On November 19, 2023, the International Monetary Fund (IMF) issued a warning that Korea's growth rate for the upcoming year may not exceed 2%, highlighting the urgent need for economic reforms to bolster resilience against potential risks.

In light of this forecast, major economic institutions, including the Korea Development Institute (KDI) and the Bank of Korea, have revised their growth projections downward, with KDI lowering its estimate from 2.1% to 2% due to a sluggish recovery in domestic demand.

The National Assembly Budget Office has also projected a decline in Korea's average annual potential growth rate from 2.33% during 2019-2023 to 2.1% for 2024-2028, raising alarms that it could approach 0% by 2050.

Rahul Anand, head of the IMF mission to Korea, has urged the government to implement structural reforms aimed at raising the country's potential growth rate, particularly in light of the challenges posed by aging demographics and productivity issues.

The securities industry has echoed these concerns, predicting that Korea's economic growth rate could dip into the 1% range, reflecting heightened investor anxiety over external uncertainties and potential economic downturns.

Experts emphasize that structural reforms are essential to combat declining birth rates and an aging population, both of which are contributing to the downward trend in Korea's potential growth rate.

Labor reform is particularly urgent, as Korea's labor productivity remains significantly below the OECD average, hindered by rigid work regulations that limit economic contributions.

To enhance potential growth rates, economic experts advocate for improvements in labor productivity through educational reforms and support for emerging industries.

Comprehensive mid- to long-term economic reforms are deemed critical for sustainable growth, with necessary measures including pension system reform and fiscal adjustments to address labor force declines.

The IMF has indicated that Korea's government debt is projected to rise from 52.9% of GDP in 2023 to 58.2% by 2029, marking the fastest increase among advanced non-reserve currency countries, which underscores the need for fiscal and pension reforms.

The IMF has also called for a gradual reduction in the base interest rate to support economic stability, emphasizing that urgent reforms should focus on expenditure rather than revenue to adapt to evolving economic conditions.

Amid these economic challenges, concerns are mounting regarding the potential impact of Donald Trump's second administration, which has proposed significant tariffs and tax cuts that could destabilize markets and adversely affect Korea's economy.