November 09, 2021 11:24
Korea's potential per-capita economic growth rate has been projected at the bottom of the OECD two decades from now as the country runs deeper into debt and the population dwindles.
The OECD projects Korea's potential growth rate -- or the maximum increase in GDP a country can achieve without inflation -- at just 0.62 percent by 2044.
That puts the country at the bottom of the OECD and far behind the U.S. (1.01 percent), Japan (0.96 percent) and the OECD average (1.08 percent).
This year, Korea's potential growth rate is estimated at 2.21 percent, which is still the eighth highest in the rich countries' club and ahead of Japan (0.82 percent), the U.S. (1.26 percent) and the average of advanced countries (0.93 percent).
But if Korea's population decline and rising fiscal expenditures continue at the current pace, the rate will plummet to the last place in the OECD by 2044 and the country will not be able to boost it to above one percent until 2060.
Korea's fiscal debt meanwhile is expected to increase at the fastest rate among the world's 35 most advanced countries.
According to the International Monetary Fund, Korea's fiscal debt ratio to GDP stood at 47.9 percent at the end of last year and will rise to 66.7 percent in the next five year. But the average ratio among the most advance countries, which is much higher, will rise just one percentage point to 121.1 percent over the same period.
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