The International Monetary Fund kept its 2011 growth outlook for South Korea at 4.5%, but called for monetary tightening to ensure a soft landing for the country's economy amid concerns that inflation could hurt the recovery momentum.

The assessment came after a delegation from the IMF completed its two-week annual meeting with key policymakers and leaders here to discuss the latest economic conditions confronting Asia's fourth-largest economy.

The IMF team in a statement said that "The Korean economy's rebound from the global crisis has translated into a robust and self sustaining expansion. Growth is projected at 4.5% in 2011, above the economy's underlying potential, before easing to 4.2% next year.”

In April, the Washington-based lender predicted the same rate of growth for South Korea, while raising its inflation outlook to 4.5%far higher than the government's official target of 3%. In its most recent assessment, the IMF lowered the inflation projection slightly to 4.3%.

The IMF cited external factors such as global economic conditions and the debt crisis in Europe as the main external factors facing South Korea. Regarding domestic risks, it mentioned the ongoing weaknesses in the construction sector and the impact of inflation on consumption.

IMF said that "In light of the strong underlying growth dynamics of the Korean economy, the focus of macroeconomic and financial police on addressing inflation pressures and limiting the further buildup of vulnerabilities is appropriate.”

The IMF welcomed the Bank of Korea's recent move to tighten its monetary stance along with the government's "timely" withdrawal of fiscal stimulus measures.

(Sourced from Yonhap)