This illustrated image depicts the International Monetary Fund’s economic growth outlook. (Yonhap)
SEOUL, Sept. 24 (Korea Bizwire) — South Korea’s economy is expected to rebound in 2026, driven by easing uncertainties and accommodative policies, an official from the International Monetary Fund (IMF) said Wednesday, calling on the country to put in efforts to revitalize domestic consumption and accelerate structural reforms to further boost growth.
“Prolonged domestic political and global trade policy uncertainties have weighed on (Korea’s) growth in 2025,” IMF mission chief for Korea Rahul Anand said in a statement on the preliminary findings of the mission, concluding the mission’s trip to South Korea that began Sept. 11.
“Growth is expected to reach 0.9 percent in 2025, as domestic demand gradually recovers, supported by more accommodative fiscal and monetary policies, and strong semiconductor external demand offsets declines in other exports.”
Korea’s real gross domestic product (GDP) — a key measure of economic growth — is expected to expand by 1.8 percent in 2026, while inflation will likely remain close to the target of 2 percent throughout next year.
But to reach the target of 3 percent growth, Korea should further revitalize its domestic demand, strengthen external resilience by diversifying the country’s export structure, and expedite structural reforms to boost productivity and tackle the declining labor supply amid demographic headwinds, Anand noted.
“Long-term fiscal reforms are needed to accommodate future age-related spending pressures while ensuring fiscal sustainability,” he said.
The IMF official stressed the accommodative monetary and fiscal policies of President Lee Jae Myung’s administration are appropriate considering moderate inflation and a negative output gap but called on the authorities to remain agile as external uncertainties are persisting.
“The authorities’ near-term fiscal stance and spending priorities in the 2026 budget proposal are appropriate, but fiscal consolidation should resume as growth converges to potential to create space to meet significant long-term spending pressures,” he explained.
Anand also welcomed Seoul’s economic growth strategy centered on supporting the development of service exports and artificial intelligence (AI) transformation, saying it would help Korea enhance its resilience to external risks.
(Yonhap)
