S. Korea's growth potential to top OECD up till 2011, but lose steam afterward

May 31, 2010 1:38 pm 

SEOUL, May 31 — South Korea's growth potential rate is expected to be the highest among leading industrialized economies up until 2011, but lose momentum in the long run, a report by an international organization said Monday.

The Organization for Economic Cooperation and Development (OECD) report said South Korea's growth potential rate may reach an average of 4.0 percent in 2010 and 2011, the highest among its 30 member countries.

This is three times higher than the 1.2 percent average for the OECD as a whole and much better than the 0.8 percent growth projected for European members of the organization, it said.

The latest report said that Slovakia and Turkey may be able to pull off an average 3.6 percent growth this year and in 2011, followed by Australia and Poland with expected gains reaching 3.2 percent.

The OECD, however, said Seoul's growth may fall off to the 3.7 percent range in the 2012-2015 period, which would place it fifth place within the organization. It may plunge further to around 1.9 percent thereafter. The slow growth may place the country in 15th place among the OECD in the 2016-2025 timeframe.

The organization cited very low birth rates and lack of jobs as the main reasons for the sharp drop in growth numbers in the long term.

The OECD's latest forecast said Seoul's employment growth potential will fall into negative territory at 0.4 percent after 2012, from 0.8 percent gains expected up until 2011.

It added the country's consumer prices will grow 3.2 percent in 2011, but fall to 2.0 percent in 2015 as the economy losses steam.

The report, meanwhile, said South Korea may be able to pull off a fiscal surplus of 0.7 percent of its GDP next year, which is the second highest after the 1.2 percent expected for Sweden.

The government's financial sector debt could reach 32 percent of the GDP in 2025, an improvement from 35 percent tallied for 2009. (PNA/Yonhap)

DCT/ebp

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