The International Monetary Fund (IMF) projected South Korea's economic growth rate at 1.0% for this year. This figure is 1.0 percentage point (p) lower than the 2.0% presented in January, marking a significant downward revision. The IMF also lowered its global economic growth forecast to 2.8% for this year, reflecting global downside risks such as U.S. trade pressures and high interest rates.
The IMF released the April World Economic Outlook on the 22nd at 10 p.m. (Korean time, 9 p.m. local time in Washington). This forecast introduced a method that presents both a 'baseline forecast' and an 'alternative forecast' instead of a single figure, reflecting recent high policy uncertainty.
◇ Global growth rates significantly revised downward… 'Protectionism puts downward pressure on the global economy'
According to the 'baseline forecast,' based on information available as of the 4th of this month, the IMF projected the global economic growth rate at 2.8%. This figure is a decrease of 0.5 percentage points compared to the January forecast. The growth rate for the Sunjin group was downward adjusted to 1.4% from January, while the growth rate for the SIS Dental was adjusted to 3.7%.
Under the baseline forecast, South Korea's growth rate is projected at 1.0% for this year. This represents a downward adjustment of 1.0 percentage points compared to January. The IMF only presented the baseline forecast for country-specific and regional growth rates.
For specific countries, the United States is projected to have a growth rate of 1.8%, down 0.9 percentage points from the January forecast. This result reflects trade tensions, delays in consumer recovery, and policy uncertainty. The forecasts for most advanced countries were also uniformly revised downward, with Germany at 0.0%, France at 0.6%, the United Kingdom at 1.1%, and Japan at 0.6%.
China lowered its growth rate to 4.0%, reflecting the negative impact of tariff measures, down 0.6 percentage points compared to January. Mexico was significantly revised down to -0.3% growth, a decrease of 1.7 percentage points.
◇ 'Alternative forecasts' presented… Scenarios change based on tariff policies
In this report, the IMF presented an 'alternative forecast' alongside the baseline forecast, depending on the timing of shifts in the U.S. tariff policy.
Initially, in the alternative forecast before the announcement of reciprocal tariffs on the 2nd of this month, the global growth rate was estimated at 3.2%, down 0.1 percentage points from the January forecast. In contrast, the baseline forecast after the announcement of the tariff suspension on the 9th predicted that the downside risks for the United States and China would increase, leading the growth rate to remain the same as the baseline forecast at 2.8%.
Next year's global growth rate is projected at 3.0% in the baseline forecast, while it is lowered to 2.9% in the alternative forecast. It is estimated that the losses from the United States and China could outweigh the gains from other countries.
The IMF pointed out that the risks to the global economy are generally focused on downside factors. Major risk factors include: ▲ Consumption and investment contraction due to increased policy uncertainty, such as trade conflicts ▲ Lack of fiscal and monetary policy room due to high interest rates and elevated liability levels ▲ High volatility in financial and foreign exchange markets, along with potential adjustments in stock and market prices. However, the IMF noted that if the U.S. reduces tariff measures and negotiations progress, it could serve as an upside adjustment factor for the global economy.
Kristalina Georgieva, the IMF Managing Director, remarked on the 17th (local time) that "the new growth outlook includes notable downward adjustments, but it does not indicate a recession," adding, "the impacts of the global trade war from Trump's tariffs could lead to upward adjustments in inflation forecasts for some countries."
To address heightened policy uncertainty and slowed growth, the IMF recommended creating a predictable trade environment while avoiding indiscriminate industrial subsidies. It also emphasized the need for efforts to prevent trade fragmentation through the expansion of regional and multilateral trade agreements. Monetary policy should be implemented cautiously while maintaining a balance between financial market stability and expected inflation.
The IMF publishes the World Economic Outlook every January and in April, July, and October. In April and October, it releases forecasts for all member countries, while in January and July, it provides revised forecasts specifically for the top 30 countries (including South Korea).