The International Monetary Fund (IMF) on Tuesday sharply raised its 2021 growth outlook for South Korea to 4.3 percent as Asia's fourth-largest economy is on a solid recovery track amid robust exports.

This marked a steep rise from the growth estimate of 3.6 percent that the Washington-based organization made in April. The IMF also revised up next year's growth outlook for Korea to 3.4 percent from 2.8 percent.

The IMF's projection is the highest among major organizations that have jacked up their own growth estimates for the Korean economy.

The Bank of Korea (BOK) and the Asian Development Bank forecast South Korea to grow 4 percent this year. The Korean government expected growth of 4.2 percent.

The South Korean economy is on a recovery track on the back of solid exports of chips and autos and improving domestic demand. It contracted 0.9 percent last year.

The country's gross domestic product (GDP) grew 0.7 percent in the second quarter from three months earlier, compared with a 1.7 percent on-quarter gain in the first quarter, central bank data showed.

Exports rose 32.8 percent on-year in the first 20 days of July on strong demand for semiconductors, autos and petroleum products, according to customs data. Overseas shipments extended their gains to the eighth straight month in June amid the global economic recovery.

Private spending rose 3.5 percent on-quarter in the April-June period, the sharpest expansion in 12 years, as people increased economic activity amid warm weather and relaxed virus curbs.

But a recent flare-up in COVID-19 cases and the fast spread of the highly contagious delta variant have emerged as major downside risks for the Korean economy.

South Korea is grappling with the fourth wave of the pandemic, as its daily new cases topped 1,000 for the 21st straight day. The country added 1,365 COVID-19 cases Tuesday, raising the total to 191,531.

Meanwhile, the IMF lowered its 2021 forecast for Korea's debt-to-GDP ratio, citing the accelerating economic recovery.

The general government debt (D2)-to-GDP ratio is likely to reach 51.8 percent this year, down from its April estimate of 53.1 percent. D2 covers debt holding by central and provincial governments and nonprofit public institutions.

The IMF maintained its estimate for Korea's fiscal deficit levels for this year. The size of the country's 2021 fiscal shortfall will likely be equivalent to 2.9 percent of GDP.

Last year, the country's national debt grew by the largest-ever amount of 123.7 trillion won (US$107.3 billion) to a record high of 846.9 trillion won, as the country expanded fiscal spending to tackle the fallout of the COVID-19 pandemic.

Source: Yonhap News Agency