OECD Slashes Korea's Growth Forecast Again
22 May, 2019
The OECD on Tuesday slashed Korea's economic growth forecast for this year by another 0.2 percent from its previous projection to 2.4 percent.
That is now significantly lower than the government's forecast of 2.6 to 2.7 percent growth and Korea's potential growth rate, which was estimated by the Bank of Korea at 2.8 to 2.9 percent.
The OECD slashed Korea's outlook by a greater margin than other member nations'. Until November 2018, it expected Korea's economy to grow 2.8 percent this year, but it slashed the forecast to 2.6 percent this March.
The overall global forecast for this year is now 3.2 percent, down just 0.1 percentage points from its previous outlook. But the U.S. economy is expected to grow 2.8 percent, up from 2.6 percent, and the eurozone 1.2 percent, up from one percent.
The OECD said the revised forecast reflects "lackluster private consumption and trade" and pointed out that a double-digit hike in the minimum wage "hinders job creation."
It urged the government to implement expansionary fiscal policies, monetary easing and structural reforms to stem the economic slowdown and pointed out that Korea's "key task" is to improve labor productivity, which used to be offset by notoriously long working hours, but now that is threatened by the 52-hour cap on the working week.
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