SEOUL: The Organization for Economic Cooperation and Development cut its economic growth forecast for South Korea, advising the country to provide further fiscal stimulus to boost its sluggish domestic demand and shrinking exports.
The OECD, a Paris-based research body, now expects South Korea’s economy to expand 3.0% in 2015, slower than its November projection of 3.8% growth. It also lowered its 2016 growth forecast for the country to 3.6% from an earlier estimate of 4.1%, it said in a report released Wednesday.
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The downward revision reflects the high household debt and stagnant wages that are weighing on private consumption, and falling overseas shipments, notably to its largest trade partner China, on sluggish demand, the OECD said.
The report said South Korea needs more fiscal stimulus to support economic activity and complement monetary policy easing, as output is expected to stay below its growth potential for the fourth straight year. The International Monetary Fund in May also lowered its growth forecast for South Korea this year to 3.1% from a previous estimate of 3.7%.
