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IMF raises Korea's 2025 growth projection to 0.9%

Published: 24 Sep. 2025, 14:36 Updated: 24 Sep. 2025, 20:18

Rahul Anand, head of the International Monetary Fund mission to Korea, briefs the press on the results of the 2025 annual consultation at the Government Complex Seoul in Jongno District, central Seoul, on Sept. 24. [YONHAP]

The International Monetary Fund (IMF) has slightly raised its projection for Korea’s economic growth this year from 0.8 percent to 0.9 percent, while calling for accelerated structural reforms and long-term fiscal consolidation.

The IMF mission to Korea, which conducted its annual consultation from Sept. 11 for two weeks, revised Korea’s 2025 growth outlook up by 0.1 percentage point to 0.9 percent — aligning with the forecasts of the government and the Bank of Korea, according to the Ministry of Economy and Finance.

The 2026 projection remains unchanged from July at 1.8 percent. These figures will be reflected in the IMF’s official economic outlook set to be released in October.

“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,” said Rahul Anand, chief of the IMF mission to Korea, in a statement. “Real GDP is projected to expand by 1.8 percent in 2026, driven by easing uncertainties, the full impact of accommodative policies and base effects.”

The IMF noted that while inflation is likely to hover near the 2 percent target through next year, uncertainty remains high and downside risks dominate. The Fund positively assessed the government’s proactive measures to curb household debt and address risks related to distressed real estate project financing.

However, the IMF emphasized the need for deeper structural reforms and fiscal discipline beyond short-term policy gains.

“To enhance productivity, reforms should focus on narrowing the productivity gap between small- and medium-sized enterprises and larger firms and harnessing the benefits of innovation and AI transformation while managing AI transition risks,” Anand said. “To create fiscal space for long-term spending pressures from aging, structural fiscal reforms — reforming the pension system, mobilizing revenue, enhancing expenditure efficiency — remain essential.”

The IMF further recommended the adoption of a fiscal anchor — a credible medium-term fiscal target — to help ensure long-term fiscal sustainability.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY JEONG JAE-HONG [[email protected]]