OECD Slashes Korea's Growth Projection

The OECD on Thursday lowered its growth projection for Korea for this year from three percent to 2.7 percent. It also cut next year's outlook from three percent to 2.8 percent.

The government already slashed its own outlook from three to 2.9 percent in July.

The last time the OECD lowered its GDP growth outlook by more than 0.3 percentage point in the same year was in 2015. It did not explain why it lowered the forecast this time, but worsening unemployment and other economic indicators as well as slowing automobile and shipbuilding markets are believed to have played a role.

"It looks like new hires, which shrank to just 5,000 and 3,000 in July and August, had a huge impact," said Cho Joon-mo at Sungkyunkwan University.

The OECD also lowered its global forecast for this year by 0.1 percent to 3.7 percent, citing "intensifying downside risks" such as worsening trade disputes and financial instability in emerging countries. But it retained its growth projections for Korea's main economic rivals. Japan's forecast was kept at 1.2 percent this year and in 2019, and China's at 6.7 percent this year and 6.4 percent in 2019.

The U.S.' 2019 forecast was slashed 0.1 percentage point to 2.7 percent.

Investment banks are also voicing concerns. Goldman Sachs forecast Korea's growth at 2.9 percent in July but lowered it to 2.7 percent last month. LG Economic Research Institute said in a recent report, "The domestic economy is showing clearer signs of a slowdown than the global economy" and forecast Korea's economy will grow 2.8 percent this year and 2.5 percent in 2019.