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OECD ups 2021 growth outlook for S. Korean economy to 3.8 pct

Economy 17:00 May 31, 2021

By Kim Soo-yeon

SEOUL, May 31 (Yonhap) -- The Organization for Economic Cooperation and Development (OECD) on Monday raised its 2021 growth outlook for the South Korean economy, citing the country's strong exports and fiscal support.

The OECD forecast Asia's fourth-largest economy to grow 3.8 percent this year, faster than its March estimate of 3.3 percent.

Still, the Paris-based organization revised down its 2022 growth forecast for South Korea to 2.8 percent from 3.1 percent.

"Strong export growth, rising investment and expansionary macroeconomic policy are boosting the (South Korean) economy," the OECD said in a report on the global economic outlook.

The OECD joined other organizations that have jacked up their growth estimates for the South Korean economy amid a global economic recovery.

The Bank of Korea (BOK) last week revised up its 2021 growth outlook for South Korea to 4 percent from its earlier estimate of 3 percent.

The International Monetary Fund (IMF) expected the South Korean economy to grow 3.6 percent this year, and global credit appraiser Standard & Poor's Global Ratings (S&P) also forecast a 3.6 percent expansion for Korea.

Last year, the South Korean economy contracted 1 percent -- the first yearly retreat since the 1997-98 Asian financial crisis -- amid the COVID-19 pandemic.

But the country's economy is on a recovery track on solid exports of chips and autos.

Asia's fourth-largest economy grew 1.6 percent in the January-March period from three months earlier, accelerating from a 1.2 percent on-quarter gain in the fourth quarter of last year, according to the BOK.

Exports, which account for half of the country's economy, jumped 41.1 percent on-year in April to extend their gains for six months.

The OECD said "strong and stable" economic growth is expected for South Korea through 2022, recommending that the country maintain expansionary fiscal policy until the economy is back on a firmer recovery path.

It also cited slow progress in COVID-19 vaccinations, global trade tensions, volatile housing prices and high household debt as potential downside economic risks.

The OECD revised its 2021 growth outlook for the global economy to 5.8 percent from its earlier estimate of 5.6 percent. Next year, the global economy is expected to grow 4.4 percent.

OECD ups 2021 growth outlook for S. Korean economy to 3.8 pct - 1


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