[Yonhap News Photo]
The Organisation for Economic Co-operation and Development has urged South Korea to reverse a trend of slow growth and low inflation by boosting productivity, increase employment and stoke economic activity.
OECD, an international economic organisation of 34 countries, said in a report published on its website that further reforms would be needed to boost South Korea's growth rates. It projected South Korea's gross domestic product (GDP) growth at 2.7 percent this year and 3.0 percent next year.
South Korea's GDP grew 2.6 percent on-year last year, compared with a 3.3 percent expansion in 2004. The central Bank of Korea has slashed its outlook for this year's economic growth to 2.8 percent from an earlier projection of three percent. The International Monetary Fund has lowered its outlook for South Korea's economy to 2.7 percent from 3.2 percent.
"Korea needs to boost productivity, increase employment and stoke economic activity as part of efforts to reverse current trends toward slower growth and low inflation," the OECD report said, adding South Korea's productivity growth has slowed markedly in recent years, curbing the rise of incomes and limiting advances in well-being.
"This calls for ambitious reforms to strengthen competition, raise efficiency in low-productivity services and overhaul the SME (small and medium-sized enterprises) sector, where policies aim to ensure the survival of small firms, rather than higher productivity and growth," the report said.
Aju News Lim Chang-won = cwlim34@ajunews.com
reporter
Park Sae-jin
swatchsjp@ajunews.com
