OECD Lowers South Korea Growth Forecast and Warns of Global Economic Fragility
The Organisation for Economic Cooperation and Development (OECD) has lowered its 2023 growth forecast for South Korea to 1.6 per cent, down from 1.8 per cent in its previous outlook in November.[0] The global economic outlook is still fragile, with the OECD expecting growth to be below trend for the next two years.[1]
The OECD expects global economic growth to be 2.6 per cent this year and 2.9 per cent in 2024, up from 2.2 per cent and 2.7 per cent respectively in its previous forecast.[2] China and India are likely to see the biggest gains, with growth of 5.3 per cent and 5 per cent respectively.[3]
Inflation is also set to remain above central bank objectives until the latter half of 2024 in most countries, with the OECD predicting a fall to 5.9 per cent in 2023 and 4.5 per cent in 2024, down from 8.1 per cent last year.[4]
In the UK, the OECD projected a 0.2 per cent drop in gross domestic product this year, followed by a tepid 0.9 per cent rebound in 2024.[5] This compares with growth of 0.8 per cent in the eurozone and 1.5 per cent in the US.[6]
The UK’s sluggish 2023 performance is made worse by the fact that it had the fastest growing economy in the G7 last year, growing by 4.0 per cent.[7]
The OECD said monetary policy needs to remain restrictive until there are clear signs that underlying inflationary pressures are lowered durably.[8] It warned that the impact of higher interest rates were difficult to assess, and could continue to expose financial vulnerabilities from high debt and stretched asset valuations.[9]
Jeremy Hunt, the UK government’s economic minister, said: “We believe the measures that the government is taking to address these issues are going to be very important to improve the economic outlook for the United Kingdom moving forward, but there are some particular challenges that are playing out at the moment.[10]
0. “OECD lowers 2023 growth outlook for Korea to 1.6%” 코리아타임스, 17 Mar. 2023, https://www.koreatimes.co.kr/www/biz/2023/03/488_347319.html
1. “OECD slashes S. Korea's 2023 growth outlook to 1.6 pct” Yonhap News Agency, 17 Mar. 2023, https://en.yna.co.kr/view/AEN20230317006300320
2. “OECD Falling Energy Prices Could Bolster Global Economic Growth” OilPrice.com, 17 Mar. 2023, https://oilprice.com/Energy/Oil-Prices/OECD-Falling-Energy-Prices-Could-Bolster-Global-Economic-Growth.html
3. “Blow for UK as experts predict economy will be the second-worst in G20” The Independent, 17 Mar. 2023, https://www.independent.co.uk/business/uk-economy-g20-oecd-russia-b2302997.html
4. “Rapid hike in interest rates has led to ‘financial vulnerabilities', OECD warns” The Irish Times, 17 Mar. 2023, https://www.irishtimes.com/business/economy/2023/03/17/rapid-hike-in-interest-rates-has-led-to-financial-vulnerabilities-oecd-warns
5. “OECD raises economic growth forecast for 2023 but flags concern about Russia and UK” The National, 17 Mar. 2023, https://www.thenationalnews.com/world/uk-news/2023/03/17/oecd-raises-economic-growth-forecast-for-2023-but-flags-concern-about-russia-and-uk
6. “Can the UK economy outperform Russia?” The Spectator, 17 Mar. 2023, https://www.spectator.co.uk/article/can-the-uk-economy-outperform-russia
7. “Central banks must keep interest rates high to combat inflation, says OECD” The Guardian, 17 Mar. 2023, https://www.theguardian.com/business/2023/mar/17/uk-will-be-only-g20-economy-apart-from-russia-to-shrink-this-year
8. “Central Banks Must Stay the Course on Rate Hikes, OECD Says” Financial Post, 17 Mar. 2023, https://financialpost.com/pmn/business-pmn/central-banks-must-stay-the-course-on-rate-hikes-oecd-says
9. “Global economic outlook has improved but recovery fragile, OECD says – National | Globalnews.ca” Global News, 17 Mar. 2023, https://globalnews.ca/news/9559293/oecd-global-economic-forecast-march-inflation/
10. “UK economy to be ‘worst performer in G7' in 2023, OECD says | NationalWorld” NationalWorld, 17 Mar. 2023, https://www.nationalworld.com/news/uk/uk-economy-g7russian-economy-g20-oecd-economic-outlook-4069275
