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OECD: Korea to grow 3.1% in 2013

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Published : 2012-11-27 19:03
Updated : 2012-11-27 19:03

The Organization for Economic Cooperation and Development predicted a gradual pickup for the Korean economy on the back of improved exports next year, forecasting a growth rate of 3.1 percent.

Korea was one of six nations the OECD predicted to register a rate of over 3 percent. For 2014, the outlook was even higher at 4.4 percent.

Overseas shipments will rise as global trade gains momentum, the OECD said in an outlook report on Tuesday. The recovery in the global economy, however, would be “hesitant and uneven,” despite signs of a rebound in the U.S. and Japan.

This year, the world economy was expected to grow by 2.9 percent, followed by 3.4 percent growth in the next.

Citing the risk factors lurking both within and outside of the country, the report said that “a major risk is financial turbulence in the world economy, which in the past has negatively affected Korea both through trade and financial channels, although Korea is now better prepared for the latter.”

Korea also must be on the lookout for China’s economic conditions, as the country accounts for one-quarter of Korea’s exports.

The 3.1 percent outlook was higher than the 2.2 percent forecast for this year issued by the OECD in November, but was slashed from the 4 percent issued in May this year in the group’s forecasts for next year.

For this year, a number of organizations including the International Monetary Fund and the Korea Development Institute cut their outlook for the local economy.

The growing volume of household debt ― which hit a record high of 937.5 trillion won ($864.7 billion) as of the third quarter of this year ― may weigh on the local economy, but Korea would have sufficient currency and fiscal ammunition to respond to global crises next year.

“Korea has scope for fiscal, as well as monetary, stimulus, given its sound public finances and low inflation,” the OECD said.

By Kim Ji-hyun  (jemmie@heraldcorp.com)

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