OECD Mentions "Inflation Concerns" for the First Time... Global Growth Rate Revised Up to 5.6%

Korea's Growth Rate for This Year Revised from 2.8% to 3.3%

[Asia Economy Reporter Jang Sehee] The Organisation for Economic Co-operation and Development (OECD) has revised the global growth rate upward to 5.6% while mentioning inflation concerns for the first time.

In its mid-2021 economic outlook released on the 9th (local time), the OECD highlighted 'inflation' as a major risk factor for the global economy and emphasized the need for caution. The OECD stated, "There are signs of inflation such as recent rises in international raw material prices and oil prices, as well as increases in major countries' government bond yields," adding, "Especially as currency values decline, inflationary pressures may increase."

Concerns have also been raised that if inflation expectations arise, government bond yields will eventually rise, leading to higher loan interest rates. On the same day, the yield on the US 10-year government bond rose to 1.5940, approaching the 1.6% level.

Im Seon, a researcher at Hana Bank Financial Investment Research Institute, said, "If inflation expectations become strongly established, the velocity of money circulation may accelerate," adding, "Both government bond yields and loan interest rates could rise, increasing the economic burden."

The OECD predicted that the speed of recovery from COVID-19 will vary significantly by country. Among the 12 OECD member countries whose growth forecasts were announced, only four countries?Turkey, the United States, Korea, and Australia?are expected to recover to pre-COVID crisis levels this year.

This year, South Korea's economic growth forecast was revised upward from 2.8% to 3.3%. The OECD stated, "The Korean economy, along with the United States and others, is expected to recover to pre-COVID crisis levels within this year," and added, "Thanks to relatively limited COVID damage and a rapid recovery, the economy is expected to regain its pre-crisis scale within this year."

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