IMF expects S. Korea to grow 4.3% in 2021…keeping its July projection
Updated: 2021-10-13 07:57:43 KST
The International Monetary Fund has slightly downgraded its global economic growth forecast for 2021 as the world is struggling from the on-going pandemic and supply disruptions.
The agency expects the global economy to grow five.nine percent this year point-one percentage point down from its July projection.
"The global economy is having a supply bottleneck problem. Some raw materials and intermediate goods are not being produced as smoothly as it could, and they are not being delivered as quickly as they would have before the coronavirus because they are facing shortage of ships, and shortage of shipping personnel. So that probably accounts for the lower global growth output."
But the IMF has maintained its previous projection for South Korea.
Its 2021 economic growth forecast… is unchanged from its previous forecast of four.three percent.
Before it's latest projection, the agency had been continuously revising up the growth forecast for South Korea over the last year.
When asked by email what are the contributing factors to those continuous upgrades for Korea's GDP outlook, the IMF replied that:
Early in the year, South Korea's real GDP increased mainly thanks to manufacturing exports as well as facilities investment, which were mainly driven by semiconductors. From the second quarter, two supplementary budgets and low interest rates have prompted consumption, triggering a faster-than-expected recovery.
The agency added that overall, they expect Korea's solid recovery to continue if the country's pandemic is well managed.
However, experts say that there are still some downside risks that Korea needs to pay attention to in order to achieve sustainable growth.
"Depending on government expenditure to maintain high growth is that eventually government will have to reduce its expenditure.we may see what's happening in China which is that growth rate is going to fall fairly rapidly and that's going to cause some disruption in the economy."
The expert added that another potential downside risk is that investment in Korea is concentrated in one particular sector…semiconductors… so it is essential to make concerted efforts to diversify investment across other industries.
Seo Eunkyung, Arirang News.