IMF cuts Korea's 2025 growth outlook to 0.8 percent

IMF headquarters in Washington DC Reuters-Yonhap — IMF headquarters in Washington, D.C. / Reuters-Yonhap

SEOUL, July 30 (AJP) - The International Monetary Fund (IMF) has downgraded South Korea's 2025 economic growth forecast to below 1 percent, amid rising global trade uncertainty driven in part by the United States-related tariff tensions.

According to the Ministry of Economy and Finance on Tuesday, the IMF, in its July World Economic Outlook (WEO), lowered South Korea's growth projection by 0.2 percentage points from its previous estimate to 0.8 percent.

This revision stands in contrast to the upward adjustments made for the global and advanced economies. The IMF expects the global economy to grow by 3.0 percent this year, up 0.2 percentage points from its earlier forecast. For advanced economies, which include 41 countries such as South Korea, the U.S., and Britain, the projection was raised by 0.1 percentage point to 1.5 percent.

The IMF had initially forecast 2.0 percent growth for South Korea in its annual consultation report released in February, but sharply cut it to 1.0 percent in April and has now revised it downward again. The new estimate aligns with projections by the Bank of Korea, Korea Development Institute (KDI), and Asian Development Bank (ADB), but falls short of the OECD’s 1.0 percent forecast.

The IMF did not include additional commentary on South Korea in the July report. However, Rahul Anand, head of the IMF Korea mission, stated that the latest downgrade was due to weaker-than-expected performance in the first half of the year, saying, "The subdued outcome was driven by domestic political and global trade uncertainty."

For 2026, the IMF revised South Korea’s growth forecast upward by 0.4 percentage points to 1.8 percent, reflecting improving consumer and investment sentiment following two rounds of supplementary budgets and easing political tensions. Anand added, "We expect a gradual economic recovery to begin in the second half of this year and continue into next year."

Regarding the broader global economy, the IMF warned of persistent downside risks stemming from uncertain trade policies, particularly those centered on the U.S. It stated, "The direction of trade policy developments will be a key determinant of global risk," and warned that "rising effective tariffs or failed trade negotiations could suppress corporate and trade-related investment, undermining growth momentum."

Lim Jaeho ajupresswogh@ajupress.com