OECD Lowers South Korea's Growth Rate to -1.1% This Year... Increased Risk of COVID-19 Resurgence
[Asia Economy Reporter Jang Sehee] The Organisation for Economic Co-operation and Development (OECD) has lowered South Korea's economic growth forecast for this year to -1.1%, reflecting the impact of the resurgence of COVID-19. This is 0.1 percentage points lower than the forecast in September (-1.0%). The global economy is also expected to contract by -4.2% due to measures such as social distancing.
According to the Ministry of Economy and Finance on the 1st, the OECD revised South Korea's economic growth forecast for this year downward by 0.1 percentage points from the previous -1.0% to -1.1% in the "OECD Economic Outlook" released that day. This is the second significant downward revision of the growth forecast this year, following the June forecast (-1.2%).
South Korea's economic growth forecast by the OECD ranks first among the 37 OECD member countries. Among G20 countries, it is expected to rank second after China (1.8%).
Next year, growth is expected to be 2.8%, down 0.3 percentage points from the September forecast (3.1%). The OECD anticipates a gradual recovery in the service sector due to the easing of social distancing following the introduction of effective vaccines. Employment is also expected to increase gradually.
However, the OECD argued that household support should be focused on vulnerable sectors such as non-regular workers and the service industry. Additionally, it emphasized the need for temporary deferral of tax and social security contributions and concurrent structural reforms in response to industrial structural changes.
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Meanwhile, the global economic growth rate for next year has been revised downward by 0.8 percentage points from 5.0% in September to 4.2%. The OECD expects the growth rate in the fourth quarter of this year to turn negative again due to strengthened lockdown measures in major countries such as Europe.
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