IMF Ups Korea’s Growth Rate for This Year

The International Monetary Fund yesterday raised its economic growth forecast for Korea this year from minus three percent to minus 1.8 percent just a month after it had revised the figure.

In a report, the IMF also maintained next year’s growth prediction of 2.5 percent for Korea, however, citing the dwindling effect of the economic stimulus package and delay in global economic recovery.

The fund had sent its consultative delegation to Seoul June 25 to July 7 to conduct due diligence on more than 20 organizations, including the Strategy and Finance Ministry, the Financial Services Commission, the Bank of Korea, and major state-run banks.

The IMF had announced a forecast of minus three percent for Korea July 7. The report said Korea experienced severe economic contraction in last year’s fourth quarter due to the global financial crisis, but is recovering at a level far higher than late last year.

It cited the government’s prompt measures to stabilize the financial market, expansionary fiscal and monetary policy, the weak won, and the current account balance returning to the black.

The pace of economic recovery will slow from the second half this year, however, as the effect of Korea’s expansionary fiscal policy and the weaker won’s impact on export growth will wane.

cha@donga.com