OECD urges stronger fiscal discipline amid aging population pressures

Korea’s economy is maintaining its growth momentum despite conflict in the Middle East, supported by a recovery in consumption and strong semiconductor exports, the OECD said Thursday. But it also warned that the country’s medium- to long-term growth trajectory is likely to weaken due to persistently low fertility rates and a rapidly aging population. In its latest OECD Economic Surveys: Korea 2026 report, the Paris-based organization said fiscal policy should continue to support recovery in domestic demand in the short term, while stressing the need for stronger medium-term fiscal consolidation to address risks. The organization projected Korea’s economy to grow 2.6 percent this year, while consumer inflation is also expected to average 2.6 percent. For 2027, the OECD forecast economic growth to slow to 1.9 percent, with inflation easing to 2.2 percent. In its March report, the OECD cut its growth outlook for Korea this year to 1.7 percent from 2.1 percent, citing concerns over the conflict in the Middle East and rising energy costs. It then sharply revised its assessment in June,