Why the IMF’expected’ the growth rate of Korea this year

3.6% forecast, up 0.5%p from two months ago…Exports, etc. are strong on the upturn of the global economy
Global IBs also raised their forecasts for three consecutive months…Delayed recovery of service sector and consumption is a challenge

[News Quest = Reporter Choi Seok-young]As the International Monetary Fund (IMF) proposed this year’s real gross domestic product (GDP) growth forecast of this year to 3.6%, up 0.5 percentage points from two months ago, expectations for an early escape from the corona economic crisis are rising. have.

This is the same as the growth rate forecasts predicted by the world’s major investment banks (IBs). Major institutions such as the Organization for Economic Cooperation and Development (OECD, 3.3%), the Bank of Korea (3.0%), and the Korea Development Institute (3.1%) and the Korean government This is higher than the forecast (3.2%).

This is interpreted as a result of reflecting the effects of the Korean government’s active fiscal policy, such as an additional budget (additional budget), and exports survived along with the global economic recovery trend.

◇ IMF raises Korea’s growth rate forecast by 3.6%… 0.5%p in 2 months

According to the ‘2021 Annual Discussion Results Report’ with the Korean government on the 26th, the IMF increased the growth rate of Korea to 3.6% this year, reflecting the increase in exports and investment and supplementary bills following the economic recovery of major countries.

This report is the result of the IMF’s discussions with the Ministry of Strategy and Finance and the Bank of Korea from January 13th to 26th on economic trends and prospects in Korea.

The IMF raised the forecast for Korea’s growth rate again two months after the announcement of the revised global economic outlook in January.

Earlier, when the IMF announced its global economic outlook, it suggested the growth rate of Korea this year at 3.1%. Since then, in the process of preparing the annual consultation report, it has been raised to 3.4%, and the forecast was raised to 3.6% again, reflecting the supplementary draft announced earlier this month.

The Ministry of Information and Communication explained, “Amidst the economic recovery patterns vary from country to country after the COVID-19 vaccination, Korea has succeeded in differentiation based on comprehensive policy responses and sound fundamentals.”

“This means that our economy is one of the strongest and fastest recovering leading group countries in the corona crisis.”

◇ Concerns over the service sector and slow consumption recovery

The IMF feared that the recovery of service sector and consumption is inadequate, unlike exports, which have risen in a clear rebound, and that employment is still far below the level before the coronavirus.

Accordingly, it was advised that, in terms of policy, it is necessary to expand screening support for the victims of Corona 19 through additional financial expansion.

Monetary policy should maintain the current easing stance, but if the downside risk materializes, it is necessary to implement a non-traditional monetary policy.

At the same time, the IMF diagnosed that a more relaxed monetary policy would solidify the economic recovery in the future and contribute to inflation.

In addition, it is necessary to maintain liquidity support for companies until the economic recovery is solid, and to strengthen related regulations if the current trend of household debt growth continues.

Deputy Prime Minister Hong Nam-ki and Minister of Equipment, said, “The 3.6% forecast at the end of last year is far exceeding the estimate of the Korean government as well as the OECD forecast, which was the highest among major international organizations,” and said, “It is one of the most authoritative international organizations. “It is of great significance that the IMF has raised its forecasts significantly.”

He said, “The government will do its best to make the Korean economy the first group to escape from the corona crisis by actively taking advantage of the opportunity to upturn the global economy.”

◇ Global IBs also have’clear’ Korean economic outlook

Prior to the IMF, the world’s major investment banks (IBs) also projected Korea’s growth rate this year to 3.6%, predicting a rapid economic recovery.

According to data from the International Finance Center, as of the end of February, 9 overseas IBs such as Barclays, Bank of America Merrill Lynch (BoA-ML), Citi, Credit Switzerland, Goldman Sachs, JP Morgan, HSBC, Nomura, UBS, etc. The growth rate is on average 3.6%.

These IBs projected Korea’s GDP growth rate to 3.3% this year as of the end of October last year and maintained the same value until November. Then, at the end of December last year, it increased to 3.4%, and from January this year to February, the monthly increase was increased by 0.1 percentage points.

They raised their forecasts for this year’s growth in Korea, India, Taiwan, Singapore, and Indonesia among the 10 Asian countries, while Malaysia, Thailand, Hong Kong, the Philippines and Vietnam fell.

By IB, as of the end of February, HSBC presented Korea’s growth rate forecast at 3.4%, 0.7 percentage points higher than a month ago (2.7%).

Others kept their forecasts at the end of January. UBS was the highest with 4.1%, followed by JP Morgan (4.0%), Goldman Sachs (3.8%), Credit Switzerland, Nomura (3.6%), Barclays, BoA-ML (3.4%), and Citi (3.3%). In order.

As of the end of February, the forecast for Korea’s 2022 growth rate presented by these nine IP locations is 3.0%, the same as the previous month.

Copyright © NewsQuest Unauthorized reproduction and redistribution are prohibited.