Next Year's 3.2% Economic Growth: Government Calls It "Appropriate Judgment" vs Academia Says "Baseless Rosy Outlook"

On the 13th, the Myeongdong shopping street in Jung-gu, Seoul was quiet. Photo by Yoon Dong-joo doso7@

[Sejong=Asia Economy Reporter Joo Sang-don] Experts are evaluating the government's projection of a 3.2% growth rate for the Korean economy next year as "excessively optimistic." The government's forecast for next year's economic growth rate (3.2%) does not reflect the possibility of raising social distancing to level 3. Even considering the base effect of this year's negative growth (-1.1%), it is higher than the projections of the Korea Development Institute (3.1%), the Bank of Korea (3.0%), and the Organisation for Economic Co-operation and Development (2.8%).

The government maintains that the figure is achievable. Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said, "There is still uncertainty about how COVID-19 will develop, but with the recent emergence of vaccines, expectations for an early end to the crisis are growing," adding, "While extreme cases are certainly possible, based on various data analyses at this time, we judge that presenting 3.2% is appropriate."

In response, Professor Lee In-ho of Seoul National University's Department of Economics described the figure as "too optimistic." He said, "Although this year's poor growth rate might provide some superficial support, I cannot find a reason why the economy will improve next year," expressing concern that "the U.S. also says it will take six months just to vaccinate, and for the economy to regain vitality, travel and other activities need to become easier as before, but there is no clear timeline for this."

Professor Kang In-soo of Sookmyung Women's University’s Department of Economics said, "The OECD's forecast of 2.8% does not take into account vaccines and a possible third pandemic wave, so the projection could fall further," adding, "Although very variable, based on the current situation, growth of just over the mid-2% range is expected."

Professor Kim So-young of Seoul National University's Department of Economics also predicted that achieving a 3.2% growth rate would be "quite difficult." She diagnosed, "We do not know when the third wave will end, and even if it ends, COVID-19 will not be completely over, and a fourth wave could come," adding, "Even with vaccines, the outcome is uncertain, and since vaccine procurement has not been secured, it seems difficult for next year's growth rate to exceed 3.2%."

Experts also criticized the government's expectation that employment will increase by 150,000 next year as unrealistic. Professor Park Young-beom of Hansung University's Department of Economics described it as "hopeful wishful thinking." He said, "Although Korea's economic growth rate this year is relatively higher compared to other countries, it will not be so next year," adding, "An increase of 150,000 means 'normalization next year, returning to the end of last year before COVID-19 occurred,' which I think is difficult."

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