"The IMF expects Korea's economic growth rate to be 3.0 percent this year and next year," said Christine Lagarde, managing director of the International Monetary Fund (IMF) in a press conference held in Seoul on September 11. The IMF had forecast that Korea's economic growth rate will reach 2.7 percent this year.
"The Korean economy is very resilient and is powered by a variety of trade agreements," Lagarde said. "I believe that the Korean economy will continue to be robust taking the strength of the Korean people into consideration."
"The Korean economy has enough financial resources and has to cope with mid- to long-term tasks by utilizing the resources," Lagarde said. "South Korea needs to strengthen social safety nets to solve problems such as taking care of children and the elderly. This will help growth and increase social productivity."
The IMF managing director cited the reduction of its work force and a slowdown in productivity as challenges for the Korean economy.
In relation to geopolitical risks such as North Korea, Lagarde pointed out that conflicts on the Korean peninsula will have some impacts on the Korean economy and downside risk will increase when a tension is ratcheted up on the peninsula.
"Some measures may be positive," Lagarde said about the Moon Jae-in government's income-led growth policy. "If we raise the minimum wage, for example, people can spend more to boost domestic demand and balance economic growth."
Legarde, however, said about her experience as France's finance minister and advised that there is a place for balance and prudence in income-led growth policies. "An income-driven growth policy is a demand-generating policy and to make the policy successful, the supply must be adjusted in accordance with the speed of economic growth," she said.
Earlier Lagarde attended the International Conference on Sustainable Growth Perspectives and Challenges for Asia held jointly by the Bank of Korea and the Ministry of Strategy and Finance, the International Monetary Fund (IMF) and the Peterson Institute for International Economics (PIIE) from September 7 to 8, and met President Moon Jae-in and Kim Dong-yeon, deputy prime minister and minister of strategy and finance in the morning of September 11.