The International Monetary Fund (IMF) projected South Korea's economic growth rate to be 0.8% this year. This is a decrease of 0.2 percentage points from the 1.0% forecast made in April. It is 0.1 percentage points lower than the forecast presented by the Organisation for Economic Co-operation and Development (OECD) and the same as the projections by the Bank of Korea and the Korea Development Institute (KDI). Although the IMF did not include a specific assessment of the South Korean economy in this forecast, it seems to reflect the negative impact of U.S. tariff policy on South Korean exports.
The IMF presented a global economic growth rate of 3.0% for this year in its 'July World Economic Outlook' announced on the 29th. This is 0.2 percentage points higher than the projection made in April (2.8%). It anticipates a global economic growth rate of 3.1%, an increase of 0.1 percentage points, in 2026.
The IMF stated that it considered factors such as the reduction in effective tariff rates, an increase in early shipments due to concerns over high tariffs, the easing of financial conditions due to dollar weakness, and the expansion of government finances in key countries. This forecast is premised on the assumption that even if the U.S. tariff increase suspension ends on August 1, tariffs will not actually rise and will remain at their current levels.
The growth rates for the advanced countries group (41 countries including South Korea, the United States, the United Kingdom, Germany, France, and Japan) are projected to be 1.5% and 1.6% for this year and 2026, respectively, an increase of 0.1 percentage points from previous forecasts. By country, the growth rate for the United States is revised up to 1.9% and 2.0%, which is 0.1 percentage points and 0.3 percentage points higher than previous forecasts, respectively. This reflects the effects of tariff reductions, easing financial conditions, and the recently enacted tax cut law known as the 'One Big Beautiful Bill Act (OBBBA)'.
In the Eurozone, the growth rate forecast for this year was increased by 0.2 percentage points to 1.0% due to an increase in Ireland's pharmaceutical exports to the United States, while the growth rate for 2026 (1.2%) was maintained at the previous forecast level.
For other advanced countries excluding the Group of Seven (G7) and the Eurozone, the growth rate is expected to decline by 0.2 percentage points to 1.6% this year. This is attributed to the appreciation of currency and tariffs on automobiles and steel, despite easing financial conditions. In 2026, the growth rate is projected to improve by 0.4 percentage points to 1.8% compared to previous forecasts.
South Korea's growth rate forecast for this year is lowered to 0.8%, a decrease of 0.2 percentage points from the previous estimate. However, next year's growth rate is projected to be 1.8%, an increase of 0.4 percentage points. The IMF did not include a specific assessment of South Korea in this forecast.
The growth rates for the emerging and developing countries group (155 countries including China, India, Russia, and Brazil) are projected to be 4.1% and 4.0% for this year and 2026, respectively, an increase of 0.4 percentage points and 0.1 percentage points compared to previous forecasts. China's growth rate is estimated to be 4.8% and 4.2% for this year and 2026, respectively. This was increased by 0.8 percentage points due to stronger-than-expected performance in the first half of the year and the U.S. reduction of tariffs on China announced on May 12. However, for 2026, the upward revision is limited to 0.2 percentage points, anticipating that the early shipment effect will be mitigated. India is expected to grow by 6.4% this year and in 2026, reflecting improvements in external conditions.
The IMF diagnosed that the risks to the global economy are concentrated on downside factors, evaluating that 'the development of trade policy' is a key variable determining the direction of risks. It pointed to rising effective tariff rates and the expansion of policy uncertainties, such as the failure of tariff negotiations, as downside factors. This analysis suggests that corporate investment and flows of trade investment may contract and that growth could weaken. It also noted that geopolitical tensions could exert further pressure on supply chains and prices.
The IMF warned that high fiscal deficits and national debt in major countries such as the United States and France could undermine market confidence and raise long-term interest rates, acting as a factor constraining global financial conditions. Instead, the IMF mentioned that if trade negotiations yield results, this could be a positive factor for the global economy. It explained that this would enhance predictability in policies and promote investment and productivity improvements.
The IMF recommended that countries design industrial policies to minimize market distortions in order to create a predictable trade environment and expand regional and multilateral trade agreements. It stated, 'From a fiscal perspective, essential expenditures such as defense should be maintained, while establishing a medium-term fiscal plan and securing fiscal capacity through revenue enhancement and expenditure efficiency.' It also emphasized the need to strike a balance between price stability and financial market stability and to continue efforts for structural reforms to enhance growth potential.
The IMF releases the World Economic Outlook in January, April, July, and October every year. In April and October, it presents forecasts for all member countries, while in January and July, it provides revised forecasts for the major 30 economies, including South Korea.