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IMF slashes Korea's 2025 growth forecast to 0.8%

Published: 30 Jul. 2025, 12:09 Updated: 30 Jul. 2025, 17:37

Export-bound containers are stacked at Pyeongtaek Port in Gyeonggi on July 29. [NEWS1]

The International Monetary Fund (IMF) slashed its forecast for Korea’s economic growth in 2025 to 0.8 percent from 1 percent, citing ongoing uncertainty in the trade environment and sluggish domestic performance in the first half of the year. However, the IMF raised its 2026 projection to 1.8 percent from 1.4 percent, expecting a gradual recovery.

In its July World Economic Outlook update released on July 22, the IMF projected global economic growth of 3 percent for 2025, up 0.2 percentage points from its April forecast of 2.8 percent.

The upward revision reflects easing financial conditions, including a weaker dollar, a decrease in effective U.S. tariff rates and a front-loading of global shipments in anticipation of higher tariffs.

The forecast assumes that the temporary suspension of U.S. tariff hikes will expire as planned on Aug. 1 but that tariffs will remain at current levels. The IMF noted that the projection could change depending on the course of trade negotiations between the United States and its partners.

Despite the improved global outlook, the IMF trimmed its growth forecast for Korea by 0.2 percentage points. The new 0.8 percent figure is in line with estimates by the Bank of Korea, the Korea Development Institute and the Asian Development Bank.

Rahul Anand, head of the IMF mission to Korea, noted that the downgrade reflects a weaker-than-expected performance in the first half of the year due to domestic political uncertainty and global trade tensions.

Export-bound cars are lined up at Pyeongtaek Port in Gyeonggi on July 29. [NEWS1]

The IMF also forecast Korea's 2026 growth at 1.8 percent, 0.4 percentage points higher than the April estimate.

The upward revision reflects expectations of a gradual economic recovery starting in the second half of 2025, supported by a continued expansionary policy stance, including two rounds of supplementary budgets, paired with a resolution of political uncertainty.

Outside of Korea, most country-level forecasts improved from April. The IMF attributed the trend to easing global trade tensions.

The fund upgraded its 2025 and 2026 growth outlook for advanced economies — comprising 41 countries including the United States, Japan and Korea — by 0.1 percentage points each, to 1.5 percent and 1.6 percent, respectively.

Among individual countries, the IMF raised the U.S. forecast to 1.9 percent from 1.8 percent, the eurozone to 1 percent from 0.8 percent and Japan to 0.7 percent from 0.6 percent.

The IMF updates its global economic outlook four times a year — in January, April, July and October. In April and October, it covers all member states; in January and July, it releases revised forecasts for the 30 largest economies, including Korea.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY JANG WON-SEOK [[email protected]]