Yoon Ja-young is in charge of articles translated by a generative AI system and edited by The Korea Times. She is interested in improving the newspaper through AI.
OECD cuts economic growth forecast for Korea
The Organization for Economic Cooperation and Development (OECD) cut its economic growth outlook for Korea this year to 2.7 percent from its previous estimate of 3 percent. It also lowered the growth forecast for next year to 3.1 percent from 3.6 percent.
In the OECD Economic Outlook released Monday, it expected Korea to mark 2.7 percent growth in gross domestic product (GDP) this year, cutting it by 0.3 percentage points from its estimate in June.
“The economy was hit by two shocks in 2015 _ an outbreak of the Middle East Respiratory Syndrome (MERS) and a marked slowdown in demand from China and other Asian countries,” it noted in the report.
“While the MERS outbreak has been resolved, weaker demand from Asia remains a headwind to growth,” it added, citing the appreciation of the Korean won, which rose more than 20 percent in trade-weighted terms during the three years to April 2015, as another negative factor for Korea’s exports.
The OECD expects the Korean economy will pick up to attain 3.1 percent growth rate in 2016 and 3.6 percent in 2017, upon increasing consumption in the private sector and free trade agreements with major economies including China and Australia.
However, it cited household debt as a risk. “Despite higher wage gains, high household debt will continue to constrain private consumption, which has lagged output growth since 2006,” it noted.
OECD advised restructuring and enhancing growth potential as top priorities. It stressed the need to support females to work ahead of the decrease in working population.
OECD expects the global economy to grow 2.9 percent this year, down 0.2 percentage points from a previous estimate. It also lowered down the growth forecast for the next year to 3.3 percent from 3.8 percent.
The global economy is expected to slowly recover on expansionary macroeconomic policy, low natural resource prices, and improvement in the labor market, but it also cited downside risks such as decreasing world trade, vulnerability of emerging economies to a key U.S. rate hike and delay of the recovery in the euro zone and Japan.
yjy@ktimes.com