South Korea's uncertain future

Citation

(2007), "South Korea's uncertain future", International Journal of Productivity and Performance Management, Vol. 56 No. 4. https://doi.org/10.1108/ijppm.2007.07956dab.006

South Korea's uncertain future

South Korea’s growth potential is projected to fall to 2 percent by 2050 because of a labour shortage and low service sector productivity, according to a recent report by the International Monetary Fund (IMF).

Growth potential is a concept that relates to the growth that a country can achieve through the utilization of its capital and workforce at full capacity without fuelling inflation.

The Washington-based international organization also said the potential growth rate of the world’s 11th largest economy will decline to around 2.5 percent by 2030 from the current mid-4 percent range.

According to the report, there is an array of risk factors threatening the Korean economy over the next several decades – rapid population ageing, labour shortages, an uncompetitive service industry, an inefficient capital market and rising fiscal deficits due to high welfare-related spending. Korea’s ability to grow will continue to dwindle.