Seoul, September 24 (QNA) - The International Monetary Fund (IMF) projects that South Korea's economy will gradually recover in 2026, supported by easing uncertainty and more accommodative fiscal and monetary policies, while urging the government to boost domestic consumption and accelerate structural reforms.
During its annual review of South Korea, Rahul Anand, the IMF mission chief for Korea, said persistent uncertainty -- both in domestic politics and global trade -- has weighed on growth in 2025. He noted that the Fund now expects GDP growth of 0.9% this year, Yonhap News Agency reported.
Anand said domestic demand is expected to recover gradually, supported by accommodative macroeconomic policies and by a strong semiconductor export sector offsetting weakness in other export segments.
Looking ahead, he projected real GDP growth of 1.8% in 2026, with inflation likely to remain close to the 2% target.
However, he cautioned that achieving a higher growth rate -- such as 3% -- would require stronger policy measures, including revitalizing domestic demand, diversifying exports to reduce external risks, and accelerating structural reforms to raise productivity and address labor market challenges amid demographic headwinds.
Anand described the current fiscal and monetary stance of the Korean government as appropriate, given moderate inflation and a negative output gap, but emphasized that authorities must remain vigilant against external volatility.
He also stressed the importance of resuming fiscal consolidation once growth approaches potential, in order to build buffers for long-term, age-related spending pressures. (QNA)