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The Organisation for Economic Co-operation and Development (OECD) revised its projection for South Korea’s 2020 economic growth rate to -1%. The rate is 0.2 percentage points lower than the -0.8% predicted in August.

The new figure was published by OECD on Sept. 16 in its “Economic Outlook, Interim Report.” The organization publishes “Economic Outlook” reports each summer and winter and “Interim Reports” each spring and autumn. In its latest interim report, it revised its projection for South Korea’s growth rate down to -1.0%. The OECD previously predicted a -1.2% rate in June before revising that up to -0.8% in an August report on the South Korean economy; with the latest change, the figure has been lowered again by 0.2 percentage points just a month later. The change appeared to be a reflection of the rapid spread of COVID-19 in South Korea since mid-August. The projected South Korean growth rate for next year remained at 3.1%.

The OECD raised its projected growth rates for China, the US, and the world economy. While it predicted a 2020 growth rate of -7.3% for the US in June and July, the OECD raised that by 3.5 percentage points to -3.8% in its latest forecast -- a decision influenced by the recovery in private consumption following the resumption of economic activity. China’s projected growth rate was 1.8%, up 4.4 percentage points from the -2.6% rate predicted in June. The number makes it the only member of the G20 predicted to experience positive growth. The projection for Germany was -5.4%, up 1.2 percentage points from -6.6% in June, while the projection for Japan was -5.8%, up 0.2 percentage points from -6.0%. The projected economic growth rate for the world was -4.5%, up 1.5 percentage points from -6.0%.

South Korea’s 2020 growth rate was the highest for any OECD member, and the second-highest in the G20 after China’s. The 3.1% growth rate predicted for next year was the same as before. The combined economic growth rate of 2.1% for the two-year period is the highest in the OECD.

The OECD noted that the US and Chinese situations for the first half of the year improved from the June predictions, while negative factors had been lessened by massive fiscal policy efforts in different countries. At the same time, it added that the recent economic recovery rate has been slow, while growth in some countries has been delayed by lockdown measures.

Under the circumstances, the report stressed the importance of governments continuing to adopt expansionary fiscal policies. OECD Chief Economist Laurence Boone said, “It is important that governments avoid the mistake of tightening fiscal policy too quickly, as happened after the last financial crisis.”

“Without continued government support, bankruptcies and unemployment could rise faster than warranted and take a toll on people’s livelihoods for years to come,” she warned.

“Policymakers have the opportunity of a lifetime to implement truly sustainable recovery plans that reboot the economy and generate investment in the digital upgrades much needed by small and medium-sized companies, as well as in green infrastructure, transport and housing to build back a better and greener economy,” she said.

By Lee Jeong-hun, staff reporter

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