 |
Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] SEOUL, Dec. 9 — Bank of Korea Governor Rhee Chang-yong warned on Monday that South Korea’s potential growth rate could decline into the 0% range by the 2040s if current demographic and productivity trends continue.
Speaking at the opening of a policy symposium titled “The Role of Finance in Enhancing Potential Growth,” co-hosted by the BOK and the Korean Finance Association at the central bank’s headquarters in Seoul, Rhee noted that Korea’s potential growth rate has already fallen sharply — from around 5% in the early 2000s to slightly below 2% today.
He highlighted that Korea’s growth engine has weakened as rapid low birth rates and population aging reduce the labor force, while corporate investment and productivity innovation have failed to sufficiently offset these demographic pressures. He added that misallocation of resources, which have not flowed efficiently into high-productivity sectors, has further contributed to the decline.
Rhee stressed that strengthening the role of finance is essential for boosting innovation and productivity.
“Finance is a key infrastructure that reallocates limited resources to their most efficient uses, driving innovation and productivity growth,” he said.
알파경제 Paul Lee 특파원(hoondork1977@alphabiz.co.kr)
