OECD raises S. Korea’s growth rate to 2.6%

May 03, 2024, 10:45 am

AsiaToday reporter Lee Ji-hoon

The Organization for Economic Cooperation and Development (OECD) has raised South Korea’s economic growth rate for 2024 to 2.6 percent from its previous outlook of 2.2 percent. It also forecasted inflation of the country to ease to 2.6 percent this year, slightly lower than its previous projection of 2.7 percent.

The organization announced its mid-term economic outlook on Thursday in Paris, where it revised up the country’s economic growth by 0.4 percentage points to 2.6 percent, according to the Ministry of Economy and Finance.

Back in February, the OECD lowered South Korea’s growth forecast by 0.1 percentage point form the previous one. However, it raised its projection significantly this time. The figure is far above the forecasts of the South Korean government and the Bank of Korea (BOK) which projected 2.2 percent and 2.1 percent growth, respectively. It is also rosier than the growth outlook of 2.3 percent presented by the International Monetary Fund (IMF).

The OECD also revised up the country’s growth outlook for 2025 by 0.1 percentage point to 2.2 percent. It projected the country’s consumer price growth rate at 2.6 percent, down 0.1 percentage point from the February projection of 2.7 percent. Despite pressure on rising food and energy prices, inflation is expected to ease toward the end of the year. It is forecasted that the growth rate will drop to the government’s target level of 2.0 percent next year.

The OECD cited improved export figures on the back of the recovery of semiconductor demand and domestic demand as the main reason for its revised outlook. It also said that domestic demand is forecast to recover starting the second half of this year as the central bank would likely to cut interest rates. To tackle the world’s lowest birth rate and rapidly aging population, it advised South Korea to push for structural reform in terms of finance, labor and pension. It also called for strengthening family-friendly policies and allow more immigrants to enter the country.

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