The Organization for Economic Cooperation and Development (OECD) lowered Korea’s economic growth. The forecast for next year would be from 2.2% to 1.8%. The real economy is expected to slow down in earnest. This is due to weak domestic demand and worsening exports due to high prices and high interest rates. However, it is significant to see the economic outlook report.
OECD presented Korea’s annual economic growth forecast for this year and next year at 2.7 percent and 1.8 percent, respectively. This is a reduction of 0.1% point and 0.4% point, compared to the forecast in September. The growth rate in 2024 is also expected to be only 1.9%, continuing to grow in the 1% range.
The sharp drop in next year’s growth forecast for the first time in two months might dampen private consumption. Plus, investment meets the aftermath of high prices and high interest rates. It might as well worsen export conditions due to the global economic downturn. OECD pointed out “accelerating housing price adjustment and expanding corporate insolvency. In addition, it is due to the burden of debt repayment could be negative factors for consumption and investment.”
The global economic growth rate might recover slightly from 3.1% this year to 2.2% next year and then to 2.7% in 2024. “The Ukrainian war has caused the biggest energy crisis since the 1970s, causing global high prices and low growth,” Oshidi said. OECD recommended, “Korea should maintain a tight monetary policy for the time being, and in the case of fiscal policy, selectively support the vulnerable.”
OECD predicted that Korea’s annual consumer price growth rate (year-on-year) will slow to 2.3% in 2024 after recording 5.2% this year and 3.9% next year due to rising service prices and rising utility bills.