IMF lowers forecast of Korean economic growth to 3.5%

The International Monetary Fund (IMF) lowered its forecast of Korea`s economic growth for this year to 3.5 percent, a Reuters news under a Washington dateline reported Wednesday. Ahead of the IMF`s ``World Economic Outlook`` report, scheduled to be officially released on Friday (Korean Standard Time), the Reuters report cites an IMF source saying that slackened economic growth in the United States and Japan are expected to result to reduced growth in all Asian countries this year except for China. The revised growth rate of 3.5 percent marks the lowest figure among the economic growth forecasts for Korea presented by Korean and foreign agencies so far. Last October, the IMF predicted that the Korean economy will grow by 6.5 percent this year but lowered its forecast to 4.5 percent this year, nearly half of the growth rate recorded in 2000.

The IMF foresees the global economy to grow by 3.2 percent this year, much lower than its initial forecast of 4.2 percent but expects that it will recover to 3.9 percent next year, according to Reuters. The economic growth projection for the United States was lowered to 1.5 percent this year from 3.2 percent predicted last September and to 0.6 percent from 1.8 percent for Japan. However, the news report quotes the IMF source as saying that China will register a solid 7.0 to 7.5 percent of economic growth this year, free from the effect of the global economic slowdown.

Meanwhile, IMF Managing Director Horst Koehler held a news conference in Washington on Tuesday ahead of the annual meeting of managing directors of IMF and International Bank for Reconstruction and Development (IBRD), slated for Apr. 29 and said that the world economy is in a very serious condition now but will recover from the second half of this year. He also said that the world is implementing economic policies toward the right direction including an interest cut by the United States, and predicted that the world economy will turn around toward growth in the latter half of this year or early next year.

Kwon Soon-Hwal shkwon@donga.com