (IMF) projected that the Korean economy will enter a full-fledged rebound phase starting in the third quarter this year. It analyzed that the effects of two rounds of supplementary budgets implemented by the government will gradually materialize from the second half, and that the tariff policy of the Donald Trump administration in the United States is likely to be more moderate than initially feared.

On the 29th, the IMF, in its 'July World Economic Outlook (WEO)', forecasted this year's Korean GDP growth at 0.8%. This is 0.2 percentage points lower than the forecast (1.0%) in April, a decrease in just over three months. This figure is the same as the projections of the Bank of Korea, Korea Development Institute (KDI), and Asian Development Bank (ADB) (0.8%) announced 2–3 months ago, but is lower than that of the Organisation for Economic Co-operation and Development (OECD·1.0%).

The IMF's current outlook, unlike other agencies, reflected the effects of both supplementary budgets organized this year. Nevertheless, it downgraded the growth outlook for this year as it expects the supplementary effects to emerge gradually.

The IMF raised its growth forecast for Korea next year from 1.4% to 1.8%, an increase of 0.4 percentage points. This was the highest increase among major advanced economies. Including developing countries, it was the second highest among all 30 surveyed nations, after Nigeria (up 0.5 percentage points). Rahul Anand, the IMF Korea mission chief, explained, "As a result of two rounds of supplementary budgets, a continued accommodating policy stance, and the easing of political uncertainty, consumer and investor sentiment has improved since the second quarter."

Lower-than-expected tariff rates imposed by the US government on countries worldwide were also analyzed as having a positive effect on the Korean economy. The IMF raised its global economic growth forecast for this year from 2.8% to 3.0%. For next year, the global growth outlook was revised up 0.1 percentage points to 3.1%. The IMF cited the reduction in US effective tariff rates, an increase in early shipments due to concerns over high tariffs, a weaker dollar, improved financial conditions, and fiscal expansion in key countries as the main drivers. This year's US GDP growth was raised by 0.1 percentage point from 1.8% to 1.9%. Next year's growth forecast was also raised from 1.7% to 2.0%.

Kim Ik-hwan, Reporter lovepen@hankyung.com