Seoul: The International Monetary Fund (IMF) on Tuesday maintained its 2026 growth forecast for South Korea at 1.9 percent, despite ongoing disruptions due to the Middle East crisis, as reported by the Ministry of Economy and Finance.
According to Yonhap News Agency, while the IMF kept its outlook steady for Asia's fourth-largest economy, it revised the global economic growth projection down by 0.2 percentage points from its January forecast, now anticipating a 3.1 percent growth. The Ministry highlighted that South Korea's growth stability is supported by strong exports and mitigating measures such as a supplementary budget.
The Ministry emphasized that the government will continue its emergency response strategy given the increased uncertainties, with plans to swiftly implement measures to stabilize prices, supply chains, and financial markets. The IMF, however, has raised its inflation forecast for South Korea this year by 0.7 percentage points to 2.5 percent, attributing this to climbing global oil prices due to supply disruptions from the crisis in the Middle East.
These forecasts assume that the conflict, initiated by U.S.-Israeli strikes on Iran in late February, will conclude within weeks, leading to normalization in the production and export of energy and other goods by mid-2026. Notably, the IMF's projections exceed those of the Organization for Economic Cooperation and Development (OECD), which recently lowered its growth outlook for South Korea to 1.7 percent from an earlier 2.1 percent forecast.
The South Korean government and the Bank of Korea (BOK) had previously estimated a 2.0 percent growth rate, but recent assessments by the BOK suggest that growth momentum has weakened more than anticipated, predicting this year's growth may fall below earlier forecasts due to the ongoing Middle East situation.
The IMF delivers its economic outlook reports quarterly-in January, April, July, and October-with the April and October reports offering comprehensive forecasts for all member nations, while the January and July updates focus on around 30 major economies, including South Korea.