Lee Chang-yong, Governor of the Bank of Korea, diagnosed that the possibility of negative growth has increased due to low birth rates and aging during a press conference held right after the Monetary Policy Committee on the 29th. This is because a decline in potential growth rate has made a decrease in economic growth rate inevitable.
Governor Lee noted, "The probability of negative growth in Korea during the global financial crisis in 2008 was about 5%, but now it is an average of 14%. This trend is due to structural reasons such as aging, causing the potential growth rate to drop below 2%."
As this year's growth rate forecast is indicated at 0.8%, marking the first decline to the 1% range since the 2008 global financial crisis and the 2019 novel coronavirus infection, he remarked, "While this has historical significance, it is difficult to make a simple comparison with the past."
Specifically, he explained, "During the global financial crisis, there was a lack of liquidity as funds were not circulating, but looking at the current conditions, liquidity levels are rather accommodative. In comparison to the neutral rate, both short-term and medium- to long-term rates have significantly declined, unlike in the past."