Deputy Prime Minister and Minister of Economy and Finance Koo Yun Cheol (second from right) on Oct. 17 holds a meeting with International Monetary Fund Managing Director Kristalina Georgieva at the fund's headquarters in Washington. (Ministry of Economy and Finance)

By Kang Gahui

The International Monetary Fund (IMF) forecasts significant recovery next year for the Korean economy with growth of 1.8%.

The IMF announced this on Nov. 24 in a report after its executive board finished a consultation for Korea.

The report predicted that the economy entered the recovery phase from the second half of this year and will show a clear rebound next year. The 2025 growth forecast of 0.9% this year cited "looser monetary and fiscal policies" and improved consumer sentiment since the June 3 election of President Lee Jae Myung.

Economic growth will rise to 1.8% next year thanks to the easing of foreign and domestic jitters and the full effect of policy actions such as the supplementary budget, the report said, adding that the growth rate will gradually recover to its potential level.

The IMF Executive Board commended Korea for showing robust resilience despite external and internal shocks, adding that its solid economic fundamentals and the government's "skillful policy management" underpinned growth.

The report, however, warned of trade and geographical risks and downside hazards for the Korean economy such as a semiconductor slowdown due to sluggish demand for artificial intelligence. It advised higher investment in research and development and innovation, two areas with high potential to back growth.

kgh89@korea.kr