The International Monetary Fund (IMF) said Wednesday that South Korea's economy growth rate is expected to reach 4.4 percent this year on the back of solid export growth and a recovery in domestic spending.

The prediction was made in a report by IMF after the organization conducted a two-week annual consultation meeting with South Korean policymakers.

According to the report, IMF believes that inflationary pressures are likely to be contained within the Bank of Korea's target range despite high oil prices.

Jerald Schiff, the assistant director of the IMF's Asia-Pacific department, said South Korea's financial sector was doing well, while pointing out "pockets of concern" such as a decline in housing prices that could hurt household asset holdings and result in decreased consumption.

Over the longer run, he said, South Korea faces some stiff challenges like a rapidly aging population that will generate larger fiscal pressure.

He forecast that in the long run, South Korea may spend up to 15 percent of its gross domestic product to cope with population aging, which might require an adjustment in tax rates as well as the tax base.

Source:Xinhua