SEOUL, March 20 (AJP) - The International Monetary Fund perceives rising downside risks in the global economy from volatility in energy prices and financial market stemming from Middle East conflict and will factor the negative impact on growth and inflation into its updated economic outlook in April, according to a senior official.
Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol met visiting Dan Katz, First Deputy Managing Director of the International Monetary Fund (IMF) in Seoul on Thursday and discussed strategic response to escalating global risks, the ministry said in a press release Friday.
Katz pointed out that recent military clashes in the Middle East, the blockade of the Strait of Hormuz, and strikes on energy production facilities have significantly heightened volatility in energy prices and financial markets. He warned that these factors are increasingly likely to dampen global economic growth.
The IMF official added that a prolonged conflict could severely hamper global expansion and trigger widespread inflation, noting that the IMF intends to closely monitor these projections. These assessments are expected to be reflected in the IMF’s World Economic Outlook (WEO) scheduled for release in April.
Koo explained Seoul was deploying "all possible policy means" - enforcing cap on gasoline and fuel prices and fast-tracking supplementary budget - to minimize the fallout on the real economy.
Katz commended the South Korean government for its "swift and decisive" response to recent market volatility and its impact on the real economy. He assessed that the South Korean economy has historically demonstrated strong resilience in the face of various domestic and international shocks.
Furthermore, the IMF deputy chief expressed gratitude for South Korea’s contributions to capacity-building programs for vulnerable and low-income countries, including its recent funding to the IMF. Koo responded by reaffirming Seoul's commitment to further contributing to capacity-building initiatives in emerging fields, such as AI and digital technology.
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