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Low Growth Feared to Have Become New Normal for S. Korean Economy

Written: 2023-09-29 14:23:10Updated: 2023-09-29 14:29:13

Low Growth Feared to Have Become New Normal for S. Korean Economy

Photo : YONHAP News

Anchor: The Korean economy is likely to see growth below the average of the Organization for Economic Cooperation and Development(OECD) for three years in a row, sparking fears of a new normal. The nation is also certain to post a lower growth rate than Japan for the first time since the 1997 foreign currency crisis.
Lee Bo-kyung has more.

Report: South Korea's growth engine is stalling while other leading economies are charging ahead. 

According to the Ministry of Economy and Finance earlier this week, the OECD projected the nation's economy to grow one-point-five percent this year in its interim world economic outlook released on September 19. 

The estimate remained stagnant from the June outlook, while projections for other major economies rose, including an increase of one-point-six percent to two-point-two percent for the U.S., one-point-three percent to one-point-eight percent for Japan and zero-point-eight percent to one percent for France. 

The OECD also upgraded its 2023 growth forecasts for both the global economy and the Group of 20(G20) nations by zero-point-three percentage points.

The economic outlook for member countries comes in June and November, and the interim economic outlook for the G20 nations in March and September.

Therefore, there was no update to the average GDP forecast for member states in September, but one-point-four percent growth was projected in the June outlook and an upward revision is expected in the November report. However, the outlook for the South Korean economy specifically does not look promising.

Although the OECD predicted one-point-five percent growth for South Korea this year, the Korean government, the Bank of Korea and the International Monetary Fund all presented a lower growth forecast of one-point-four percent, while the Asian Development Bank’s outlook was even more pessimistic at one-point-three percent.

South Korea posted lower growth rates than the OECD average for the past two years. The country grew four-point-three percent in 2021 against an average of five-point-eight percent, and last year the local economy expanded by two-point-six percent to the OECD average of two-point-nine percent.

According to the OECD’s projection, South Korea is also likely to post a lower growth rate than Japan for the first time since the foreign currency crisis.

Experts are saying that the recent slowdown is not temporary and the domestic economy is likely to have entered an era of low growth.

A government official, however, said that the economy is heavily dependent on the manufacturing industry and has been more affected by a global slowdown in the sector this year, projecting a larger economic rebound for South Korea than other countries next year when the industry recovers.
Lee Bo-kyung, KBS World Radio News.

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