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OECD slashes China's growth outlooks in 2023, 2024

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People walk past a map showing Evergrande development projects in China at an Evergrande city plaza in Beijing, Monday. AP-Yonhap
People walk past a map showing Evergrande development projects in China at an Evergrande city plaza in Beijing, Monday. AP-Yonhap

By Yi Whan-woo

The Organization for Economic Cooperation and Development (OECD) slashed its 2023 economic growth outlook for China to 5.1 percent, Tuesday, down from 5.4 percent in its previous forecast made in June.

The Paris-headquartered organization also lowered next year's growth forecast for the world's second-largest economy from 5.1 percent to 4.6 percent.

It cited China's structural changes led by the housing market crisis following four decades of development as the reasons for the downward revisions for 2023 and 2024.

The OECD's forecast for China, according to Seoul analysts, adds to concerns over the less-than-expected spillover effect from China's reopening on Korea's path for revitalization.

The OECD on Tuesday kept the 2023 economic growth outlook for Korea steady at 1.5 percent, after making its fifth consecutive downward revision ― from 2.7 percent in December 2021 to 2.5 percent in June 2022, 2.2 percent in September 2022, 1.8 percent in November 2022, 1.6 percent in March 2023 and 1.5 percent in June 2023.

The organization's forecast is slightly higher than the 1.4 percent projected by the Ministry of Economy and Finance as well as the Bank of Korea (BOK) and the International Monetary Fund (IMF).

The OECD's outlook for Korea next year remains unchanged at 2.1 percent.

The organization did not give reasons behind its economic outlook for Korea in this month's update.

Korea and China joined several major economies whose 2023 growth forecast was not revised up as the OECD anticipated this year's global economy will grow 3 percent, up from 2.7 percent in its June forecast.

For instance, the United States saw its 2023 growth outlook raised by 0.6 percentage points to 2.2 percent. Japan also saw an increase of 0.5 percentage points to 1.8 percent, while France increased by 0.2 percentage points to 1 percent, Spain went up by 0.2 percentage points to 2.3 percent, India rose by 0.3 percentage points to 6.3 percent and Brazil went up by 1.5 percentage points to 3.2 percent.

On the other hand, Germany's growth forecast shrank by 0.2 percentage points from zero percent, while that for Canada fell by 0.2 percentage points to 1.2 percent, and Italy 0.4 percentage points to 0.8 percent.

The growth projection for the United Kingdom remained unchanged at 0.3 percent.

The OECD assessed the pace of recovery for the world economy is weakening but inflation is easing gradually worldwide.

It did not give an inflation outlook for the entire world, while lowering the 2023 inflation outlook for G20 economies from 6.1 percent to 6 percent.

The inflation forecast for Korea remained unchanged at 3.4 percent for 2023 and 2.6 percent for 2024.

Concerning downward global economic risks, the organization warned that China's growth slowdown can affect the world along with the tight supply of raw materials and high interest rate policies.

Yi Whan-woo


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