OECD Downgrades South Korea’s 2023 Economic Outlook
The Organization for Economic Cooperation and Development (OECD) has revised down South Korea's growth outlook for 2023 to 1.6 per cent, as the global economy stands on a “fragile” foundation amid uncertainties.[0] The OECD said the improved economic outlook is still fragile and risks remain tilted to the downside, with the war in Ukraine, the impact of higher interest rates and potential financial vulnerabilities from high debt and stretched asset valuations as key sources of uncertainty.[1]
In its Interim Economic Outlook report, the OECD said global economic growth is projected to remain at below trend rates in 2023 and 2024, at 2.6 per cent and 2.9 per cent respectively.[2] It also noted that inflation is expected to moderate gradually over 2023 and 2024, remaining above central objectives in most countries until the latter half of next year.[3]
The UK is set to be the only economy in the G20 apart from Russia to shrink this year, with the OECD expecting a 0.2 per cent fall in the UK's gross domestic product in 2023, followed by a rise of 0.9 per cent next year.[4] This is substantially behind other leading economies, with growth of 0.8 per cent in the eurozone and a 1.5 per cent expansion in the US.
Despite the weak outlook, the OECD said there were “more positive signs” as food and energy prices were falling back, and the Chinese economy had fully reopened.[4] It said the Federal Reserve and the European Central Bank must press ahead with interest-rate increases and not be blown off course by the fragility of the global economic recovery and vulnerabilities in the financial system.[5]
Earlier this week, Jeremy Hunt said: “We believe the measures that the government is taking to address these issues are going to be very important to improve the economic outlook for the United Kingdom moving forward, but there are some particular challenges that are playing out at the moment.”[6] He said the government's plan to grow the economy includes unlocking business investment, helping more people into work, and extending energy bill support.[6]
0. “OECD slashes S. Korea's 2023 growth outlook to 1.6 pct” Yonhap News Agency, 17 Mar. 2023, https://en.yna.co.kr/view/AEN20230317006300320
1. “Global economic outlook has improved but recovery fragile, OECD says – National | Globalnews.ca” Global News, 17 Mar. 2023, https://globalnews.ca/news/9559293/oecd-global-economic-forecast-march-inflation/
2. “OECD expects short-term sluggish economic growth” UPI News, 17 Mar. 2023, https://www.upi.com/Top_News/World-News/2023/03/17/france-oecd-inflation-gdp-interest-rates-russia-ukraine/1501679068542
3. “Rapid hike in interest rates has led to ‘financial vulnerabilities', OECD warns” The Irish Times, 17 Mar. 2023, https://www.irishtimes.com/business/economy/2023/03/17/rapid-hike-in-interest-rates-has-led-to-financial-vulnerabilities-oecd-warns
4. “OECD says UK faces being only member of G7 in recession this year” Daily Mail, 17 Mar. 2023, https://www.dailymail.co.uk/news/article-11871867/OECD-says-UK-faces-member-G7-recession-year.html
5. “Central Banks Must Stay the Course on Rate Hikes, OECD Says” Financial Post, 17 Mar. 2023, https://financialpost.com/pmn/business-pmn/central-banks-must-stay-the-course-on-rate-hikes-oecd-says
6. “UK economy to be ‘worst performer in G7' in 2023, OECD says | NationalWorld” NationalWorld, 17 Mar. 2023, https://www.nationalworld.com/news/uk/uk-economy-g7russian-economy-g20-oecd-economic-outlook-4069275
