IMF raises Korea’s 2026 growth forecast to 1.9% from 1.8%

(Yonhap)

The International Monetary Fund (IMF) has raised its forecast for South Korea’s real gross domestic product (GDP) growth this year to 1.9 percent, up 0.1 percentage point from its previous estimate.

The upward revision is largely attributed to a recovery in the semiconductor sector fueled by expanding investment in artificial intelligence (AI).

According to the Ministry of Economy and Finance on Monday, the IMF expected the Korean economy to grow by 1.9 percent this year in its January 2026 World Economic Outlook report.

This is nearly double last year’s growth rate of 1 percent.

The Korean government had also presented a growth target of 2 percent for this year in its economic policy directions announced at the beginning of the year.

The IMF releases its World Economic Outlook report four times a year in January, April, July, and October.

The April and October reports provide regular forecasts covering all member countries, while the January and July reports offer updated forecasts for 30 major economies.

The latest release falls under the updated forecast category and covers major countries, including Korea.

The IMF also raised its forecast for global economic growth this year by 0.2 percentage point to 3.3 percent.

Advanced economies are expected to grow by 1.8 percent, while emerging and developing economies are projected to expand by 4.2 percent.

The IMF explained that the overall upward revision reflects factors such as a surge in AI-related investment, continued fiscal and monetary policy support, and accommodative global financial conditions.

Among advanced economies, the United States is projected to post particularly strong growth this year at 2.4 percent, well above that of the euro zone at 1.3 percent and Japan at 0.7 percent.

Among emerging and developing economies, India is expected to record the highest growth rate this year at 6.4 percent, followed by China and Saudi Arabia at 4.5 percent each, and Nigeria at 4.4 percent.

The IMF also forecast that global inflation will continue to ease, slowing to 4.1 percent in 2025 and 3.8 percent in 2026, largely due to declining energy prices. Inflation trends, however, are likely to diverge across countries, it said.