OECD "Han, COVID-19 Impact Likely Large... Growth Rate This Year 2.3→2.0%"

'World Economic Outlook for March 2020' Growth Rate Forecast

Global Growth Rate 2.9→2.4%

If COVID-19 Spreads After Q1, It Could Drop to 1.5%

[Sejong=Asia Economy Reporter Joo Sang-don] The Organisation for Economic Co-operation and Development (OECD) has downgraded South Korea's economic growth forecast for this year to 2.0%. This is due to the close connection with China, which could mean a relatively large impact from the novel coronavirus disease (COVID-19).

On the 2nd, the OECD released the 'Interim Economic Outlook' containing this information.

In this forecast, the OECD lowered the economic growth rates for countries closely linked to the Chinese economy, including Japan and Australia, as well as Italy, where COVID-19 is spreading.

In the November forecast last year, South Korea's economic growth rate was projected at 2.3%, but this time it was adjusted down by 0.3 percentage points to 2.0%. However, the downward revision for South Korea is smaller compared to other countries where COVID-19 is spreading. The OECD lowered growth forecasts by 0.4 percentage points for Japan, 0.5 percentage points for Australia, and 0.4 percentage points for Italy.

Regarding China, even if COVID-19 eases after the first quarter, it is expected to reduce GDP by 2% in the first half of the year, resulting in an annual growth rate of 4.9% for 2020. The previous forecast was 5.7%.

For the United States, although its economic ties with China are relatively weaker, growth is expected to decline from 2.0% to 1.9% due to weakened economic sentiment, supply chain disruptions, and reduced external demand. The Eurozone's growth forecast was also lowered from 1.1% to 0.8%.

The OECD expects the global economy's growth rate to fall from 2.9% to 2.4% this year due to adverse effects on global value chains, tourism, financial markets, and economic sentiment. This assumption is based on COVID-19 in China peaking in the first quarter and easing, with limited spread to other countries. However, contrary to this expectation, if the virus spreads and prolongs in the Asia-Pacific region, Europe, and North America after the first quarter, the global growth rate is projected to fall to 1.5%.

The OECD recommended, "Countries heavily affected by COVID-19, such as China, need to implement tailored policies including public health support and short-term assistance for businesses and workers." It added, "In particular, for countries like South Korea and Australia, preventive policy rate cuts could help restore economic sentiment and reduce debt financing costs."

This content was produced with the assistance of AI translation services.