TOKYO, NNA – South Korea’s economic growth is expected to slow to 2.6 percent in 2019 after decelerating to 2.7 percent last year in the face of a global slowdown, the International Monetary Fund said Monday.
The IMF forecast that South Korean GDP will pick up to 2.8 percent in 2020.
These forecasts are unchanged from the IMF’s projections in its semi-annual World Economic Outlook issued last month.
“Korea’s economy has strong fundamentals, but short-term growth is moderating,” the IMF said in its annual Article IV consultation with South Korea, noting slower global trade and softer semiconductor markets have dampened capital investment.
For 2019, the projected slowdown is “driven by an expected deterioration in external demand, while internal demand is anticipated to pick up, supported by fiscal policy,” the IMF said.
South Korea’s inflation pressures are subdued, with the IMF forecasting consumer price increases of 1.4 percent for this year and 1.6 percent in 2019, below the central bank’s target to guide inflation around 2 percent over the medium term.
The IMF suggested that monetary policy “should remain accommodative” in the country and said there is room for easing.
The Bank of Korea raised its key policy rate by 25 basis points to 1.75 percent in November and has been on hold since then.
Last month, the bank revised down its growth forecast for this year to 2.5 percent, from the 2.6 percent projected three months earlier, on moderating consumption and slower exports, but its forecast for 2020 was unchanged at 2.6 percent.