SEOUL, Sept. 11 (Korea Bizwire) – According to Simon Baptist, Chief Economist at the Economist Intelligence Unit, by 2050, South Korea, Canada and Italy may find themselves firmly entrenched outside the global GDP top-10 list.
Baptist attributes this change partly to the projected rise of India, with its growing population and migration to urban areas with high productivity, and the emergence of Indonesia and Mexico.
In contrast, South Korea will see its growth rates of 3.5 to 4 percent shrink to 2 percent by 2030. By 2050, Baptist expects the number to decrease further to 1 percent.
The downward trajectory of South Korea’s economic output is tied to its dwindling workforce, once the source of South Korea’s miraculous climb out of post-war devastation.
Baptist uses the example of U.S. economic growth and stresses the need for South Korea to adopt certain measures.
“The reason for the United States’ continued growth is the workforce consistently expanded due to the increase in the rates of female employment in the 70′s, and immigration,” he pointed out.
“South Korea needs to raise its relatively low rate of female employment and take on immigrants. It can also push back the retirement age and increase labor participation among minorities such as persons with disabilities,” Baptist said.
He also mentioned the possibility of unification with North Korea as a move that presents difficulties in the short term, but offers opportunities in the long term if North Korea undergoes the same restructuring the South went through after the Korean War.
He credited South Korea’s R&D capabilities and technological prowess as strengths and said the tourism sector had significant potential. Relaxing regulations, diversifying exports, reforming tax laws and attracting more foreign investment could be routes through which the country maintains its economic growth.
Despite the expected drop in GDP, Baptist expects GDP per capita to rise.
“Currently, South Korea’s GDP growth rate is higher than the growth rate of GDP per capita, but this will be reversed going forward. In the future, economic growth will come not from population growth but technological development,” he declared.
“Quality of life will not fall as long as technological development continues,” Baptist concluded.