Republic of Korea: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Korea
IMF Staff Country Reports, May 13, 2019
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- Republic of Korea: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Korea
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Bibliographic details
- Published: May 13, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781498314794.002
Economic assessment and challenges
- Korea’s economy has strong fundamentals but is facing cyclical and structural headwinds.
- Potential growth will continue its decline.
- Polarization and inequality are concerns.
- Labor and product market duality persist.
- The government is focusing on supporting income, creating jobs, and promoting innovation.
Recent government actions
- Strengthened social safety nets.
- Substantially raised the minimum wage.
- Supported small-and-medium enterprises to boost employment.
- Expanded public sector jobs.
Fiscal and labor policy recommendations
- Fiscal policy should remain expansionary in the medium term.
- Fiscal policy focus: increasing social protection, boosting female labor force participation, and supporting growth enhancing structural reforms.
- Public sector job creation should be linked to developing services that cannot be provided by the private sector.
- The minimum wage increase for next year should be set below labor productivity growth.
Macroeconomic and financial policy guidance
- IMF staff recommend an integrated package of macroeconomic, financial and structural policies to:
- support growth,
- raise potential output,
- reduce excess internal and external imbalances,
- preserve financial stability.
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