IMF Raises Korea's Growth Forecast to 0.9% for 2023 Amid Smaller-than-Expected US Tariff Effects

Strategic Insights -

The International Monetary Fund (IMF) has slightly raised its growth forecast for Korea's economy to 0.9 percent for this year, citing smaller-than-expected effects from US tariff measures. This revised forecast, included in the IMF's latest World Economic Outlook report, marks a 0.1 percentage point increase from the previous forecast released in July. The IMF maintains its 2026 growth outlook for Korea at 1.8 percent. Despite the upward revision, the IMF cautions that the outlook remains fragile, with risks tilted to the downside. Major economies have completed tariff agreements with the US administration, and Seoul officials are accelerating diplomatic efforts to finalize a framework trade deal.

Key Takeaways:

  • The IMF raised Korea's growth forecast to 0.9 percent for this year, a 0.1 percentage point increase from the previous forecast released in July.
  • The IMF maintains its 2026 growth outlook for Korea at 1.8 percent, despite the upward revision.
  • The effects from US tariff measures have been smaller than expected, with most countries refraining from retaliation and keeping the trading system largely open.
  • Major economies have completed tariff agreements with the US administration, aimed at scaling back Washington's "reciprocal" tariffs and sector-specific duties.
  • Seoul officials are accelerating diplomatic efforts to finalize a framework trade deal, with a $350 billion investment package to be provided by Korea.
  • Finance Minister Koo Yun-cheol is expected to meet with US Treasury Secretary Scott Bessent later this week to officially conclude the agreement.
  • The IMF's latest forecast is roughly in line with projections from other major economic institutions, including the Bank of Korea and the Organization for Economic Cooperation and Development.

Statistics:

  • Korea's growth forecast raised to 0.9 percent for 2023 by the IMF.
  • 0.1 percentage point increase from the previous forecast released in July.
  • 1.8 percent maintained as the 2026 growth outlook for Korea.
  • $350 billion investment package to be provided by Korea under the framework trade deal.
  • 0.3 percent potential drop in global output next year due to increased tariffs and trade tensions.

Sources:

  • The International Monetary Fund (IMF)
  • The World Economic Outlook report (exact date not specified)
  • A recent revision by the Bank of Korea
  • The Organization for Economic Cooperation and Development
  • The administration of US President Donald Trump