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🇰🇷 South Korea /Economy & Trade

OECD raises South Korea's 2024 growth forecast to 2.6%, citing export strength

From Hankyoreh · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

News Official statement New plan
  • The OECD has raised South Korea's economic growth forecast for the year to 2.6%, up from 1.7%.
  • This upward revision is driven by strong semiconductor exports, leading the OECD to project nominal GDP growth at 10.4%.
  • The improved outlook is expected to support the government's "active fiscal" policy and lower the national debt-to-GDP ratio.

The Organisation for Economic Co-operation and Development (OECD) has significantly upgraded its economic growth forecast for South Korea, projecting a 2.6% real GDP growth for the year. This marks a substantial increase from the 1.7% forecast issued in March and is the largest upward revision among G20 nations.

The OECD expects South Korea's semiconductor exports to surge this year, with clear increases in both price and volume.

— OECDExplaining the key driver behind the upgraded economic forecast.

The primary driver for this optimistic outlook is the robust performance of South Korea's semiconductor exports, which have seen a notable surge in both price and volume since the beginning of the year. The OECD anticipates that this export strength, coupled with semiconductor-focused private investment, will continue to bolster the economy. Consumer spending is also expected to recover gradually, supported by fiscal measures aimed at addressing energy crises.

Furthermore, the OECD projects South Korea's nominal GDP growth to reach 10.4%, a figure that has garnered attention following recent remarks by President Lee Jae-myung. A higher nominal GDP growth rate typically leads to a lower national debt-to-GDP ratio. The OECD now forecasts this ratio to fall to 48.2% by year-end, down from a previous estimate of 52.0%, providing fiscal breathing room for the government's expansionary policies.

The OECD projects nominal GDP growth at 10.4% for South Korea this year.

— OECDHighlighting a key economic indicator.

While acknowledging the positive impact of policies like price caps and fuel tax cuts in mitigating inflationary pressures from energy shocks, the OECD cautioned that these measures could also prolong inflation. Consequently, the organization recommended their phased withdrawal. The OECD also slightly lowered its global economic growth forecast to 2.8%, citing factors such as surging energy prices and trade disruptions.

The OECD recommended the phased withdrawal of policies like price caps and fuel tax cuts, noting they could prolong inflation.

— OECDAdvising on fiscal policy measures.
DistantNews Editorial

Originally published by Hankyoreh in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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