OECD forecasts growth of 1.8% for the Korean economy and 2.2% for the global economy in 2023

The Organization for Economic Co-operation and Development (OECD) forecast that next year’s economic growth rate will stop in the upper 1 percent range. The OECD predicted that next year’s global economic growth rate would also remain in the low 2% range.

According to the Ministry of Strategy and Finance, the OECD lowered its forecast for Korea’s next year’s economic growth rate to 1.8% in its economic outlook announced on the 22nd (local time). This is 0.4 percentage point lower than the forecast (2.2%) presented by the OECD last September. The forecast for growth in 2024 was 1.9%, below the 2% mark.

Although Korea’s private consumption has shown a solid recovery, the OECD observed that there is a possibility that private consumption will be constrained in the future by slowing disposable income growth due to high prices and high interest rates. In the short term, the slowdown in exports due to the downturn in the semiconductor economy and contraction in global demand also influenced the downward revision of the forecast. The OECD’s forecast for Korea’s economic growth this year is 2.7%, down 0.1 percentage point from the previous forecast (2.8%).

The OECD found that housing price adjustments and the risk of corporate insolvency due to the increased debt repayment burden of households and businesses are downside factors for consumption and investment in Korea, while China’s easing of ‘Zero Corona’ policy and early recovery in the face-to-face service sector act as upside factors. observed that it could be In addition, it was recommended that the monetary policy be continued for the time being so that the expected inflation rate could be formed stably, and that the National Assembly adopt fiscal rules to alleviate the pressure of high inflation and prepare for the rapid aging of the population.

The OECD predicted that Korea’s inflation rate would show a high level for the time being, centered on service and public charges, and then gradually decline. Inflation forecasts for this year and next year were maintained at 5.2% and 3.9%, respectively. The projected inflation rate for 2024 is 2.3%.

The OECD’s forecast for next year’s global economic growth was 2.2%, maintaining the same level as last September’s forecast. The OECD diagnosed that the Russia-Ukraine war caused the highest level of energy crisis since the 1970s, causing high prices and low growth worldwide. The OECD presented △disruptions in energy and food supply △emphasis on financial vulnerabilities due to rising interest rates △a contraction in the economy of emerging countries as major risk factors for the global economy.

The OECD raised its global economic growth forecast for this year to 3.1%, 0.1 percentage point higher than the September forecast (3.0%). In 2024, the global economy is projected to grow by 2.7%. The OECD predicted that by 2024, while Asia would lead the global economic recovery, recovery in Europe, North America and South America would be sluggish.

Reporter Lee Kang-jin [email protected]

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