IMF Staff Completes 2022 Article IV Mission to Republic of Korea

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.

  • The Korean economy has weathered the COVID-19 pandemic well, having regained the lost economic ground from the pandemic.
  • Growth is projected to remain robust in 2022 and 2023, at 3.0 and 2.9 percent, respectively, supported by a recovery in private consumption and continued strong export growth.
  • The Korean New Deal offers an opportune strategy to develop new growth drivers and achieve greater inclusiveness; broader product market reforms and steps to tackle remaining rigidities in the labor market will help generate greater impact.

Washington, DC: An International Monetary Fund (IMF) team, led by Mr. Martin Kaufman, Mission Chief for the Republic of Korea and Assistant Director of the Asia and Pacific Department, held virtual discussions on the 2022 Article IV Consultation from January 11 to 25, 2022. At the conclusion of the discussions, Mr. Kaufman issued the following statement:

“The Korean economy has continued to recover well from the COVID-19 pandemic shock, supported by its sound macroeconomic fundamentals, a timely and effective public health response, and the deployment of a comprehensive set of fiscal, monetary, and financial measures.

“As a result, Korea has regained lost economic ground from the pandemic. Activity has been supported by strong exports of high-tech products and resilient investment in machinery and equipment.

“The outlook is for robust growth in 2022 and 2023 at 3.0 and 2.9 percent, respectively, supported by a gradual easing of COVID-related restrictions and a recovery of private consumption, which has remained below the pre-COVID level, and continued strong external demand. Uncertainty surrounding the outlook remains elevated, however, reflecting external and domestic COVID-related risks. In this context, the authorities’ nimble policy making through the pandemic will remain key going forward.

“Building on the successful response to the COVID-19 shock, the tasks for the period ahead will be to sustain the recovery and maintain a stable inflation environment, and solidify the foundations for resilient, greener and more inclusive medium-term growth.

“As the pandemic abates, policy focus should shift from economic support to structural reform priorities, including in the context of the Korean New Deal, which represents a strategy to develop new growth drivers in a post-COVID normal and increase inclusiveness. Reforms that reduce entry barriers and stimulate competition, especially in the services sector, promote R&D in dynamic new areas, ensure strong human capital formation, and tackle remaining rigidities in the labor market can provide a further boost to productivity and potential growth. Strengthening carbon pricing to provide robust incentives for green investment will also be important to achieve the objectives of the green pillar of the Korean New Deal.

“We would like to express our gratitude to the authorities for excellent virtual discussions and logistical support during the Article IV consultation.”

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