The International Monetary Fund (IMF) projected Korea's economic growth rate this year at 0.9%. The figure is 0.1 percentage point (p) higher than the 0.8% presented in Jul. The growth rate for next year was maintained at 1.8%.
In the Oct. World Economic Outlook released on the 14th, the IMF put this year's global economic growth rate at 3.2%. That is 0.2 percentage point higher than the Jul. forecast (3.0%). Next year's growth rate was kept at 3.1%, maintaining the previous outlook.
As the background for this adjustment, the IMF said it took into account "reduced uncertainty from U.S. tariff cuts and deferrals, the adaptability of economic agents through inventory adjustments and reconfiguration of trade routes, and a weaker dollar." However, this outlook assumes that tariff deferrals between the United States and China will not take effect going forward and that tariffs will remain at current levels.
The growth rate for the advanced economies group (41 countries including Korea, the United States, the United Kingdom, Germany, France, and Japan) is 1.6% this year, up 0.1 percentage point from the Jul. outlook. It was seen holding at the same level of 1.6% next year.
By country, the United States saw its growth rate this year raised by 0.1 percentage point to 2.0% on the back of tariff cuts, the passage of a tax cut bill, and easier financial conditions, and next year it was also raised by 0.1 percentage point to 2.1%. The eurozone was projected at 1.2% this year, up 0.2 percentage point thanks to strong exports from Ireland and a recovery in private consumption in Germany, but next year was seen at 1.1%, down 0.1 percentage point.
Other advanced economies excluding the G7 and the eurozone were projected at 1.8% this year, up 0.2 percentage point due to improved consumption from the conclusion of trade negotiations with the United States in some countries and rising real wages, but next year were expected at 2.0%, down 0.1 percentage point.
The emerging and developing economies group (155 countries including China, India, Russia, and Brazil) was revised up 0.1 percentage point from Jul. to 4.2% this year, and kept at 4.0% next year. China was kept at 4.8% this year and 4.2% next year, the same as the Jul. outlook. Early shipments and expansionary fiscal policy mitigated the negative effects of trade uncertainty and tariffs.
Inflation was broadly expected to slow. The IMF projected global inflation at 4.2% this year and 3.7% next year, showing an overall downward trend.
For advanced economies, this year's inflation outlook was kept at 2.5%, the same as in Jul., while emerging economies were revised down 0.1 percentage point to 5.3%. In the United States, inflation was projected to temporarily intensify as tariffs are reflected in consumer prices from the second half of this year. Accordingly, this year's inflation rate is expected to exceed the target at 2.7% and return to around 2% in 2027.
The IMF said, "Risks to the global economy remain concentrated on the downside," citing trade policy uncertainty, productivity losses from immigration restrictions, fiscal and financial market instability, and the possibility of a reassessment of new technologies such as artificial intelligence (AI) as major risk factors. However, the IMF noted that "if trade tensions ease, structural reforms accelerate, and the adoption of AI improves productivity, these could act as upside factors."
Policy recommendations were also presented. The IMF emphasized, "To create a predictable trade environment, governments should design rules-based industrial policies and expand regional and multilateral trade agreements." On the fiscal front, the IMF advised, "Restore fiscal space through increased revenue and more efficient expenditure, and establish a medium-term fiscal plan that includes clear benchmarks." It added, "While maintaining the independence of monetary policy, pursue financial market stability and accelerate structural reform efforts to raise medium- to long-term growth potential."
The IMF releases the World Economic Outlook four times a year, in January, April, Jul., and Oct. In April and Oct., it publishes projections for all member countries, while in January and Jul., it releases revised projections for the 30 major countries (including Korea).