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IMF Raises 2026 Growth Forecast to 1.9% Amid Survey Predicting Near‑1% Expansion

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IMF Raises 2026 Growth Projection to 1.9% The International Monetary Fund lifted South Korea’s 2026 growth estimate to 1.9 %, a 0.1‑point increase from its October outlook. This places the country just above the 1.8 % average growth rate for advanced economies. The IMF attributes the upgrade to a recovery in the second half of 2025 supported by accommodative fiscal and monetary policies. It also flags downside risks such as AI‑focused investment concentration, persistent trade uncertainty, geopolitical tensions, and high global debt levels [2].

Survey Shows Economists Expect Near‑1% Growth in 2026 Yonhap‑reported survey of 100 economics professors found 54 % anticipate South Korea will grow within a 1 % range this year. Respondents gave an average projection of 1.8 % expansion, below the government’s 2 % target and the IMF’s 1.9 % estimate. The poll notes the economy slowed to 1 % growth in 2025 after a 2 % rise the year before. About 36 % foresee a 2 % rebound starting in 2027, driven by recovering consumption and demand. Nearly 60 % warn that pending U.S.–Korea tariff negotiations could dampen exports, while 92 % expect AI to boost productivity and 90 % call for safeguards against technology leakage [1].

Domestic Forecasts Diverge Around Government Target Seoul projects 2.0 % growth, the Bank of Korea expects 1.8 %, and the OECD forecasts 2.1 %, all hovering near the official 2 % goal. The IMF’s 1.9 % outlook aligns closely with the survey’s average of 1.8 % but remains short of the government target. The spread reflects differing views on the durability of recent consumption recovery and the impact of external trade pressures [1][2].

Key Risks Include Trade Uncertainty and AI Concentration Both the IMF and the survey highlight trade‑related uncertainty, with the latter pointing to pending U.S.–Korea tariff talks that could curb export growth. The IMF warns that heavy investment in AI and advanced‑technology firms may create concentration risks, echoing the survey’s 92 % view that AI can raise productivity but also requires strict leakage controls. These overlapping concerns suggest policymakers must balance technology‑driven gains against external trade and geopolitical headwinds [1][2].

Sources

Timeline

2025 – South Korea’s economy expands by 1 % in 2025, down from 2 % in 2024, signalling a slowdown that frames all subsequent forecasts. [1]

Jun 24 – Nov 8, 2025 – A data‑breach attack on e‑commerce giant Coupang exploits its electronic‑signature key, leaking private information of more than 30 million customers and exposing major cybersecurity gaps. [4]

Dec 2, 2025 – President Lee Jae‑Myung declares that restoring communication channels with North Korea will be the “starting point for peaceful coexistence,” positioning inter‑Korean dialogue as a cornerstone of his foreign‑policy agenda. [4]

Dec 2, 2025 – The United States retroactively lowers tariffs on Korean imports to 15 %; the Korea Composite Stock Price Index climbs 1.9 % and the won strengthens against the dollar, illustrating immediate market optimism. [4]

Dec 2, 2025 – South Korea’s Fair Trade Commission fines NIFCO Korea Inc. and ITW Automotive a combined 35.4 billion won for bid‑rigging in automotive air‑vent components, reinforcing competition‑law enforcement. [4]

Dec 2, 2025 – Prosecutors announce they will not appeal a lower‑court ruling that acquitted a worker of a minor “Choco Pie” theft, marking a rare de‑escalation of a low‑profile criminal case. [4]

Dec 2, 2025 – An IMF economist at a Seoul conference states that South Korea’s economy “is beginning to show signs of a rebound,” offering a cautiously optimistic view from the global lender. [4]

Dec 2, 2025 – The OECD keeps its 2025 growth projection at 1 % but projects 2.1 % growth for both 2026 and 2027, slightly above domestic forecasts and suggesting confidence in a gradual recovery. [5]

Dec 2, 2025 – IMF Asia‑Pacific economist Sakai Ando forecasts 0.9 % growth for 2025 and 1.8 % for 2026, noting a resilient first half of 2025 but warning of trade‑tension, AI‑investment concentration, and fiscal‑capacity risks. [6]

Dec 19, 2025 – AMRO projects real GDP growth of 1.0 % in 2025 and 1.9 % in 2026, attributing the rebound to private‑consumption strength and resilient exports, while flagging housing‑market corrections, regional‑bank exposures, and a shrinking labor force as domestic vulnerabilities. [3]

Jan 19, 2026 – The IMF lifts South Korea’s 2026 growth outlook to 1.9 % (up 0.1 pp since October), continuing upgrades that began in July; it cites a second‑half‑2025 recovery and supportive fiscal/monetary policy, but flags downside risks from AI concentration, trade uncertainty, geopolitical tensions, and high global debt. [2]

Jan 25, 2026 – A Southernpost Inc. survey of 100 economics professors finds 54 % expect 2026 growth in the 1 % range, 36 % anticipate 2 % growth from 2027 onward, and the average 1.8 % forecast falls short of the government’s 2 % target; 92 % say AI will boost productivity, 90 % demand strict safeguards against tech‑leakage, and ≈60 % warn that U.S.–Korea tariff talks could hurt exports, with the won projected at 1,403‑1,516 per dollar. [1]

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