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The International Monetary Fund (IMF) has sharply downgraded South Korea’s 2024 economic growth forecast, citing growing domestic political uncertainty and fallout from U.S. President Donald Trump’s aggressive tariff policies. With other major institutions also lowering their outlooks, concerns are mounting that the Korean economy may be sinking into a prolonged low-growth phase. Attention now turns to a key trade meeting between finance and commerce leaders from Korea and the U.S.

According to the Ministry of Economy and Finance on April 22, the IMF’s latest World Economic Outlook projects South Korea’s real GDP will grow just 1.0% this year—a full percentage point drop from its January estimate of 2.0%. This marks the sharpest downgrade among major economies including the United States, the United Kingdom, and Japan. The IMF also lowered Korea’s 2025 growth projection from 2.1% to 1.4%.

Other domestic institutions have followed suit. In February, the Bank of Korea revised its 2024 forecast from 1.9% to 1.5%. Even this figure may be overly optimistic, said Governor Rhee Chang-yong, citing Trump’s tariffs on China, sector-specific duties, and a baseline 10% tariff rate. He warned that May’s update could drop to around 1%.

The Korea Development Institute (KDI), a state-run think tank, also cut its outlook from 2.0% to 1.6% in its February report, with further downward revision likely.

Foreign investment banks are even more pessimistic. Morgan Stanley and Standard Chartered each predict only 1.0% growth, while Bloomberg Economics (0.7%), Capital Economics (0.9%), Citi (0.8%), ING Group (0.8%), and JP Morgan (0.7%) all expect Korea to fall short of even 1.0% growth this year.

Since 2000, Korea’s growth rate has dipped below 2.0% only three times: during the 2009 global financial crisis (0.8%), in 2020 due to COVID-19 (-0.7%), and in 2023 (1.4%).

Deputy Prime Minister and Finance Minister Choi Sang-mok recently acknowledged the risks during a parliamentary inquiry, saying, “The government initially projected mid-1% growth, but with the weak performance in Q4 last year and Q1 this year, we now face significant downside risks.”

As alarm over sluggish growth intensifies, upcoming trade negotiations with the U.S. are drawing close attention. According to the Finance Ministry, a 2+2 economic dialogue involving both nations’ finance and trade chiefs will be held in Washington, D.C., at 9 p.m. on April 24 (Korean time). Deputy Prime Minister Choi and Trade Minister Ahn Duk-geun will represent Korea, while U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer will lead the American side.

The U.S. is reportedly pushing for a “one-stop shopping” approach that includes defense cost-sharing and trade issues, while South Korea maintains a “two-track” stance, seeking to keep trade and security negotiations separate.