"Housing prices, its debt, and aging populations are causing S. Korea's instability"

OECD Secretary-General Angel Gurria from Mexico will resign on June 1 after having led the organization since 2006. At the video press conference on Friday hosted by the French government, the longest-serving OECD secretary-general talked about how he has seen South Korea in the last 15 years. He will be succeeded by Mathias Cormann, a former Australian finance minister.

Gurria said South Korea that he experienced as an OECD secretary-general symbolizes one of the most dramatically changed countries. “South Korea’s development in technology like in semiconductors, IT, and artificial intelligence are impressive,” said the secretary-general. “I used to tell several governments that I am proud of South Korea’s success and its secret should be shared with others.”

The secretary-general had positive things to say about South Korea’s efforts to control COVID-19. “South Korea successfully managed the pandemic, and its economy is expected to do well next year as a result,” he said. “It will be great if we can share the secret of South Korea,” he laughed.

However, he added that the country’s economic stimulus should not be suspended until post-COVID-19 economic recovery is clearly on its path and that timing is important for economic stimulus. “While most countries with low vaccination rates have a high numers of patients, South Korea has an unusual combination of a small number of new patients and slow vaccination,” he expressed concerns regarding South Korea’s current vaccination rate around 10 percent.

　

“Even though the country was able to buy time thanks to its relatively low number of COVID-19 infections, it is critical to raise its vaccination rate now,” he emphasized. “Nobody is safe until everybody is.” He also stressed that advanced countries should provide holistic support ranging from vaccine supply to funding to buy vaccines and building vaccine manufacturing facilities.

The secretary-general pointed to real estate, household debt, and aging populations as factors that cause instability in South Korea’s economy. “I am concerned about housing prices and household debt, not government or corporate debt,” he said. “Productivity decrease as a result of low birth rates and aging populations is a serious issue. Other big challenges include changes in the way, environment, and conditions of working as people live and work increasingly longer.”

He suggested expanding childcare infrastructure as a solution. “Heavy investment is needed in daycare centers so that women can continue to work after giving births,” he said. “Policies to support women’s retraining and upskilling after giving births are desperately needed to increase productivity.”


Youn-Jong Kim zozo@donga.com