By Diplomacy Journal Lee Kap-soo

Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol held a meeting with the IMF team, led by Mission Chief for Korea Mr. Rahul Anand, as part of the 2025 Article IV Consultation on September 23. The mission team has been visiting Korea from September 11 to 24.

Mission Chief Mr. Anand briefed DPM Koo on the outcomes of the two-week Article IV consultation, the first to be conducted since the launch of the new administration, and exchanged views on key issues.

He assessed that the Korean economy is on a recovery path, supported by the expansionary fiscal stance, including the supplementary budget, and the easing of domestic uncertainties, and projected that this recovery trend will continue into next year.

He also highly commended the new government’s structural reform efforts aimed at boosting growth, such as the ultra-innovative economy initiative and the AI transformation. He stressed that greater investment in such innovations would help consolidate Korea’s edge in high-tech industries and enhance its export competitiveness, even amid global trade uncertainties. In addition, he noted that policies such as expanding service exports, including K-content, and diversifying export markets would further support Korea’s external competitiveness.

At the same time, he acknowledged the need for expansionary fiscal policy to support economic growth at the current juncture, and assessed that the fiscal management approach reflected in the 2026 budget proposal was appropriate and effective. However, while Korea’s fiscal capacity is sufficient in the short term, he recommended that the government carefully assess and prepare for medium- to long-term fiscal risks, particularly in light of rising mandatory spending due to population aging.

DPM Koo concurred with Mission Chief Anand’s overall assessment of the Korean economy, and emphasized that, under the recognition that the next five years are “the golden time for the Korean economy,” the government will mobilize all policy capacities and foster collaboration among all economic actors to seize the opportunity for a rebound in growth.

Furthermore, DPM Koo explained that the government will pursue “performance-oriented fiscal management”, not merely fiscal expansion, so as to achieve both an active role of fiscal policy and long-term sustainability in meeting future demands. He also stated that fiscal policy will serve as a “turning point” in overcoming the crisis of low growth, establishing a virtuous cycle in which fiscal policy promotes growth and economic growth in turn leads to sound fiscal condition.