SEOUL, Sept. 21 (Korea Bizwire) — The Organization for Economic Cooperation and Development (OECD) on Tuesday raised its 2021 growth outlook for the South Korean economy to 4 percent, amid the country’s strong exports and fiscal support.
The latest outlook is a 0.2 percentage-point rise from its May estimate of 3.8 percent growth for Asia’s fourth-largest economy.
The Paris-based organization also revised up its 2022 growth forecast for South Korea to 2.9 percent from its earlier estimate of 2.8 percent.
The OECD joined other organizations that have boosted their growth outlook for the South Korean economy to the 4-percent range amid a global economic recovery.
The International Monetary Fund (IMF) expected the South Korean economy to grow 4.3 percent this year. The Bank of Korea (BOK) forecast 4 percent growth for Korea.
Three global credit appraisers — Moody’s Investors Service, Standard & Poor’s Global Ratings (S&P), and Fitch Ratings — also expected the Korean economy to grow 4 percent this year.
Finance Minister Hong Nam-ki described the OECD’s upward revision of the growth outlook as a reaffirmation that South Korea has been responding to the COVID-19 crisis successfully in relative terms.
“Despite the difficult situation in which the growth forecast for the world economy this year has been revised down 0.1 percentage point due to the impact of the delta variant’s spread, our country’s growth outlook was revised upward, due apparently to strong exports and the effect of policy efforts, such as the second extra budget,” Hong wrote on Facebook.
Commenting on the revision of next year’s growth outlook, Hong said that South Korea has received a positive assessment that its economic recovery will continue not only during the process of overcoming the current crisis but also in a post-crisis period.
Asia’s fourth-largest economy is on a recovery track on the back of solid exports despite the latest spike in COVID-19 cases.
The Korean economy grew a revised 0.8 percent in the second quarter from three months earlier, slowing from a 1.7 percent on-quarter gain in the first quarter, according to central bank data.
Exports, which account for half of the country’s economy, rose 35 percent on-year in August, extending their gains to the 10th straight month.
In terms of an estimated average growth rate in 2020-21, South Korea ranked third with 1.6 percent among the Group of 20 (G-20). It also topped the list among 10 advanced nations from G-20.
“Growth should also pick up in Japan, Korea and Australia as infections abate and sanitary restrictions are lifted,” the OECD said.
Meanwhile, the OECD upped its 2021 inflation outlook for Korea to 2.2 percent from its May forecast of 1.8 percent.
Its forecast is higher than the BOK’s projection in August of 2.1 percent. South Korea’s central bank aims to keep annual inflation at 2 percent over the medium term.
The OECD lowered its 2021 growth outlook for the global economy to 5.7 percent from 5.8 percent amid a global resurgence in COVID-19 cases. Next year, the global economy is expected to grow 4.5 percent.