[News Today] IMF LOWERS KOREA’S GROWTH OUTLOOK

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The International Monetary Fund has lowered its growth forecasts for South Korea for this and next year. This year's growth is hindered by domestic weaknesses, and next year's outlook is clouded by global uncertainties. There are concerns that export momentum may weaken.

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In the third quarter of this year, Samsung Electronics' performance fell short of market expectations in the semiconductor sector.

Following the U.S. presidential election, its stock price plunged to the upper-40,000 won level or about 28.6 U.S. dollars per share for the first time in four years and five months.

Joo Won/ Hyundai Research Institute
Memory chips are a key flagship export item. They seem to be going down on the cycle.

The outlook for the nation's semiconductor industry at large is growing grim, as domestic chip production decreased for the first time in 14 months, ending an upward streak.

Semiconductors account for 22 percent of the nation's total exports. Due to the falling chip shipment volume, Korea saw its overall export growth rate drop from over ten percent to 4.6 percent last month.

The International Monetary Fund paid attention to this issue during its two-week review of the Korean economy.

The IMF lowered its outlook for Korea's economic growth in 2025, saying exports have been the main driving force behind the nation's growth.

Rahul Anand/ IMF mission chief for Korea
However, uncertainties around the outlook remains high and the risks are tilted to the downside.

It further recommended that Korea should look for a breakthrough in exports.

Rahul Anand/ IMF mission chief for Korea
The other policy measure could be to look at diversifying exports, not only in terms of destinations that's important but also diversification from manufacturing to services.

The IMF also cut Korea's economic growth rate for this year by 0.3 percentage points, citing sluggish domestic consumption.

This decision highlights Korea's double burden of a prolonged slump in domestic demand and weakening exports.

The IMF said that Korea needs stronger economic policies, as it is faced with rapid population aging and transformative technological changes like AI.