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IMF maintains Korea's growth outlook despite Iran war, rising inflation risks

Published: 15 Apr. 2026, 14:05 Updated: 15 Apr. 2026, 18:57

The logo of the International Monetary Fund (IMF) is displayed in its headquarters in Washington on Nov. 24, 2024. [REUTERS/YONHAP]

Korea’s growth outlook held steady despite the Iran war, but inflation risks surged as the International Monetary Fund (IMF) raised its price forecast and warned of mounting global uncertainty.

The IMF kept Korea’s growth projection at 1.9 percent while raising its inflation outlook to 2.5 percent, reflecting mounting price pressures driven by higher global energy costs, increased oil prices following the Middle East conflict and heightened exchange rate volatility, according to its “World Economic Outlook” report released Tuesday.

The organization also downgraded global growth and cautioned that prolonged war-driven oil shocks could significantly weaken the world economy.

The global economic growth forecast for this year was set at 3.1 percent, down 0.2 percentage points from the 3.3 percent projection in January, reflecting rising energy prices and growing inflation concerns triggered by the Middle East war, per the same report. The IMF publishes the outlook four times a year in January, April, July and October.

“Although the Middle East war had an impact despite strong exports, the supplementary budget offset the effects,” said the Ministry of Economy and Finance.

The government expects the extra budget to boost growth by 0.2 percentage points, following the 26.2 trillion won ($17.8 million) supplementary budget passed by the National Assembly on Friday to mitigate the economic fallout from the Iran war, including rising oil prices and inflationary pressure.

The IMF also maintained its growth forecast for Korea next year at 2.1 percent.

Bundles of U.S. dollars and Korean won are piled up in at Hana Bank in central Seoul in April. [YONHAP]

The United States’ growth outlook was lowered by 0.1 percentage points to 2.3 percent. While the country, as a net energy exporter, faces limited impact from the Iran war, a slowdown in growth is seen as inevitable.

Japan maintained its growth forecast at 0.7 percent for this year, supported by the effects of stimulus measures.

Inflation, by contrast, reflected the impact of the Middle East crisis more strongly. The IMF projected Korea’s inflation rate at 2.5 percent for this year, up from the 1.8 percent forecast in its annual consultation report released in November last year.

U.S. and Iranian flags and 3D printed oil barrels are seen in this illustration taken on March 23. [REUTERS/YONHAP]

At the time, the IMF expected inflation to ease, citing a stronger won and falling oil prices. However, rising oil prices and increased exchange rate volatility following the Iran war appear to have added upward pressure on prices.

The global inflation outlook was also revised higher, rising by 0.6 percentage points from January to 4.4 percent.

The IMF’s projections assume that the war will gradually stabilize and that energy production and exports will normalize from the middle of this year.

However, it warned that if the conflict drags on and average oil prices rise to around $100 per barrel, global growth could slow to 2.5 percent, and if prices climb to around $110 per barrel, growth could fall to around 2 percent.

The IMF chose "Global Economy in the Shadow of War" as the report's subhead.

“Global activity now faces a major test from the outbreak of war in the Middle East,” said the report. "Downside risks dominate the outlook."

It added, "Fostering adaptability, maintaining credible policy frameworks, and reinforcing international cooperation are essential to navigating the current shock while preparing for future disruptions in an increasingly uncertain global environment."

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 AHN HYO-SEONG [[email protected]]