"This Year’s South Korean Economic Growth Rate Has Risen"... Why the IMF Keeps Revising It Upward

[Financial News] The International Monetary Fund (IMF) has forecast that the Republic of Korea (South Korea) economy will grow by 1.9% this year.
According to the Ministry of Finance and Economy, the IMF projected on the 19th in its "World Economic Outlook (WEO) January 2026" that South Korea’s economic growth rate for this year will be 1.9%.
This is 0.1 percentage points higher than the 1.8% forecast made last October. The IMF has been steadily revising up its growth outlook for South Korea since July of last year. In particular, this year’s projection of 1.9% is higher than the average for advanced economies, which stands at 1.8%.
The IMF raised its growth forecast for the South Korean economy mainly to reflect strong exports driven by the recent recovery in the semiconductor sector and the continued rebound in domestic demand since last year.
However, the IMF’s growth projection for this year is lower than the forecasts by the government and the Organisation for Economic Co-operation and Development (OECD).
On the 9th, the government predicted in its economic growth strategy that this year’s growth rate would be 2.0%. The OECD’s forecast released last December was 2.1%, and the average projection by investment banks this month came in at 2.0%. The Bank of Korea (BOK) is more conservative at 1.8%.
Rhee Chang-yong, Governor of the Bank of Korea, said on the 15th, "Growth will largely be in line with the 1.8% projection made last November," adding, "We judge that upside risks have somewhat increased."
The global inflation rate is expected to continue slowing, from 4.1% last year to around 3.8% this year, helped by falling energy prices.
However, inflation trends are expected to diverge by country. In the United States, there is a possibility that achieving the 2% inflation target will be delayed due to the pass-through effects of tariffs, while in China, inflationary pressures are projected to gradually build from the current low level.
The IMF assessed that risks to the global economy remain tilted to the downside.
Key risks cited include concentrated investment in a small number of artificial intelligence (AI) and advanced-technology firms, persistently high trade uncertainty and geopolitical tensions, and elevated debt levels in major economies.
The IMF warned that if expectations for AI-driven productivity and profitability weaken, a sharp correction in asset prices could occur, transmitting and amplifying financial risks.
At the same time, it noted that if trade tensions continue to ease and countries adopt AI in ways that boost medium-term productivity, these developments could act as upside factors for the global economy.


moon@fnnews.com Moon Young-jin Reporter