Dan Katz, First Deputy Managing Director of the International Monetary Fund (IMF), met with Deputy Prime Minister and Minister of Finance and Economy Koo Yoon-cheol and warned of inflation concerns should the Middle East crisis become prolonged.
According to the Ministry of Finance and Economy on the 20th, Katz said during a meeting with Deputy Prime Minister Koo at the Seoul Government Complex on the 19th, "Energy prices and financial market volatility have expanded due to the recent Middle East situation, raising downside risks to the global economy." He added, "If the situation becomes prolonged, there are concerns it could negatively affect the global economy's growth trajectory and inflation."
Katz indicated that the IMF plans to closely monitor related developments and reflect them in the World Economic Outlook (WEO) scheduled for release in April.
In January, the IMF revised its global economic growth forecast for this year to 3.3%, up 0.2 percentage points from its previous projection. Growth rates for major advanced economies were forecast at 2.4% for the United States, 1.3% for the United Kingdom, 1.1% for Germany, 1.0% for France, and 0.7% for Japan. However, given the Middle East crisis and surging international oil prices, the global growth rate is expected to be revised downward while inflation projections are likely to be raised.
Deputy Prime Minister Koo assessed that external uncertainties have recently increased significantly. He explained that the government has activated an emergency response system across all ministries regarding the Middle East situation and is closely monitoring energy supply and demand as well as overall trends in financial and real economies.
In particular, he emphasized that the Korean government is mobilizing all available policy tools across fiscal, financial, and industrial sectors, including a price cap on petroleum products and swift supplementary budget compilation.
The Ministry of Finance and Economy reported that Katz praised Korea's economy for responding well to domestic and external shocks and gave high marks to the government's rapid policy response regarding recent market volatility and impacts on the real economy.
Katz also expressed gratitude for Korea's active contribution to IMF capacity development programs for vulnerable and low-income countries and requested further strengthening of mutual cooperation going forward.
Deputy Prime Minister Koo responded, "We will continue to expand our contributions to capacity development programs in areas such as artificial intelligence (AI) and digital technology."