Myeongdong Street in central Seoul is crowded with locals and foreign visitors. (Yonhap)
SEOUL, Nov. 24 (Korea Bizwire) — The International Monetary Fund held its forecast for South Korea’s 2025 economic growth at 0.9%, saying the economy has entered a recovery phase in the second half of the year and is positioned for a more meaningful rebound in 2026, according to the finance ministry.
The projection is unchanged from the IMF’s September outlook, which nudged Korea’s forecast up by 0.1 percentage point from its July estimate. The fund said private consumption is beginning to firm as fiscal and monetary policies turn more supportive and post-election sentiment improves.
The IMF also kept its 2026 forecast at 1.8%, expecting clearer momentum to emerge next year.
The assessment follows a two-week Article IV consultation in Seoul, led by IMF Korea mission chief Rahul Anand, involving discussions with the finance ministry, the Bank of Korea and other institutions.
The ministry said the IMF commended the government’s “skillful policy management,” arguing that Korea has shown resilience against domestic political turbulence—including the fallout from last year’s failed martial-law bid—and external pressures such as U.S. tariff measures.
Seoul and Washington in November finalized details of a $350 billion Korean investment package tied to a broader trade arrangement during President Lee Jae-myung’s meeting with U.S. President Donald Trump at the APEC summit in Gyeongju.
“Central government debt remains sustainable, with substantial fiscal space,” the IMF said, adding that the financial sector remains sound thanks to pre-emptive regulatory action.
A night view of Seoul as seen from Lotte Tower. (Yonhap)
The fund also backed the Lee administration’s short-term stimulus efforts and its medium- and long-term growth strategy. With monetary and fiscal room still available, “looser policies are appropriate at this stage,” it said. The prioritization of spending in the supplementary budget and next year’s fiscal plan, it added, is largely consistent with earlier IMF guidance.
Still, the IMF cautioned that risks lean to the downside, citing heightened geopolitical and trade tensions and the possibility of weaker semiconductor performance if global artificial-intelligence demand cools.
The fund also welcomed the new administration’s ambition to position Korea as a top-five global soft-power leader, saying such efforts could strengthen export diversification and resilience.
The IMF’s outlook is broadly in line with other major institutions. The Bank of Korea recently lifted its own 2025 forecast to 0.9%, while the OECD expects 1% growth.
M. H. Lee (mhlee@koreabizwire.com)
