OECD Economic Outlook, Volume 2003 Issue 2
This issue of the OECD Economic Outlook analyses the major trends that will mark the next two years. It covers the outlook to the end of 2005 and examines the economic policies required to foster high and sustainable growth in member countries. Developments in selected major non-OECD economies are also evaluated. Three analytical chapters look at fiscal policy and its influence on economic activity, fiscal relations across levels of government, and crubing the growth in government spending and raising its cost effectiveness.
Korea
The economy experienced a sharp downturn in the first half of 2003 following a number of negative shocks. A strengthening of confidence and a pick-up in world trade should lead to a recovery that would lift growth to around 4¾ per cent in 2004 and 5½ per cent in 2005. However, there are risks, including a further appreciation of the exchange rate and some retrenchment by the household sector following a credit boom, which could affect the timing and strength of the recovery. Given the high costs incurred for financial-sector restructuring, the fiscal policy stance should return to neutral in 2004 as the economic recovery begins. Further structural reforms, particularly in the corporate and financial sector and in the labour market, are needed to strengthen confidence and boost Korea’s growth potential...
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