The International Monetary Fund revised down Korea’s gross domestic product growth forecast Tuesday to 2.8 percent this year, from the 3.2 percent it estimated earlier this year.
But the IMF said it expected Korea’s economy to progress toward the trend of 4 percent next year, when it would grow 3.9 percent on the back of improvements in exports and increased private investment.
The IMF’s revised economic outlook came after Deputy Prime Minister and Finance Minister Hyun Oh-seok told lawmakers that Korea could reach 2.8 percent growth this year, backed by a supplementary budget and a package of economic measures aimed at reviving the economy.
The Ministry of Strategy and Finance forecast Korea’s growth at 2.3 percent, down from its initial forecast of 3 percent, while the Bank of Korea revised down its growth from 2.8 percent to 2.6 percent.
IMF’s revision on Korea’s growth is aligned with other changes it made on the U.S., the eurozone and the global economy.
The U.S., Korea’s second-biggest export destination, is expected to post 1.9 percent growth, down from 2 percent this year mainly due to across-the-board spending cuts, also known as the sequester.
The IMF projected a contraction of 0.3 percent for the eurozone, revised from minus 0.2 percent, on the prolonged debt crisis.
The global economy will grow 3.3 percent, down from 3.5 percent.
China, meanwhile, is likely to maintain its growth at around 8 percent this year.
The IMF made an upward growth projection on Japan’s economy from 1.2 percent to 1.6 percent on monetary easing.
It warned that global consumption and investment could fall should the advanced economies such as the U.S., the eurozone and Japan fail to come up with fundamentally sound measures to resolve their fiscal problems.
By Park Hyong-ki