OECD Maintains Korea's Growth Forecast at 1.0% for This Year... Recovery to 2.1% Expected Next Year

Recovery in Private Consumption and Improvements in Exports

The Organisation for Economic Co-operation and Development (OECD) has maintained its forecast for South Korea's economic growth rate this year at 1.0%. For next year, the OECD projected a growth rate of 2.1%, indicating a stronger recovery compared to this year.

In its "Economic Outlook" released on December 2 (local time), the OECD kept South Korea's economic growth rate forecast for this year at 1.0%, the same as its projection in September. The growth rate for next year was set at 2.1%, which is 0.1 percentage points (P) lower than the previous forecast of 2.2%.

The OECD assessed that South Korea's economy will continue its growth momentum, supported by expansionary fiscal policies such as consumption coupons, accommodative monetary policy, a recovery in private consumption driven by real wage increases, and improvements in exports.

South Korea's consumer price inflation rate is projected to be 2.0% this year and 1.8% next year, suggesting that it will remain at the price stability target level of 2%.

The OECD forecasted global economic growth at 3.2% this year and 2.9% next year. These figures are unchanged from the September projection, and the OECD noted that, despite strengthened trade barriers and policy uncertainty, the global economy demonstrated stronger-than-expected resilience this year.

Cargo is piled up on a container ship docked at Busan Port. Photo by Jin-Hyung Kang aymsdream@

The OECD predicted that the growth rates of major economies such as the United States, China, and Japan will rise slightly next year. The United States' growth rates were revised upward by 0.2 percentage points each from the September forecast, to 2.0% this year and 1.7% next year. However, the OECD expects the growth momentum to slow due to sluggish employment and the pass-through of price increases resulting from higher tariffs.

Japan is expected to record solid growth this year based on domestic demand, but net exports are projected to act as a drag, resulting in growth rates of 1.3% this year and 0.9% in both next year and 2027. The eurozone's growth rate is forecast at 1.3% this year and 1.2% next year, indicating that the recovery will continue but at a moderate pace.

For China, the OECD expects the growth slowdown to persist, citing the sluggish real estate market and the fading effect of early shipments. China's growth rate is projected at 5.0% this year and 4.4% next year.

The OECD identified several downside risks to the global economy next year, including changes in trade policy, renewed inflationary pressures, financial market risks from abrupt asset price adjustments, and deteriorating fiscal soundness. On the upside, the OECD cited the easing of trade barriers, reduced geopolitical uncertainty, and productivity gains from increased AI investment as potential positive factors.