IMF'S GROWTH PROJECTION OF S. KOREA

[Anchor Lead]

The International Monetary Fund projected 3.6% of growth for Korea this year, higher than the initial forecast. The global organization concluded that the Korean economy is on the recovery as export and investment have increased. However, the IMF recommended that the government needs to continue its expansive fiscal policies since uncertainties from COVID-19 still remain.

[Pkg]

The International Monetary Fund projected a growth rate of 3.6% for Korea this year.
The figure, made public in its annual report on Friday, is 0.5% point higher than the one forecasted earlier in January. It is also higher than the Korean government’s projection of 3.2% and the 3.3% that the Organization for Economic Cooperation and Development announced on March 9th. The government concluded that the increases in export and investment following economic recoveries in major countries have led to the latest upward adjustment. The IMF added that its initial growth projection of 3.4% was raised to the current level after taking into account Korea’s recent supplementary budget plan. Korea’s growth rate last year stood at –1%. The IMF's conclusion is that the Korean economy had shrunk last year but the country's effective disease control measures and fiscal and monetary policies helped Korea suffer relatively less damage than other advanced economies. The IMF believes that the Korean economy is solidly on the recovery track as export started to rebound since the second quarter of 2020. However, the service sector and spending haven’t recovered quickly enough and employment figures still remai considerably lower than pre-pandemic times. The IMF has recommended that the Korean government continues its expansive fiscal policies in order to maintain the current recovery pace since the future still remains quite uncertain. The global financial organization added that more selective assistance should be given out to those who were gravely affected by the pandemic. Moreover, the IMF said that liquidity assistance to corporations should be continued as more relaxed monetary policies are needed. But also, the Korean government was advised to arrange responses to a possible spike in household debts.