OECD Revises 2023 Growth Outlook for South Korea amid Global Economic Recovery Fragility
The Organization for Economic Cooperation and Development (OECD) has revised its 2023 growth outlook for South Korea to 1.6 percent, down from 1.8 percent in its previous forecast in November.[0] The OECD further warned that the global economic recovery is still fragile, and downward risks persist due to the prolonged war in Ukraine, the impact of higher interest rates and the disruption of supply chains.[1]
The OECD's latest Interim Economic Outlook report said global GDP is projected to remain at below-trend rates in 2023 and 2024, at 2.6 per cent and 2.9 per cent respectively, with policy tightening continuing to result in a drag on growth. It noted ‘more positive signs have now started to appear' as food and energy prices fell back from recent highs and predicted growth would improve into next year as inflation continues to recede.[2]
The Organisation for Economic Co-operation and Development (OECD) reduced its projection for overall inflation by 0.1 percent to 5.9 percent in 2023, however, its estimate of core inflation, not taking into account fluctuating food and energy costs, was augmented to 4 percent.[3] It warned that core inflation remains elevated, “held up by strong service price increases, higher margins in some sectors and cost pressures from tight labour markets”.[2]
The OECD said monetary policy needs to stay the course until there are clear signs that underlying inflationary pressures are lowered durably.[4] As such, the Federal Reserve and the European Central Bank must press ahead with interest-rate increases and not be blown off course by the fragility of the global economic recovery and vulnerabilities in the financial system, the OECD said.[5]
In the UK, the OECD expects GDP to fall by 0.2 per cent in 2023, compared with 0.4 per cent predicted in November. It said the UK is likely to be the only G7 economy in recession this year, with only Russia performing worse among the G20.[6] The OECD anticipates that the UK will lag behind the other countries of Europe in terms of growth by 2024, with a rate of 0.9%, while Germany is expected to grow at 1.7%, France at 1.3%, and the entire Eurozone at 1.4%.[7]
0. “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
1. “Australia's growth outlook still subdued: OECD” The Queenslander, 17 Mar. 2023, https://theqldr.com.au/politics/2023/03/18/economy-159
2. “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
3. “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/
4. “OECD calls for further interest rate hikes, citing persistently high inflation By Investing.com” Investing.com, 17 Mar. 2023, https://www.investing.com/news/economy/oecd-calls-for-further-interest-rate-hikes-citing-persistently-high-inflation-3033583
5. “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
6. “OECD says UK faces being only member of G7 in recession this year” Daily Mail, 17 Mar. 2023, https://www.dailymail.co.uk/news/article-11871867/OECD-says-UK-faces-member-G7-recession-year.html
7. “Can the UK economy outperform Russia?” The Spectator, 17 Mar. 2023, https://www.spectator.co.uk/article/can-the-uk-economy-outperform-russia
