This file photo shows the buildings of South Korea’s major companies in Seoul. (Yonhap)
SEOUL, Feb. 3 (Korea Bizwire) — The shrinking population driven by low birthrate and aging will cut South Korea’s economic growth by close to 1 percent each year in the long term, a research paper showed Thursday.
Lee Jong-wha, an economics professor at Korea University and chief of the Korean Economic Association, estimated a forecast of South Korea’s economic growth rate until 2060, based on population projections provided by Statistics Korea and a simulation of the country’s growth model.
The basic model showed that the growth rate of GDP between 2050-2060 is expected to be 0.9 percent, along with a growth rate of gross domestic product (GDP) per capita of 2.3 percent.
This indicates that the shrinking population will cut labor supply and capital investment, leading to deteriorating technological innovation and putting the South Korean economy in the pit of low growth.
The paper said that according to a model built on the premise that the level of technological advancement and the increase rate of human capital stays constant, the GDP growth rate between 2050-2060 will be 1.5 percent and the growth rate of GDP per capita will be 2.9 percent.
In contrast, according to a model built on the premise that the investment rate of physical capital will shrink incrementally, the growth rate of GDP between 2050-2060 will be 0.2 percent, and the growth rate of GDP per capita will be 1.5 percent.
H. M. Kang (hmkang@koreabizwire.com)
