OECD lowers Korea’s 2024 growth outlook to 2.2%
The Organization for Economic Cooperation and Development (OECD) cut its 2024 economic growth forecast for Korea to 2.2 percent, Monday, slightly down from 2.3 percent announced in its previous forecast back in November 2023.
The inflation outlook for Korea this year was kept steady at 2.7 percent.
The updated growth estimate for Asia’s fourth-largest economy is the same as the projection by the Ministry of Economy Finance, and higher than that of the Bank of Korea (BOK) at 2.1 percent.
The OECD’s downward revision contradicts the International Monetary Fund’s (IMF) updated growth estimate for Korea, which was announced last week. It was revised up to 2.3 percent from a previous forecast of 2.2 percent back in October 2023.
The Paris-headquartered OECD did not explain why it slashed the forecast for Korea as it released its first updated interim world economic outlook for this year.
“Under the circumstances, we predict the organization, in its update, took into account the Korean government’s forecast of 2.2 percent as addressed in the 2024 economic policy directions in January,” the Ministry of Economy and Finance said.
Joo Won, director of the Hyundai Research Institute, said, “Stagnant private spending in Korea was possibly behind the OECD’s downward revision despite the country’s export rebound.”
The OECD forecast the global economy to expand 2.9 percent this year after estimating the growth rate at 2.7 percent in November.
The organization assessed the world had resilient recovery last year as inflation eased faster than expected and economic activities picked up pace.
It assessed that such growth momentum, however, weakened at the end of 2023. It added that international trade still remains sluggish this year but shows sign of a rebound on the back of sales of chips, IT devices, cars as well as travel demand.
The organization, nevertheless, warned that geopolitical risks stemming from the Red Sea crisis can put upward pressure on shipping costs as freight shipping rate can increase and cause a shipping delay.