Bank of Korea: "Han Must Accelerate Transition to Low-Carbon Economic Structure... Need to Foster Eco-Friendly Industries"

Bank of Korea 'Overseas Economic Focus'

[Asia Economy Reporter Kim Eunbyeol] As international efforts to transition to a low-carbon economy continue, the Bank of Korea has pointed out that South Korea must hasten its shift to a low-carbon economic structure. It also advised actively fostering eco-friendly industries to utilize them as new growth engines.

On the 2nd, the Bank of Korea stated in its 'Overseas Economic Focus' report, "Carbon neutrality policies have both positive and negative effects, but according to long-term analyses by the International Monetary Fund (IMF), the benefits of curbing climate change outweigh the costs," adding, "Given that South Korea has a higher proportion of high-carbon industries compared to major countries, it must accelerate the transition to a low-carbon economic structure."

According to the IMF, advanced countries with high adaptability to renewable energy such as Europe and Japan are expected to see their gross domestic product (GDP) increase by 2-3% due to climate response policies, whereas countries heavily dependent on the oil industry, such as OPEC members and Russia, are expected to experience a significant decline in GDP.

Employment also tends to be more positively impacted by low-carbon industries compared to high-carbon industries. The Bank of Korea noted, "The employment inducement effect in renewable energy sectors like solar and wind power surpasses that of fossil fuel power generation," adding, "The greater employment inducement effect of eco-friendly industries compared to existing fossil fuel sectors will act as a positive factor."

However, it also cautioned, "There remains a possibility of a temporary significant increase in unemployment in industries where production scales shrink during the industrial structure transition process."

Regarding inflation, it is expected to face upward pressure as the imposition of carbon taxes raises the costs of fossil fuels and related products. However, considering gradual tax rate increases and reduced fossil fuel demand due to the shift to alternative energy, this pressure is not expected to rise significantly.

The Bank of Korea stated, "Although countries worldwide are implementing various policy efforts to build a low-carbon economic foundation under the goal of achieving carbon neutrality, these efforts are still deemed insufficient, and stronger policies are expected to follow," adding, "Since the climate change prevention benefits of carbon neutrality policies are clear, international efforts to transition to a low-carbon economic structure are expected to continue."

Furthermore, it emphasized, "Considering that South Korea has a higher proportion of high-carbon industries such as heavy chemical industries compared to major countries, it is necessary to hasten the transition to a low-carbon economic structure while actively fostering eco-friendly industries to utilize them as new growth engines."

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