The IMF projects consistent growth for South Korea until 2028

IMF projects consistent growth in GDP

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The IMF projects consistent growth for South Korea until 2028: The International Monetary Fund (IMF) has issued its yearly Article IV report, forecasting stable annual GDP expansion in South Korea until 2028. The projection includes a peak in 2024, with a notable real GDP growth rate of 2.9%, followed by a consistent pace of approximately 2.7% in the subsequent years. A marginal decline is expected, reaching around 2.1% by the conclusion of the forecast period.

Excluding potential economic shifts in China, the report highlights South Korea’s resilient economy and successful implementation of policy responses. Despite the optimistic outlook, the IMF has adjusted inflation projections upward, underscoring the importance of structural reforms to boost productivity. These reforms are deemed essential for tackling demographic challenges and sustaining output levels without triggering inflationary pressures.

The anticipated trajectory of South Korea’s potential output rate, indicating the maximum sustainable growth without inducing inflation, aligns closely with the GDP estimates. The projection indicates a slight decline towards the conclusion of the assessed period.

Additional insights from the Article IV consultation report reveal that South Korea’s GDP growth is anticipated to fluctuate within the range of 2.1% to 2.3% until the conclusion of the decade. Commencing with a conservative growth estimate of 1.4% for the current year, it is projected to peak at 2.3% in three years before stabilizing back to approximately 2.1%. Presently, the inflation rate stands at 3.6%, with a modest expected uptick to around 2.4% in the coming year.

Korea’s policy responses received acclaim from IMF executive directors, who underscored the importance of structural reforms in addressing demographic challenges affecting productivity growth rates. The potential output is set to follow a pattern akin to GDP growth projections, aiming to sustain stability without provoking inflationary pressures.

The perspective emphasizes the resilience of South Korea’s economy and underscores the significance of ongoing vigilance and strategic policy-making to uphold growth and effectively manage inflation in the upcoming years.

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