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The International Monetary Fund (IMF), Organisation for Economic Co-operation and Development (OECD) and other international organizations have forecast Korea’s future growth rate to reach about 4 percent.
According to reports submitted by the Ministry of Strategy and Finance (MOSF) to the National Assembly on Monday, the IMF expected Korea’s growth rate between 2015 and 2018 to reach 4.0 percent last April. The OECD also forecast last May that Korea will grow by 4.1 percent between 2012 and 2017.
Korea’s predicted growth rate for the next five years is about 4 percent. However, in the long term, most expect Korea’s growth rate to drop after 2018.
The OECD also adjusted Korea’s growth rate between 2018 and 2030 downward to 3.3 percent. The growth rate dropped by 0.8 percentage points from 4.1 percent between 2012 and 2017. The Korea Development Institute (KDI) also forecast Korea’s growth rate between 2011 and 2020 to reach 3.6 percent, but it will stand at 2.7 percent between 2021 and 2030, according to KDI.
The slowed growth of the economically active population due to a low birth rate and decreased labor supply with reduced working hours after the second half of the 1990s are named as reasons for the drop in growth rate.
As companies hesitated to invest after the financial crisis, investment growth slowed. A stalled increase in the productivity of the manufacturing and service industries is also expected to have an impact.
The MOSF noted that policies, including investment facilitation measures, will be developed to break away from slowed growth. The ministry will also build Korea’s growth potential through comprehensive efforts including shifting the economic paradigm, enhancing productivity, promoting investment and increasing the quality of employment.
Source: Yonhap News (Oct. 14, 2013)
** This article was translated from the Korean.