OECD raises Korea’s growth outlook to 3.2%

The OECD joined other global institutions in raising Korea’s economic growth outlook for the year to 3.2 percent and projected growth for the next two years to average 3 percent in a report released Tuesday.

The international organization noted that improvements in Korean exports led by the bullish performance of semiconductors and expansion in corporate investment drove the favorable forecast. In its last projection in June, the OECD predicted Korea’s GDP growth would be 2.6 percent this year and 2.8 percent next year.

The revision follows the International Monetary Fund’s forecast projecting the Korean economy will grow 3.2 percent this year, up from an earlier estimate of 3 percent. Among the OECD’s 35 member countries, Korea’s outlook is relatively strong. The organization expects the global economy to expand 3.6 percent, up from its June’s projection of 3.5 percent.

The eurozone is expected to see sharper improvement this year, growing 2.4 percent compared to 1.8 percent in June, while the U.S. economy is expected to nudge up a bit from the OECD’s previous outlook, from 2.1 percent to 2.2 percent.

“The rebound in international trade and greater fiscal support are projected to sustain output growth at around 3 percent through 2019,” the OECD report said.

During a press briefing on Monday, Korea’s finance minister, Kim Dong-yeon, expressed confidence that Korea’s economy would achieve growth above 3 percent this year. If it happens, it would be the first time in three years that GDP has expanded more than 3 percent.

However, the OECD report noted that growth in the following years will likely be held back by declining construction investment. The government has been cracking down on real estate development, imposing strict lending standards as part of efforts to cool an overheated market.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]