The International Monetary Fund (IMF) noted that the significant downward adjustment of South Korea's growth rate forecast in the "April World Economic Outlook (WEO)" announced on the 22nd reflects political uncertainty caused by the martial law and impeachment situation.
Rahul Anand, head of the IMF's South Korea mission, responded on the 23rd (local time) to a question from the traveling press corps at the IMF-World Bank (WB) Spring Annual Meeting regarding the "background behind the recent significant adjustment of South Korea's growth rate forecast by the IMF," stating, "In the revised economic outlook in January, we acknowledged that political factors had increased the downside risks, but the political uncertainty in December (the declaration of martial law) was not fully reflected in the short-term macroeconomic impact."
Previously, the IMF presented South Korea's growth rate forecast for 2025 as 1.0% in the April WEO. This is a downward adjustment of 1.0 percentage point (p) from the growth rate forecast (2.0%) announced in the previous January's revised economic outlook. Reactions poured in as the growth rate forecast had been cut in half in three months.
Anand noted regarding the forecast provided in January, "At that time, the available data to reflect the political uncertainty was limited," adding, "The April growth rate forecast reflects not only the impact of tariff measures but also changes in the domestic situation that began last year."
In relation to Anand's explanation, Kim Seong-wook, an IMF director, stated, "Political uncertainty affects consumption," and emphasized that the "April growth rate forecast reflects the impact of political uncertainty on the real economy and financial markets, combined with the tariff policies of the Trump administration."
Director Kim indicated that the United States' tariff policies have also impacted the downward revisions of growth rate forecasts for the U.S. and China. Quoting Pierre-Olivier Gourinchas, the IMF's chief economist, Kim stated, "The U.S. growth rate forecast for 2025 has been revised down by 0.9 percentage points. Of this, the impact of tariff policies accounts for -0.4 percentage points, and the impact of the U.S. entering an economic downturn accounts for -0.5 percentage points," adding, "China's growth rate forecast has been revised down by 0.9 percentage points. The tariff impact has reached -1.3 percentage points, but this has been offset by domestic stimulus policies."