OECD cuts Korea's 2024 economic outlook but remains positive about growth

The logo of the Organization for Economic Cooperation and Development (OECD) is seen in this 2021 photo. Korea Times file

The Organization for Economic Cooperation and Development (OECD) cut Korea's 2024 economic growth forecast to 2.5 percent on Wednesday, down from a previous forecast of 2.6 percent announced in May.

The Paris-headquartered organization's updated outlook on Asia's fourth-largest economy came as it revised up the 2024 growth projection for both the world and Group of 20 economies from 3.1 percent to 3.2 percent.

Despite the downward revision, the OECD assessed Korea's export driven-growth as "stable." It accordingly kept the country's GDP growth outlook for 2025 steady at 2.2 percent as it had projected in May.

"Growth is projected to be stable in Korea," it said, "with exports aided by ongoing strength in global semiconductor demand."

The OECD's growth forecast for Korea is lower than the Ministry of Economy and Finance's estimate of 2.6 percent, and higher than the Bank of Korea's 2.4 percent.

Of other financial institutions within and outside Korea, the International Monetary Fund, the Asian Development Bank and the Korea Development Institute had the same growth estimate for Korea at 2.5 percent.

Concerning the inflation forecast for Korea, the OECD lowered the rate to 2.4 percent from 2.6 percent for 2024. The rate for next year remained unchanged at 2 percent.

With regard to downside risks for Korea, the organization picked a surge in import prices due to geopolitical tension, market volatility on a path to cooling inflation and a slowdown in growth momentum due to the sluggish labor market.

The OECD suggested a "data-based" decision with regard to the timing of a rate cut, stern measures against any pressure on fiscal soundness, among others.

The OECD announces the growth outlook for each of the global economy and G20 nations four times a year, including September.

It shares growth forecasts for the OECD member states twice a year — between May and June and between November and September.

With regard to the world economy, the OECD assessed that its growth "remained resilient" and that it is anticipated to sustain a 3.2 percent growth in 2025 as in 2024.

For G20 nations, the organization projected the economy will grow 3.1 percent in 2025, down from 3.2 percent this year.

The 2025 growth projection is the same as the OECD's previous forecast made in May.

The 2024 growth forecast remained unchanged at 3.6 percent for the United States and at 4.9 percent for China.

For Japan, the OECD slashed this year's growth outlook by 0.6 percentage points and predicted that it will contract by 0.1 percent.