Choi Ji-young, New IMF Executive Director: "Korea’s Economic Growth Forecast Would Have Exceeded 1.9% Without the War"

"If it were not for the U.S.-Iran issue, the International Monetary Fund (IMF) would have forecasted a higher economic growth rate for Korea than the current 1.9%," said Choi Ji-young, the newly appointed IMF Executive Director, during a meeting with reporters in Washington D.C., USA, where the IMF Spring Meetings are being held, on April 17 (local time).

The IMF recently projected Korea's economic growth rate for this year at 1.9% in its 'World Economic Outlook, April 2026.' Assuming that the Middle East war concludes in the first half of the year and that energy production and exports are normalized, the global economic growth rate forecast was revised downward from 3.3% in January to 3.1% for this year, while Korea's forecast was left unchanged. This stands in contrast to the OECD's sharp downward revision for Korea from 2.1% to 1.7%.

Choi Ji-young, the newly appointed IMF Executive Director, is interviewed by reporters on the 16th in Washington D.C., USA, where the IMF Spring Meetings are being held. Photo by Joint Press Corps

원본보기 아이콘

Choi explained, "Although the global outlook has been lowered, the IMF believes that advanced economies have a short-term buffer under a typical oil price scenario, and Korea is viewed in the same context." She added, "In particular, the 26 trillion won supplementary budget, which includes measures such as a cap on oil prices, is estimated to have contributed about 0.2 percentage points to the forecast."

She continued, "Korea was affected by the Middle East war, but since the fourth quarter of last year, trade performance in sectors such as semiconductors, automobiles, and shipbuilding has been strong. As a result, Korea is in a position to pay down debt rather than generate a fiscal deficit, showing that there is sufficient policy capacity. The IMF's view of the Korean economy is very positive," she assessed.

However, the high inflation rate forecast is a cause for concern. The IMF expects Korea's inflation rate to reach 2.5% this year, which is 0.7 percentage points higher than the 1.8% forecast announced in November last year. No forecast was published in January this year.

Choi noted, "Although there was no official announcement in January, the IMF at that time expected a rate around 1.9%." She added, "While the economic growth rate forecast is being maintained, the outlook on inflation is clearly negative." She further commented, "The problem is that if this uncertainty persists and oil prices approach around $100, inflation concerns could intensify."

Ji-Young Choi, new IMF Executive Director, is being interviewed by reporters in Washington D.C., USA, where the IMF Spring Meetings are being held on the 16th. Photo by Joint Coverage Team

원본보기 아이콘

Recently, the IMF's 'Fiscal Monitor' forecasted that Korea's government debt-to-GDP ratio would rise from 54.4% this year to 60.1% in 2029 and surge to 63% by 2031. This is a more severe projection compared to last November's estimate that it would rise to 59% by 2030.

Regarding this, Choi explained, "It only stands out compared to other advanced economies where the debt ratio is being maintained." She added, "To say that the IMF issued a 'warning' about Korea's government debt ratio is an exaggeration."

She also said, "In fact, the projection for the national debt-to-GDP ratio has actually been lowered." According to the IMF, Korea's general government debt-to-GDP ratio for 2030 is now projected at 61.7%, which is 2.6 percentage points lower than the 64.3% forecast made last October.

Meanwhile, Choi, who previously served as Director General for International Economic Affairs at the Ministry of Economy and Finance, began her term as the new IMF Executive Director on April 6. She is a career international economic official, having spent most of her public service career in organizations related to international finance. She graduated from Korea University with a bachelor's degree in business administration and earned a master's degree in economics from Missouri State University in the United States.

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.