A forecast by the Organization for Economic Cooperation and Development (OECD) said Korea's potential growth rate will fall below 1.5% next year. This is the first time Korea's estimated potential growth rate has been below 1.5%. The potential growth rate is the growth rate of potential gross domestic product (GDP), and a decline in this figure means the economy's underlying strength is weakening. Potential GDP refers to the maximum level of output that can be achieved by mobilizing all of a country's production factors without causing inflation.
According to data released by the OECD on the 3rd, Korea's potential growth rate is estimated to be 1.66% this year, down from 1.85% last year, and 1.52% next year. In particular, in the fourth quarter next year, the potential growth rate is projected to rise only 1.46% from the same period a year earlier.
Earlier, in a report in Dec., the OECD estimated Korea's potential growth rate at 1.71% for this year and 1.57% for next year. That lowered the estimates for this year and next by 0.05 percentage points each. The fourth-quarter forecast for next year was also cut by 0.06 percentage points, from 1.52%.
These projections are interpreted to mean that the boom in semiconductor exports may not last long. Semiconductors will lift the economic growth rate for now, but there are limits. On the 3rd, the OECD raised Korea's real GDP growth forecast to 2.6% from 1.7%.