The OECD adjusted its South Korean economic growth forecast for this year from 2.4 percent to 2.1 percent and that for next year from 2.5 percent to 2.3 percent. Previously, the OECD lowered the estimate for this year from 2.6 percent to 2.4 percent in May this year.
The downward adjustments have to do with the ongoing sluggish global trade and a decrease in import demand from China. Still, the OECD said that the South Korean government’s current expansionary macroeconomic policy is expected to lead to more domestic consumption next year.
According to the OECD, the global economy is expected to grow 2.9 percent this year and 3 percent next year. Its previous estimates were 3.2 percent and 3.4 percent, respectively. “With multiple trade disputes resulting in a decrease in investment and economic uncertainties lingering for longer than previously thought, the growth estimates had to be lowered along with most of those for G20 countries,” the OECD explained.
The organization mentioned trade disputes, Chinese economic slowdown, Brexit and financial volatilities as this year’s downside economic risks. “Trade disputes should be addressed along with economic uncertainties so that more investment and potential growth can be realized,” it said, adding, “Developed economies, in particular, need to pursue monetary easing and fiscal expansion at the same time.”