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Country snapshots 2017-18: Korea
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Economic growth continued at a moderate pace in 2016, supported by a supplementary budget and record low interest rates. Growth is projected to edge up from 2.75% in 2016-17 to 3% in 2018. Inflation is projected to converge to the central bank’s 2% target by 2018, and the current account surplus to remain large at 6.5% of GDP. 

The Bank of Korea reduced its policy rate to an all-time low of 1.25% in mid-2016. Concerns about rapidly rising household debt suggest fiscal policy may now be better placed to take some of the burden. The planned budget consolidation in 2017 will restrain growth. Instead, to support growth, government spending should be increased beyond the levels set in the National Fiscal Management Plan. In addition, structural reforms are needed to boost productivity and labour participation as the working-age population begins to decline. 

GDP growth

2013

Current prices KRW trillion

2016

   

2017

% real change

2018

   

1 429.42.72.63.0

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©OECD Observer No 308 Q4 2016