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The Organisation for Economic Co-operation and Development (OECD) kept its 2021 growth rate projection for the South Korean economy steady, even as it revised and lowered its projected growth rates for other major economies and the world as a whole.

It also slightly raised its projection for next year, signaling its conclusion that South Korea will continue showing stable growth through 2023.

In a report on economic outlooks published Wednesday, the organization listed South Korea’s projected gross domestic product growth rate for 2021 at 4.0% — the same figure it gave in its interim economic outlook in September.

In the report, the OECD noted South Korea’s continued trend of recovery thanks to policy effects, strong exports and investment, and the loosening of distancing requirements thanks to rapid COVID-19 vaccine administration.

The OECD also predicted that the South Korean economy’s stable growth would continue through 2022 and into 2023. In September, the organization raised its 2022 economic growth projection for South Korea to 2.9% from 2.8% in May; the latest report had it at an even higher 3.0%.

The OECD’s predictions of stable growth for South Korea included a projected 2023 growth rate of 2.7%.

The report predicted an increasing recovery of consumption and employment, particularly in the service sector, along with a continued rise in exports and investment thanks to strong global demand and government support.

“Economic growth is expected to be stable through 2023,” it said.

The OECD recommended that South Korea provide “targeted” support to segments hit hard by the COVID-19 pandemic.

“Fiscal support to households and companies particularly affected by the pandemic should remain in place until the economy has fully recovered. However, it should become more targeted and help facilitate job transitions,” it advised.

“As the economy recovers, public investment should focus on accelerating digitalisation, greening the economy and reducing social inequality in line with the New Deal’s orientations,” it continued.

The report also advised, “Stronger prudential policy may be needed if household debt does not level off. Meanwhile, efforts should be stepped up to supply more housing with a view to stabilising housing prices.”

The South Korean government concluded that South Korea ranks first among the major advanced economies for growth trends through 2023 when compared with the period before the pandemic.

According to a government analysis, South Korea’s predicted GDP in 2023 was 109% of its real GDP level for the pre-pandemic year of 2019. This put it ahead of the projections for the US (108.3%), Germany (104.3%), the UK (103.2%), and Japan (101.5%).

“Among the advanced economies that belong to the G20, the South Korean economy is sustaining the fastest growth trend through 2023 when compared with pre-crisis levels,” the government said.

“After our efforts to minimize negative growth during the crisis, we are projected to sustain a faster and stronger recovery trend than initially anticipated during the crisis recovery process,” it added, describing this as “additional proof of the success of our crisis response compared with [other] major economies.”

Projected 2021 growth rates for major economies and the world as a whole were lowered substantially. The global economic growth rate for this year was estimated at 5.6%, down by 0.1 percentage points from the September projection.

In its report, the OECD noted that the momentum of global economic growth had recently been slowed by supply bottlenecks, rising raw material prices, and a resurgence of COVID-19 infections.

It also lowered its projected 2021 growth rates for the US (6.0%→5.6%), China (8.5%→8.1%), and Japan (2.5%→1.8%), although it raised its projections for some Eurozone members and emerging economies.

In a reflection of growing inflation around the world, the OECD raised its projections for prices in most countries, including South Korea. Its core inflation forecast for South Korea was 2.4%, up by 0.2 percentage points from the 2.2% estimate given in September.

By Lee Ji-hye, staff reporter

Please direct questions or comments to [english@hani.co.kr]