From left, Lareina Yee and Vinayak HV, senior partners at McKinsey & Company, talk with Clay Chandler, executive editor for Asia at Fortune, during a session of the McKinsey Asia Media Day at The Shilla Seoul hotel, Thursday. Courtesy of McKinsey & Company

Korea is forecast to grow into the world's seventh-largest economy by 2040, with per capita gross domestic product (GDP) expected to surpass $70,000, according to the head of McKinsey & Company in Korea on Thursday.

During the Asia Media Day hosted by McKinsey & Company, a full-day program packed with a total of seven sessions at The Shilla Seoul, Song Seung-heon, managing partner at McKinsey Korea, highlighted key takeaways from the firm's latest report on Korea's next economic growth model.

Under the presentation title of "Korea's Next S-Curve," Song emphasized that Korea has now entered a new period of economic growth in which Korea needs to focus on high-tech industries, such as semiconductors, bio and artificial intelligence (AI), to implement a necessary transition to a value-added economy.

McKinsey suggested that Korea implement eight major tasks, including industrial structure reform, business model reform, conversion to new businesses centered on original technology and AI, among others, under the three axes of reorganization, transformation and construction.

“If Korea boldly implements the key tasks with a growth mindset, it will be possible for Korea to become the world's seventh-largest economy by 2040 with achieving a per capita GDP of $70,000,” Song said during the session.

Song Seung-heon, managing partner of Korea at McKinsey & Company, speaks during his presentation at a session of the McKinsey Asia Media Day held at The Shilla Seoul hotel, Thursday. Korea Times photo by Anna J. Park

Besides Song's presentation, six other sessions were held during the Asia Media Day event in Seoul, with dozens of consultants from Shanghai, Singapore, London, Sydney and more joining the program to share the global management strategy firm's insights into the outlook for Asia in the coming future.

The sessions covered various topics, ranging from generative AI, energy and green technology to inclusive prosperity, yet the common denominator of the sessions was the new challenges facing Asian countries.

Despite Asia's successes in leading the global economic growth over the past decades, serving successfully the role as the nexus of the world with its ample population and technological innovations, the region now faces a challenging period ahead, requiring a new set of strategies for businesses.

“In the past era, Asia, including South Korea, benefited more than any other region from the major trends of globalization and digitization. And it starts a new era in a strong position. Looked at collectively, the diverse and dynamic countries of Asia are now such a large part of the global economy, they can shape a new era,” Seong Jeong-min, a partner at McKinsey Global Institute (MGI), said during the session titled “Asia on the cusp of a new era” at the event.

Seong Jeong-min, a partner at McKinsey Global Institute (MGI), speaks during his presentation at a session of the McKinsey Asia Media Day held at The Shilla Seoul hotel, Thursday. Courtesy of McKinsey & Company

“A new era is going to have very different underlying forces than in the past, and Asia will be at the center of these forces,” Chris Bradley, a McKinsey senior partner and MGI director, said during the session as well. “Asia will be the furnace in which a new era is forged, and it may be that Asia experiences a more concentrated, heightened version of global challenges.”

The two speakers delved into how to navigate the challenging period facing Asian countries in five key domains ― world order, technology platforms, demographic forces, resource and energy systems and capitalization. Many thought-provoking questions were raised, including whether Asia could reinvent itself as a technology creator from the current global hub for tech-manufacturing. Demographic challenges of aging population and low fertility rate are another major headwind facing Asian economies.

Participants listen to a presentation during the McKinsey Asia Media Day held at The Shilla Seoul hotel, Thursday. Courtesy of McKinsey & Company

“While the pace of aging is very fast in the region, Korea shows the highest number in the old age dependency ratio. In addition, Korea's fertility rate dropped to 0.78 in 2022, the lowest figure among OECD countries. Shanghai's urban fertility rate also stood at only 0.7, even lower than that of Korea,” Seong pointed out during the session, adding that the demographic challenge brings in difficult policy options like cross-border migration or relocation of workforces to address labor mismatches.