The International Monetary Fund (IMF) has modestly cut its global growth projection for 2024 while sharply raising its outlook for South Korea, reflecting divergent impacts from the Middle East conflict and the burgeoning artificial-intelligence (AI) technology cycle.
In its July “World Economic Outlook Update,” the IMF trimmed its forecast for world GDP growth this year to 3.0%, down 0.1 percentage point from its April estimate of 3.1%. Both advanced economies and emerging and developing economies saw their forecasts downgraded by 0.1 point, to 1.7% and 3.8% growth, respectively.
By contrast, South Korea’s growth forecast was lifted by 0.7 point to 2.6%—the largest upward revision among the IMF’s top-30 economies—and its 2025 outlook was raised by 0.4 point to 2.5%. The Fund cited Korea’s strong external demand and its position as one of the world’s four largest net exporters of AI hardware (alongside Taiwan, Thailand and Malaysia).
The United States’ growth forecast was left unchanged, supported by looser financial conditions and ongoing technology investment. The eurozone’s 2024 forecast was cut by 0.2 point to 0.6%, and Japan’s by 0.1 point to 1.1%, both weighed down by high energy costs. China’s forecast was upgraded by 0.2 point to 4.7%, on the back of robust exports and gains in advanced manufacturing despite domestic consumption challenges.
On inflation, the IMF now sees global consumer prices rising 4.7% this year—up 0.3 point from April—driven by higher energy and food costs, although it expects core inflation in major economies to gradually converge toward targets.
While global risks have eased slightly since April, the IMF warned that downside pressures remain, including geopolitical uncertainty in the Middle East, trade fragmentation, waning policy buffers in some countries, and the risk that unmet AI expectations could dampen consumption and financial activity.
Asia Development Bank Aligns with IMF on Korea
Shortly after the IMF update, the Asian Development Bank (ADB) raised its 2024 growth forecast for South Korea by 0.7 point to 2.6% and nudged up its 2025 outlook by 0.1 point to 2.0%. The Korea Development Institute’s latest economic review also omitted earlier references to downside risks from the Middle East conflict.
Record Current-Account Surplus
Reflecting strong overseas demand for semiconductors and other goods, Bank of Korea data show that May’s current-account surplus reached a record $38.61 billion, surpassing the previous monthly high of $37.93 billion in March. Through May, the cumulative surplus of $141.28 billion has already exceeded last year’s total.