IMF revises up Korea's GDP growth forecast to 3.6% on robust exports - The Korea Times
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IMF revises up Korea's GDP growth forecast to 3.6% on robust exports

Finance Minister Hong Nam-ki speaks during an emergency economic meeting at the Government Complex Seoul on April 7, Wednesday. Yonhap
Finance Minister Hong Nam-ki speaks during an emergency economic meeting at the Government Complex Seoul on April 7, Wednesday. Yonhap

By Lee Min-hyung

The International Monetary Fund (IMF) has revised up Korea's 2021 GDP growth forecast by 50 basis points to 3.6 percent, in a World Economic Outlook (WEO) report, reflecting on robust export growth and anti-coronavirus extra budget effects here.

This is well above other projections from authorities here and abroad ― such as the OECD, the Korea Development Institute (KDI) and the Korean government ― whose forecasts ranged from 3.1 percent to 3.3 percent.

With major economies across the globe showing signs of recovering from the COVID-19 shock, the IMF forecasts the Korean economy would also bounce back at a more robust pace on export upswing and other rosy economic indices here.

According to data from the Bank of Korea (BOK) released Wednesday, exports here increased by 9.2 percent to reach $44.7 billion (49.9 trillion won) in February from the previous year.

The Korean economy is heavily reliant on exports, with its trade dependency topping 60 percent. But the economy reported a contraction of 1 percent in 2020 amid virus-induced global economic downfall.

The IMF also forecasts the global economy to grow 6 percent this year, an increase of 0.5 percentage points from the earlier forecast, due to aggressive anti-virus measures taken by governments around the globe.

Korea's Ministry of Economy and Finance expected the nation's export recovery momentum to pick up more steam for the rest of this year on the global economic rebound.

The nation's exports will recover at a more agile pace particularly on economic growth of Korea's two biggest trade partners ― the United States and China, according to the finance ministry.

According to the latest IMF report, Korea placed its name on a list of eight G20 member nations whose 2021 GDP growth is forecast to top their 2019 figures.

Finance Minister Hong Nam-ki also remained optimistic over the economy's faster-than-expected recovery this year.

"The U.S. president and his administration's push for large-scale pump-priming measures are expected to cast significant ripple effects on its major trading partners this year, and Korea will be one of the biggest beneficiaries due to its heavy trade reliance," Hong said during an emergency economy meeting Wednesday.

Eugene Investment & Securities economist Kim Yeon-jin also shared a rosy outlook for Korea's economic recovery based on similar reasoning.

"Expectations for an economic rebound here will rise, as Korea's key trading partners are also showing signs of economic recovery," the economist said. On top of that, a series of U.S. stimulus packages worth trillions of dollars and the country's rapid vaccination program will also keep raising hopes for the Korean economy, according to the expert.


Lee Min-hyung mhlee@koreatimes.co.kr


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