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Changes in IMF growth rate projections for 2020

The International Monetary Fund (IMF) revised its projection for South Korea’s 2020 economic growth rate to -1.9% on Oct. 13. The number is 0.2 percentage points higher than a previous projection in June.

In its “World Economic Outlook” published that day, the IMF revised its projected global economic growth rate for 2020 from -5.2% to -4.4% -- an increase of 0.8 percentage points -- and raised the projected rate for South Korea from -2.1% to -1.9%. While the number falls short of the -1.2% projection issued in April shortly after the COVID-19 pandemic erupted, it is still the second highest among the 37 members of the Organisation for Economic Co-operation and Development (OECD) after Lithuania (-1.8%). South Korea’s projected growth rate for 2021 was lowered by 0.1 percentage point from 3.0% to 2.9%.

The IMF cited an unequal recovery in its revision of the growth rate projections, noting that advanced economies and China have recovered faster than expected while recovery has been slower in other emerging economies. In June, the IMF predicted that the group of advanced economies (which includes the US, the Eurozone, and Japan) would see a growth rate of -8.1%, while the group of emerging economies (including India and Russia, but excluding China) would have a growth rate of -5.0%. But now the organization has adjusted both projections, with the group of advanced economies rising to -5.8% and the group of emerging economies dropping to -5.7%.

“Employment remains well below pre-pandemic levels and the labor market has become more polarized with low-income workers, youth, and women being harder hit. The poor are getting poorer with close to 90 million people expected to fall into extreme deprivation this year,” wrote Gita Gopinath, the IMF’s chief economist.

While noting that countries around the world had already poured nearly US$12 trillion into global fiscal support for the pandemic, Gopinath said that such fiscal support must continue “to ensure a sustained recovery.”

By Lee Jeong-hun, staff reporter

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