IMF raises global economic growth rate by 0.8%P this year...Korea only raises 0.2%P

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Global economic growth rate significantly increased to -5.2→-4.4%

Korea growth rate slightly adjusted to -2.1→ -1.9%

For gradual reduction in selective support for restarting economic activities. The International Monetary Fund (IMF) became a covid-19 pandemic As we judged that the economic recession caused by the economic recession was less than originally expected, we raised our forecast for the global economic growth rate by 0.8%P (points) this year, but raised the forecast for Korea's growth rate by only 0.2%P, which is much smaller than this.

It is based on the judgment that the continued uncertainty arising from the trade conflict between the US and China, which is Korea's major trading partner, is more restricting the economic recovery compared to other countries.

The IMF released the'World Economic Outlook for September', which was announced on the 13th. The IMF raised Korea's economic growth rate of -1.9% this year, up 0.2 percentage points from the -2.1% forecast in June. However, it is lower than the IMF's estimate of -1.2% in April.

If this forecast leads to Korea's actual economic growth rate, it is the lowest since 1998 (-5.1%) during the financial crisis. The IMF predicts that the Korean economy will grow at 2.9% next year. The IMF believes that it is difficult to recover more than the 3% the government expects.

The IMF raised the global economic growth rate this year to -4.4%, up 0.8%p from the forecast of -5.2% in June. As for the reason for the upward revision, he mentioned that the economic recovery was more than expected, mainly in developed countries, such as GDP growth in 2Q. This is because economic activity in developed countries improved faster than expected in May-June, when the'lock down' measures were reduced, and strong economic recovery signs were seen in the third quarter.

The IMF reported that the global economic growth rate for next year was 5.2%, slightly lower than the June forecast of 5.4%. This is taking into account that the corona pandemic is prolonged and a second spread is expected. The IMF explained the reason, saying, "The base effect and social distancing from the higher outlook for 2020 will continue." The IMF also wrote about the downward trend of global economic growth, "imposing the soaring unemployment rate and widening the gap between real GDP growth and potential growth, both in developed and emerging countries."

In this global economic outlook, the IMF predicted the growth rate of developed countries to -5.8%, up 2.3%p from the forecast in June. In particular, the US increased its growth rate from -8.0% to -4.3%, and the Eurozone from -10.2% to -8.3%. In addition, Germany is forecast to increase 1.8%P to -6%, France to increase by 2.7%P to -9.8%, and Italy to increase 2.2%P to -10.6%. Japan also forecast at -5.3%, up 0.5%p from the forecast in June.

On the other hand, the forecast for the economic growth rate of emerging economies was lowered by 0.2%p during this period to -3.3%. Despite the economic recovery in China (1.9%), India's economic growth rate was adjusted to -10.3%, down 5.8%p to reflect the recession caused by the spread of Corona 19.

It is unusual for the IMF to only slightly adjust the growth rate forecast for Korea, even though major countries such as the US and China have significantly raised their growth rate forecasts. The IMF believes that while major economies such as the US, China, and Germany have seen stronger-than-expected economic recovery after 2Q, Korea's economic recovery is relatively modest. The IMF explained, "Korea's GDP in the second quarter was weaker than expected due to a hit in the export sector due to weakening external demand.

Bloomberg's analysis of economic growth forecasts from major global investment banks (IBs) and international organizations in September showed that the U.S. economy, which grew negatively by -31.7% in the second quarter (hereinafter based on an annual rate), will turn to 21.2% growth in the third quarter. It is expected. However, these organizations are showing the view that Korea will continue to grow negatively from -2.7% in the second quarter (hereafter compared to the previous year) to -1.5% in the third quarter.

In addition, despite the upward revision of Korea's economic growth forecast this year, the IMF presented the most pessimistic growth forecast compared to other institutions. This is because most institutions are holding Korea's economic growth rate at -1% this year. The Organization for Economic Development Cooperation (OECD) and the Asian Development Bank (ADB) project the growth rate of Korea this year at -1.0%.

The Bank of Korea predicted that at the end of August, Korea's economic growth rate was lowered by 1.1 percentage points from -0.2% to -1.3%. The Korea Development Institute (KDI) predicted the growth rate of the Korean economy this year at -1.1%. Global credit rating agency Moody's -0.8%, S&P's -0.9%, and Fitch's -1.1%, suggesting Korea's economic growth forecast this year. The IMF is also the most pessimistic about the outlook for the growth rate of the Korean economy next year. The ADB is 3.3%, the IMF is 3%, and the KDI is 3.5%, which is 3%, but the IMF is forecasting it at 2%.

The Ministry of Strategy and Finance said, "It is still expected to show the third highest growth rate among 39 developed countries and the second highest among 37 OECD member countries according to the classification of the IMF." "The growth outlook has been raised thanks to the active policy response of Korea, but the extent of the upward revision was limited due to the delay in recovery in the domestic demand and service sectors due to the re-proliferation of Corona 19 after mid-August."

The Ministry of Information and Communication introduced the IMF's policy recommendations along with the forecast of the economic growth rate. According to the Ministry of Finance, the IMF said, "If the crisis persists, provide necessary policy support while securing fiscal capacity for future fiscal expenditure growth." Do it." He added, "It is necessary to raise the progressive tax rate for the wealthy such as income tax and property tax, and international cooperation on digital tax."

In addition “Securing financial resources for increased health needs and spending priority on the health sector” said, “If the spread of Corona 19 intensifies, the victims will receive selective and temporary tax reductions, wage subsidies in case of closure of jobs, and ease of eligibility standards for unemployment benefits. Support and strengthen re-education." When economic activity resumed, it was also recommended to gradually reduce selective support and redistribute resources through public investment and support for the vulnerable.

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