SEOUL, Sept. 19 (Korea Bizwire) – The Organization for Economic Cooperation and Development (OECD) on Tuesday maintained South Korea’s growth outlook and inflation forecast for 2023 at 1.5 percent and 3.4 percent, respectively.
The latest figure is just above a 1.4-percent growth projection suggested by the South Korean government in July.
The Paris-based organization had revised down the growth outlook by 0.1 percentage point in June, citing weak exports and sluggish private investment.
The organization suggested a 2.1-percent growth rate for 2024, also unchanged from the previous report.
The OECD estimated South Korea’s inflation for 2023 at 3.4 percent, standing pat from its previous outlook as well. The figure is below 3.5 percent estimated by the Bank of Korea in August.
It expected the global economy to expand 3 percent on-year in 2023, up 0.3 percentage point from the previous outlook, on the back of the better-than-expected performance of the United States, Japan and Brazil.
For 2024, however, the OECD cut the forecast from 2.9 percent to 2.7 percent, citing the impact of monetary tightening moves, coupled with the weakening spillover from China’s recovery.
The organization pointed out that major countries are anticipated to maintain monetary tightening moves for the time being amid lingering inflationary pressures.
“This is likely to limit the scope for any policy rate reductions until well into 2024 in most advanced economies,” it added.
South Korea’s central bank, meanwhile, held its key interest rate steady at 3.5 percent last month for the fifth straight time as it weighs a slowdown in growth amid moderating inflation.
The rate freezes came after it delivered seven consecutive rate hikes from April 2022 to January 2023.
The OECD added countries should make efforts to “rebuild fiscal space” to “meet future policy priorities and respond effectively to future shocks.”
“This would also improve the near-term alignment of fiscal and monetary policies, reducing the burden on monetary policy to lower demand pressures and inflation,” it added.