The Organisation for Economic Co-operation and Development (OECD) has pointed out that the South Korean government’s inefficiency in terms of administrative processes is at a critical level. In addition, the OECD said that the Bank of Korea should lower its domestic economic growth forecast for this year from 2.5 percent. The OECD itself is predicted to lower its forecast from 2.6 percent sooner or later.
Vincent Koen, who is in charge of country studies at the OECD, attended the Korea Development Institute’s international conference in Seoul on May 9 and criticized the bureaucracy of the South Korean government.
“South Korea’s product market regulation index was the fourth-highest in the world behind those of Turkey, Israel and Mexico in 2013 and we found that the index of South Korea has shown little improvement since then in spite of the South Korean government’s efforts,” he said, adding, “In addition, the government needs to refrain from overprotecting small and medium-sized enterprises in that the overprotection hinders the growth of large corporations and prolongs the lives of zombie companies.”
He also said that sluggish exports and investments as well as the base effect related to the fourth quarter of 2018 resulted in South Korea’s Q1 economic growth rate as low as negative 0.3 percent, the worst since the recent financial crisis. “The Bank of Korea gave a forecast of 2.5 percent for this year before the Q1 growth data came out and the central bank will have to lower its forecast,” he went on to say, continuing, “The South Korean economy is unlikely to reach its potential growth rate this year.”