Lee Jae-myung cites IMF outlook of rising South Korean potential growth for two years
In short
President Lee Jae-myung said on 20 October on X that the IMF expects South Korea's potential growth rate to rise this year and next, calling it a very positive signal for the economy's fundamentals. He said two straight yearly rises have not happened in about 40 years, since 1986-87, and pledged to focus on housing, jobs and inclusive finance.
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President Lee Jae-myung said on 20 October that the International Monetary Fund expects South Korea's potential growth rate to rise for two years in a row, this year and next. In a post on X, he called this a dramatic reversal in the fundamentals of the Korean economy and welcome news, according to Yonhap, SBS News and Asia Economy. [ 1 , 2 , 3 , 4 ]
Lee wrote that two consecutive yearly rises in potential growth had last occurred in 1986-87, a period of low oil prices, low interest rates and a weak dollar, about 40 years ago. He explained that potential growth is the maximum rate an economy can reach using its labor, capital and productivity without stimulating prices, and said that, put simply, it measures a country's basic economic strength. He called the rebound a very positive signal that the economy's fundamentals are recovering. [ 1 , 2 , 3 , 4 ]
Yonhap and SBS News said the IMF's October World Economic Outlook estimated South Korea's potential growth at 1.94% last year, 2.14% this year and 2.20% next year. Asia Economy said the figures were back-calculated from real GDP growth and GDP gap rates in the outlook the IMF published on 13 October. It said potential growth had been 1.96% in 2024, so it rises by 0.20 percentage points this year and 0.06 points next year. Asia Economy also said that in 1985-87 it rose from 9.67% to 9.77% and then 9.91%. [ 2 , 3 , 4 ]
Asia Economy added that the IMF forecast real growth of 3.33% this year and 2.83% next year, and per capita GDP of 43,512 dollars this year, above 40,000 dollars for the first time. It said strong chip exports and larger AI-related equipment investment were cited as main factors behind the outlook. [ 4 ]
Lee said the economy should keep growing on its improved strength and that the fruits of growth should be shared evenly among all citizens. He said the government would concentrate its efforts on the 3 mega projects and 7 SEED projects, together with three core social policies of housing supply, job stability and inclusive finance, so that people feel the warmth of growth. He added that he would do his best to improve people's lives. [ 1 , 2 , 3 , 4 ]
Asia Economy described the 3 mega projects as a national growth strategy centered on large investment in semiconductors, physical AI and AI data centers. It described the 7 SEED projects as covering nuclear fusion, small modular reactors, renewable energy, quantum, space and aviation, advanced bio and advanced supply chains. It said the message matched Lee's statement on 15 October, ahead of his 500th day in office, that housing, jobs and finance are top priorities. [ 4 ]
Why it matters
The outlets report the president presenting the IMF projection as evidence that the economy's underlying strength is recovering. He tied it to a government push to spread the gains from growth more widely, which signals his policy priorities.
Key facts
- Lee Jae-myung said on 20 October that the IMF projects South Korea's potential growth rate to rebound for a second year in a row, this year and next. [ 1 , 2 , 3 , 4 ]
- Lee wrote on X that two consecutive yearly rises in the potential growth rate had last occurred in 1986-87, about 40 years ago. [ 1 , 2 , 3 , 4 ]
- The IMF's October World Economic Outlook puts potential growth at 1.94% last year, 2.14% this year and 2.20% next year, according to Yonhap, SBS News and Asia Economy. [ 2 , 3 , 4 ]
- Lee called the rebound a very positive signal that the fundamentals of the Korean economy are recovering. [ 1 , 2 , 3 , 4 ]
- Lee said the government will focus on its 3 mega projects, 7 SEED projects and three core social policies: housing supply, job stability and inclusive finance. [ 1 , 2 , 3 , 4 ]
Confirmed by several sources
- Lee Jae-myung said on X on 20 October that the IMF projects South Korea's potential growth rate to rise for two consecutive years, this year and next, the first such run since 1986-87. [ 1 , 2 , 3 , 4 ]
- The IMF's October World Economic Outlook figures put South Korea's potential growth rate at 1.94% last year, 2.14% this year and 2.20% next year. [ 2 , 3 , 4 ]
- Lee said the government will concentrate its efforts on the 3 mega projects, the 7 SEED projects, and housing supply, job stability and inclusive finance. [ 1 , 2 , 3 , 4 ]
Still unclear
- How the IMF potential growth figures were produced. Asia Economy said the figures were back-calculated from the IMF's real GDP growth and GDP gap rates in the 13 October outlook, while Yonhap and SBS said the IMF estimated them.
- The IMF's headline growth forecasts and per capita GDP figure. Only Asia Economy gave a real growth forecast of 3.33% this year and 2.83% next year, and per capita GDP of 43,512 dollars this year.