November 04, 2019 12:45
Korea posted the third largest drop in potential growth rate among 36 OECD countries for the last three years.
According to the OECD on Sunday, Korea's potential growth rate for this year is estimated at 2.7 percent, a drop of 0.4 percentage points from 2017. The rate is an estimate of the growth a country could achieve by using its labor and capital to the fullest.
Korea's potential growth rate hovered around four to five percent in the early 2000s, and still stood at 3.9 percent in 2008 amid the global financial crisis, before going downhill.
Only two OECD members, Turkey (0.7 percentage points) and Ireland (1.7 percentage points) saw a bigger drop than Korea. For 18 countries including the U.S. and France the rate increased.
With such poor potential, short-term patches such as expanding fiscal spending and cutting interest rates have a limited impact, a recent IMF report said.
- Copyright © Chosunilbo & Chosun.com