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Growth forecast for global economy revised up to 2.6%
By Yi Whan-woo
The Organization for Economic Cooperation and Development (OECD) lowered its 2023 growth forecast for Korea to 1.6 percent, Friday, down from 1.8 percent in its previous outlook given in November.
The outlook for Asia's fourth-largest economy contrasts with a global economic growth forecast that has been revised up to 2.6 percent from the previous 2.2 percent.
In its first updated interim economic outlook for this year, the Paris-headquartered organization said the global economy is anticipated to recover as purchasing power is rising in the face of declines in energy and food prices.
It also said China's reopening after years of COVID lockdowns will push global demand for goods and services upward. It viewed the neighboring Asian countries will especially benefit from China's travel boom.
The OECD still described the global economy as "fragile," noting downside risks prevail over upside risks due to a prolonged Ukraine war and disrupted supply chains, among others.
For Korea, the OECD said the country, along with Australia, "will benefit from the expected growth rebound in China, offsetting the impact of tighter financial conditions."
However, it did not give further details on why it revised Korea's growth forecast.
The OECD's outlook for Korea is on par with estimates by the Ministry of Economy and Finance and the Bank of Korea (BOK), which forecast 1.6 percent, respectively.
The OECD's 2023 growth forecast for G20 was revised up by 0.4 percentage points to 2.6 percent, while for the euro area it went up by 0.3 percentage points to 0.8 percent
The outlook for the United States was increased by 1 percentage point to 1.5 percent while improving for China by 0.7 percentage points to 5.3 percent. For Germany, it increased by 0.6 percentage points to 0.3 percent and in France 0.1 percentage points to 0.7 percent.
But the outlook for Japan slid by 0.4 percentage points to 1.4 percent. Australia inched down 0.1 percentage points to 1.8 percent.
Concerning the inflation outlook for Korea, the OECD lowered it to 3.6 percent from 3.9 percent, in line with global inflation that it projected would take a downward trajectory in most G20 countries.
The inflation forecasts for the global economy this year were not given. For G20 economies, the inflation outlook was lowered by 0.1 percentage points to 5.9 percent, while that for the eurozone fell by 0.4 percentage points to 6.2 percent.
The inflation outlook for the U.S. was revised up by 0.2 percentage points to 3.7 percent, while that of Japan shot up by 0.5 percentage points to 2.5 percent, and the U.K. by 0.1 percentage points to 6.7 percent.
The inflation forecasts for China remained unchanged at 2 percent.
To tackle the uncertainties of growth and inflation, the OECD urged the world to take joint measures on fiscal policy, monetary policy, reform efforts and climate change.
In particular, it recommended sustaining credit tightening until signs of inflation cooldown become apparent. It assessed that additional rate hikes in the U.S., the eurozone and most other countries are still necessary.
