An International Monetary Fund (IMF) team, led by Mission Chief Rahul Anand, concluded its visit to the Republic of Korea on November 20, 2024. The visit was part of the 2024 Article IV Consultation discussions held from November 7 to November 20.
Rahul Anand stated, "Strong economic fundamentals and sound macroeconomic policies have helped the Korean economy navigate through multiple global shocks in recent years." He noted that economic growth has recovered, inflation has declined steadily, and financial stability risks have decreased. However, challenges remain in boosting growth potential amid rapid population aging and adapting to shifting trade patterns and climate vulnerabilities.
Growth for Korea is projected at 2.2 percent in 2024, driven by strong semiconductor exports but partially offset by weak domestic demand recovery. Real GDP is expected to expand by 2.0 percent in 2025 as the economy converges to its potential growth. Inflation was recorded at 1.3 percent year-on-year in October 2024 and is expected to stay near the target of 2 percent in 2025.
Anand highlighted that "a gradual monetary policy normalization seems appropriate given high uncertainty," with limited foreign exchange interventions advised only for preventing disorderly market conditions. He also mentioned that more ambitious fiscal consolidation will be needed beyond the proposed measures for the 2025 budget to address long-term spending pressures.
The IMF underscored the importance of medium-to-long term economic reforms to sustain growth amid structural transitions such as a declining labor force and advancing capital market reforms. Enhancing allocative efficiency in services sectors and small- and medium-sized enterprises (SMEs), while leveraging artificial intelligence could boost productivity.
The statement emphasized maintaining Korea's competitiveness within a changing global trade landscape through innovation, supply chain diversification, and service export promotion. Structural fiscal reforms are required for meeting aging-related spending needs alongside targeted policies for AI adoption preparation.
Anand concluded with gratitude towards Korean authorities and stakeholders for their support during the mission.