The International Monetary Fund has revised its projections for South Korea's general government debt as a share of gross domestic product. The IMF had put this year's debt ratio at 46.1% in its October Fiscal Monitor, but raised it to 47.3% in subsequently revised data. The 2031 projection was lowered to 49.7% from 51.3%.
The IMF released revised country-by-country projections for general government debt, updating the figures it presented when the report was published on the 14th, according to the Ministry of Planning and Budget on the 16th.
Under the revised outlook, South Korea's general government debt is expected to reach 47.3% of GDP this year, then move to 46.2% in 2027, 47.0% in 2028, 48.2% in 2029, 49.2% in 2030 and 49.7% in 2031. While the ratio for this year is higher than previously projected, the medium- to long-term outlook has improved.
The revision is attributed to a change in assumptions about how the Middle East war will unfold. The IMF had initially assumed the war would end relatively early, but recalculated its projections to reflect a scenario in which the conflict drags on, according to sources.
Even after the revision, South Korea's general government debt ratio remained far below the average for advanced economies. This year's ratio is about 44% of the 107.8% average for advanced economies and about 38% of the 123.9% average for the Group of Seven. Among the 38 advanced economies covered in IMF statistics, South Korea has the 23rd-highest debt ratio. A ministry official said the medium-term improvement reflects "a virtuous cycle in which economic growth broadens the revenue base and strengthens fiscal sustainability."