IMF Lowers South Korea's Debt-to-GDP Ratio Forecast to 46.1% for 2023

The International Monetary Fund (IMF) has revised its forecast for South Korea's government debt-to-GDP ratio for this year, lowering it to 46.1%. This marks an 8.3 percentage point decrease from the previous estimate of 54.4% made in April.

According to the latest Fiscal Monitor released on October 14, South Korea’s debt ratio remains significantly below the averages of the G7 countries (123.6%) and other advanced economies (107.6%).

The forecast for 2031 was also adjusted, dropping from 63.1% to 51.3%. The IMF predicts a 5.2 percentage point increase in the ratio from this year to 2031, which is considerably less than the average increase of seven points expected for advanced economies.

The downward revision was attributed to strong GDP growth and the anticipated improvement in revenue conditions through 2030. Additionally, both the Organisation for Economic Co-operation and Development and credit rating agencies Fitch and Moody's have provided positive evaluations of South Korea's fiscal management.

The South Korean government plans to continue supporting the recovery of the economy’s potential growth rate through proactive investments while ensuring fiscal sustainability to foster a beneficial cycle of fiscal prudence and growth.