OECD Sees Korea’s 2008 Growth at 5.2%
By Lee Hyo-sik
Staff Reporter
The Organization for Economic Cooperation and Development (OECD) said Thursday it has revised upward its projection for South Korea's 2007 economic growth to 4.9 percent from 4.3 percent made in May on strong exports and reviving domestic consumption.
Also, the country's gross domestic product (GDP) growth is expected to reach 5.2 percent in 2008, up from the earlier 4.8 percent prediction, according to the Paris-based organization, which publishes its outlook on the global economy and member countries in May and November every year.
It painted a generally positive picture for the Korean economy, citing recovering corporate investment. Exports will continue to remain solid on growing overseas demand for Korean goods, but the current account may swing to a deficit next year because of deterioration of the balance of services. Inflation will remain benign and job market conditions are also likely to improve, it said.
However, the organization cited a number of downside risks. ``Falling housing prices amid heavy household debt could dampen private consumption. Also a strong won against the dollar and high international oil prices continue to pose threat to the world's 13th largest economy.''
It suggested the Bank of Korea's monetary policy should focus on a mid-term inflation target, adding the government should help increase the supply of new houses to stabilize the real estate market. ``Also, the country needs to strengthen the productivity of its services sector and keep a floating foreign exchange rate regime.''
As a whole, the OECD expects its member economies to achieve an average 2.7 percent economic growth this year, unchanged from the previous projection made in May.
It said emerging economies are leading the global trade expansion and will be the main engine of global economic growth in the future. It estimated China's GDP will maintain two digit growth at 11.4 percent this year, with India growing 8.8 percent, Russia 7.3 percent and Brazil 4.8 percent.
However, the OECD projected global growth will slow to 2.3 percent in 2008 because of a U.S. economic slowdown as a result of the housing market slump and volatile financial markets across the globe.