IMF "Korea's Economic Growth Expected to Weaken Due to China's Economic Slowdown"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] The International Monetary Fund (IMF) has forecasted that South Korea's economic growth will weaken due to China's economic slowdown and supply chain disruptions.

On the 28th (local time), Krishna Srinivasan, head of the IMF's Asia-Pacific Department, wrote on the IMF blog that "the growth momentum in the Asia-Pacific region is set to slow further due to the impact of Russia's invasion of Ukraine and other shock factors," and "South Korea's economic growth will weaken as a result of China's economic slowdown and supply chain disruptions."

The IMF had previously revised down the Asia-Pacific region's growth rate for this year from 4.9% to 4.2%, and next year's growth rate from 5.1% to 4.6%. Srinivasan pointed out that China's economic slowdown is likely to have significant spillover effects on trading partners within the region. In particular, both South Korea and Japan, which are closely integrated with China not only through global supply chains but also trade, are expected to experience slower growth due to reduced external demand and supply chain disruptions.

Srinivasan noted that most Asian countries, excluding China, have experienced capital outflows comparable to the 2013 "Taper Tantrum." The Taper Tantrum refers to the global financial market turmoil triggered in 2013 when then-Federal Reserve Chairman Ben Bernanke announced the tapering of asset purchases to end quantitative easing.

While assessing that inflationary pressures in Asia remain relatively moderate compared to other regions, Srinivasan highlighted that in many countries, inflation rates have exceeded central banks' targets. He advised, "As inflation expands to core prices, some countries need to quickly raise benchmark interest rates to prevent a wage-price spiral."

This content was produced with the assistance of AI translation services.