OECD report hopeful about exports

The Organization for Economic Cooperation and Development (OECD) has lowered Korea’s growth outlook by half a percentage point, while adding that the country could still achieve a gradual recovery through improvements in exports despite depreciation of the Japanese yen.

The OECD revised Korea’s economic expansion forecast for this year to 2.6 percent from 3.1 percent in its annual global economic outlook.

It also shaved the global economic growth outlook to 3.1 percent from 3.4 percent for this year and to 4 percent from 4.2 percent for 2014. The global economy is forecast to continue a “muted” and “multiple-speed” recovery for the next two years, the report said.

Yet the OECD report was positive on Korea’s exports. “A pickup in world trade is projected to spark a gradual recovery with output growth reaching 4 percent in 2014,” the report said.

On the other hand, It cited external and domestic risks facing the Korean economy. “With exports accounting for more than half of GDP, Korea is particularly exposed to global economic conditions and exchange-rate shifts,” the report said. “Domestic risks are on the upside insofar as government initiatives related to household debt and housing boost growth more than foreseen.”

The U.S. economy is expected to grow 1.9 percent this year, down slightly from the organization’s previous projection of 2 percent.

The Japanese economy is predicted to expand by 1.6 percent, more than doubling from 0.7 percent in 2012.

Korea’s Finance Minister Hyun Oh-seok called for short-term economic boosts and long-term structural reforms at the OECD Ministerial Council Meeting held in Paris yesterday. Hyun was the first Korean government official to serve as a panelist.

“Countries with fiscal space, like Korea, must contribute to revitalize the sluggish global demand and help relieve the burden of more troubled countries under tight austerity measures,” Hyun said.

By Song Su-hyun [ssh@joongang.co.kr]