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. The global economic outlook is still fragile, with the OECD expecting growth to be below trend for the next two years.
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. China and India are likely to see the biggest gains, with growth of 5.3 per cent and 5 per cent respectively.
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.
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. This compares with growth of 0.8 per cent in the eurozone and 1.5 per cent in the US.
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.
The OECD said monetary policy needs to remain restrictive until there are clear signs that underlying inflationary pressures are lowered durably. 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.
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.
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