The International Monetary Fund (IMF) said on the 8th that it will raise its forecast for Korea's economic growth this year to 2.6% from 1.9%. That is a 0.7 percentage point increase in three months. The upgrade came thanks to semiconductor exports by Samsung Electronics and SK hynix growing by a larger margin than expected. The IMF also raised next year's forecast by 0.4 percentage point, to 2.7% from 2.3%.
The IMF released its updated world economic outlook the same day. The IMF releases economic outlooks for major countries every January, April, July, and October. In April and October, it provides growth and inflation forecasts for all member countries, and in January and July, it releases revised growth figures for 30 major countries. In the most recent outlook on Apr. in, the IMF forecast Korea's growth at 1.9% this year and 2.1% next year. In just three months, it raised this year's growth by 0.7 percentage point and next year's by 0.4 percentage point.
A government official said, "Among the 30 major countries covered, this is the largest upward revision to the forecast."
◇ Semiconductor exports surge 163%... overseas IBs see average 3% growth
The IMF's sharp upgrade is assessed to be due to semiconductor exports increasing far more than initially expected. First-half exports were $496.7 billion, up 48.4% from a year earlier. Semiconductor exports were $192.4 billion, up 163%. The first-half trade surplus also hit a record high of $138.3 billion. If this trend continues, the annual trade surplus this year could reach three times the record high in 2017 ($95.2 billion).
Other international organizations and overseas investment banks (IBs) are also raising their forecasts for Korea's growth this year across the board. The Bank of Korea in May raised this year's forecast to 2.6% from 2.0%, and the Organization for Economic Cooperation and Development (OECD) last month raised it to 2.6% from 1.7%. Major overseas IBs see 3% growth as possible. According to the International Financial Center, as of the end of June, the average forecast for this year presented by eight major IBs was 3.0%. That is up 0.2 percentage point in a month from 2.8% at the end of May.
◇ "Downside factors dominate the world economy... if AI expectations fade, consumption and finance will take a hit"
However, this outlook is based on the assumption that around March next year the global energy supply and logistics situation will return to pre–Middle East war conditions. The IMF also said, "Beyond uncertainty in the Middle East, downside risks still dominate the world economy." It lowered this year's global growth forecast to 3.0% from 3.1%. It cut the forecast for the advanced economies group, which includes the United States, the eurozone, and Japan, to 1.7% from 1.8%. It kept the United States at 2.3%, lowered the eurozone to 0.9% from 1.1%, and Japan to 0.6% from 0.7%. It also lowered the emerging and developing economies group to 3.8% from 3.9%. While it raised China by 0.2 percentage point from April to 4.6%, it cut the Middle East and Central Asia to 0.7% from 1.9%.
Meanwhile, the IMF warned in this report that if the AI bubble bursts, it could hurt the economy. The IMF said, "AI can contribute to growth by improving efficiency, but if expectations reverse, it acts as a downside factor that dampens consumption and finance." It recommended monetary policy that puts price stability first. It also said fiscal support should be temporary and targeted, focusing on vulnerable groups.