OECD "Global Economy to Grow 3.2% This Year"… South Korea Expected to Grow 2.5%

The Organisation for Economic Co-operation and Development (OECD) projected the global economic growth rate to be 3.2% this year. Korea is expected to show stable growth with 2.5% this year and 2.2% next year, supported by increased exports driven by sustained strong global semiconductor demand, according to the OECD. However, this year's growth rate was revised down by 0.1 percentage points compared to the May forecast.

According to the OECD's interim economic outlook report published on the 25th (local time), the global economic growth rate for this year was revised up by 0.1 percentage points from the 3.1% forecast released in May. The OECD explained, "Global production growth is being maintained, and inflation remains at a moderate level."

The OECD added that although household purchasing power in many countries has not yet fully recovered to pre-COVID-19 levels, real wage increases are supporting household income and spending. Furthermore, with easing inflation and rising real incomes supporting demand, the global gross domestic product (GDP) growth rate is also expected to stabilize at 3.2% next year.

Inflation is expected to return to target levels in most of the major 20 countries (G20) by the end of next year. The OECD forecasted that the annual consumer price inflation rate in the G20 will ease from 5.4% this year to 3.3% next year, helped by declines in food and energy prices. Recent drops in oil prices and global food prices may exert additional downward pressure on consumer inflation in the short term.

Looking at regional economic growth rates, the United States is projected to grow by 2.6% this year. Private consumption is supported by real wage increases resulting from falling inflation, maintaining the same growth rate as the May forecast.

Europe is predicted to grow by 0.7% this year and 1.3% next year, supported by policy interest rate cuts and further recovery in real incomes. In China, despite government stimulus measures, the long-term slump in the real estate market and weakened consumer confidence are expected to hamper private consumption growth, resulting in growth rates of 4.9% this year and 4.5% next year, falling short of the 5% target.

On the other hand, India is expected to grow by 6.7% and 6.8% this year and next year, respectively, and Indonesia is forecasted to grow by 5.1% and 5.2%. Japan's growth rate was sharply revised down to -0.1% this year, 0.6 percentage points lower than the May estimate of 0.5%, due to weak first-quarter performance. However, strong real wage growth is expected to offset the effects of tightening policies, leading to a projected growth rate of 1.4% next year.