South Korea may need more fiscal aid and monetary easing to support a faster economic recovery from the coronavirus pandemic, the International Monetary Fund (IMF) mission said on Thursday.
A stronger recovery and an inflation rate near the Bank of Korea’s 2% target “could be achieved through a modest further easing, while forward guidance on the likely course of monetary policy could also help ease financial conditions currently,” IMF mission chief Andreas Bauer said in a statement.
The mission chief also said South Korea’s macroprudential policies should be tightened further if household credit continues to rise sharply.
The IMF statement was released following the conclusion of its annual assessment of South Korea’s economy. It predicted that the trade-reliant economy will grow 3.1% this year, helped by a gradual lifting of coronavirus-related restrictions and stronger exports.
The economy contracted 1.0% in 2020.