ED Zero growth in 2050

More efforts needed to raise productivity

The country's economic growth could come to a halt in 2050 unless productivity is raised through structural reforms, a state-run think tank warned Tuesday. This gloomy forecast sends out a warning signal for the future of the nation, which is suffering from chronically low growth.

In its report on the long-term economic outlook, the Korea Development Institute (KDI) said the Korean economy would grow 0.5 percent in 2050 only if productivity improves, albeit slightly. In a worst-case scenario, the economy may post negative growth that year.

The Korean economy is expected to grow around 2 percent annually from 2023 through 2027. But it will continue to lose steam in the 2030s due to demographic changes characterized by an aging population and persistently low fertility. In fact, Korea's total fertility rate, which measures the average number of children a woman bears in her lifetime, is at 0.81 in 2021, down from 0.84 the previous year.

The short-term prospects for the Korean economy also remains gloomy. Preliminary current account data from the Bank of Korea showed that exports stood at $57 billion in September, down 0.7 percent from a year earlier ― the first drop since October 2020. The country's current account surplus during the first nine months of the year remained at $24.1 billion, down sharply from $43.2 billion a year ago.

This lamentable situation can only be rectified by an increase in productivity. When it comes to such factors as aging and global supply chain disruptions, there is little we can do. But productivity gains are achievable, depending on how we act. It's impossible to expect the Korean economy to revive itself without addressing the low productivity problem.

The government should create an environment in which the proportion of the working-age population, aged between 15 and 64, doesn't shrink further. Specifically, it's imperative to draw women and seniors into the labor market so that they can actively participate in economic activities. The nation also needs to cope with manpower shortages by accepting more immigrants.