The Organization for Economic Co-operation and Development (OECD) estimates that economic growth in Korea will remain close to 3 percent by 2020, thanks to robust export growth and fiscal stimulus.
In its latest economic outlook, released on November 21, the organization expects Korea’s economic growth of 2.8 percent in 2018. It is above the forecast of the Korea Development Institute of 2.6 percent and the Bank of Korea of 2.7 percent.
The organization commented that Korea’s „fiscal stimulus“ compensates for weak employment growth, and that the improved relations with North Korea was also an event with positive economic implications, as the lower risk reduces uncertainty and the macroeconomics develops positively.
The OECD pointed out that the supportive macroeconomic policies of the Korean government should be accompanied by structural reforms to boost output growth. The organization also said: „The income-growth strategy must be supported by reforms to reduce the productivity gaps between industry and services and between large and small enterprises.“ In addition, the government’s organization recommended that the minimum wage be capped negative impact on employment.
