OECD raises Korea's growth outlook this year to 2.6%

The Organization for Economic Cooperation and Development (OECD) has significantly raised its economic growth forecast for Korea this year from 2.2 percent to 2.6 percent. The OECD joins global investment banks in raising Korea’s growth outlook after its real gross domestic product (GDP) showed ‘stronger-than-expected growth’ in the year's first quarter.

According to the Ministry of Economy and Finance on Thursday, the OECD predicted that Korea’s economy would grow by 2.6 percent this year. In February, the OECD projected 2.2 percent growth, a 0.4 percentage point increase in three months. The OECD expects that amid Korea's exports showing upward signs, domestic demand is expected to pick up in the second half of the year.

“The outcome reflects the strong performance of major industries such as semiconductors and a better-than-expected recovery in domestic demand," Chief Presidential Secretary for Policy Seong Tae-yoon said at a briefing on economic issues. "This year's growth forecast of 2.6 percent is the highest among the Group of 20 (G20) countries with per capita income above $20,000.”

Global investment banks, including Goldman Sachs, have raised their growth forecasts for Korea this year to the mid-2 percent range after the country's economy expanded by 1.3 percent in the first quarter of this year, far exceeding market expectations. However, experts say the economy is still hindered by high interest rates and prices, making it difficult to determine whether domestic demand has clearly recovered.


Do-Hyong Kim dodo@donga.com