The Organisation for Economic Co-operation and Development (OECD) expects Korea’s economic growth to be 4.0 percent this year and 4.2 percent in 2015. This is higher than the organization's previous prediction of 3.8 percent, which the OECD announced last November.

The OECD said in its OECD Economic Outlook, published on May 8, that, “Output is projected to grow at around 4% in 2014-15,” thanks to, “stronger export growth in line with the recovery in world trade.”


The OECD said that constrained private consumption and sluggish exports slowed the recovery pace of the Korean economy last year. However, it said that, “Output is projected to grow at around 4 percent in 2014 and 2015.” Mentioning Korea’s free trade agreements (FTA) with the EU, the U.S., Canada and Australia, it said that FTAs will also boost trade and productivity. “Sustained growth is expected to bring inflation back into the target range by late 2014 and reduce the current account surplus to around 4.5 percent of GDP in 2015,” said the report.

The OECD predicted that Korea’s unemployment rate would remain at the same level as the previous year, at 3.1 percent for 2014 and 2015. It expects Korea’s consumer price index to record 2.0 percent growth in 2014, up 0.7 percent from 2013, and 2.8 percent growth next year.

The report pointed out that exports, which account for more than half of Korea's GDP, uncertainties due to the fragile global economic situation and exchange rate shifts are all risks for the Korean economy. The OECD said, however, that domestic risks are, “largely on the upside, insofar as government initiatives to raise potential growth and to reduce the household debt ratio are effective.”

It advised the Korean government to avoid the low-growth trap by, “addressing challenges, such as a rapidly ageing population and a stagnant service sector, through wide-ranging reforms, including those in the government’s Three Year Plan for Economic Innovation.”

By Yoon Sojung
Korea.net Staff Writer
arete@korea.kr