Korea tumbles off fastest-growing nation listKorea has dropped out of the top 10 fastest-growing members of the Organization for Economic Cooperation and Development (OECD) for the first time in nine years.
Korea grew 2.6 percent last year, ranking 12th among the group’s 34 members, according to data released by the OECD on Sunday.
The country’s gross domestic product growth ranked 11th in 2006, but did better afterwards. It encountered stellar growth, particularly during the global financial meltdown that took down Lehman Brothers.
At the peak of the meltdown in 2008, the country’s gross domestic product growth ranked sixth among OECD nations and climbed to fourth in 2009.
In 2010, Asia’s fourth-largest economy posted the second-highest growth, as the country’s exports proved resilient compared to other countries.
But its rank began sliding as a combination of slowing economic growth in China, shrinking domestic consumption, growing debt and worsening unemployment all squeezed the country’s economy.
Last year, Korea fell behind countries that it normally outperforms and behind nations with lower gross national income. Those include the Czech Republic, Hungary and Poland. Spain, Luxemburg and Iceland were also ahead of Korea.
Growth in 2016 is not likely to see a swift rebound, based on recent forecasts by global economic organizations.
The country’s latest headache is its stifling heavy industries including shipping, shipbuilding and steel, once pillars of economic growth. Major companies in this sector, including Hyundai Heavy Industries and Hanjin Shipping, are undergoing restructuring after posting sizable losses.
The OECD lowered its growth outlook for Korea to 2.7 percent earlier this month from its previous estimate of 3.1 percent. The revision followed a growth outlook change by the International Monetary Fund, which cut its estimate to 2.7 percent.
While the Bank of Korea also trimmed its forecast to 2.8 percent, the Korean government has held firm to its 3.1 percent prediction since last year.
The OECD has called for reforms for Korea to restore its growth.
“Further reforms will be needed to boost the country’s growth rates, which have slowed versus historical rates, although remaining above the OECD average,” the international organization said in a statement.
“Korea’s productivity growth has slowed markedly in recent years, curbing the rise of incomes and limiting advances in well-being,” it said.
“This calls for ambitious reforms to strengthen competition, raise efficiency in low-productivity services and overhaul the SME [small and midsize enterprises] sector, where policies aim to ensure the survival of small firms, rather than higher productivity and growth.”
BY PARK EUN-JEE [firstname.lastname@example.org]
with the Korea JoongAng Daily
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