Bank Of Korea warns Korea's economy may enter negative territory in 2040s
A research institute of the Bank of Korea (BOK) said Sunday that Korea may be forced to record negative economic growth in the 2040s unless the nation improves its productivity, as its working-age population is rapidly shrinking.
In a report, the BOK's Economic Research Institute expected Korea's economy to grow some 2.1 percent in the 2020s and some 0.6 percent in the 2030s but to shrink some 0.1 percent in the 2040s.
The assessment by Cho Tae-hyung, vice head of the institute, was based on an assumption that Korea may fail to improve its productivity to make up for a decline in the working-age population.
If Korea improves its productivity to cope with a demographic change, the report predicted that the nation's economy would grow some 2.4 percent in the 2020s, some 0.9 percent in the 2030s and some 0.2 percent in the 2040s.
"It is most important to keep productivity growth to mitigate future slowdowns in economic growth," Cho said in the report.
The BOK has recently projected Korea's economy to grow 1.4 percent for all of 2023, down from a 2.6 percent expansion in 2022. (Yonhap)
There’s nothing wrong with periods of static or negative economic activity.
In the natural world the only thing I know of that’s always growing, is cancer.
This is true, but it's not like South Korea will just be producing slightly less consumer goods. Their population will soon be majority senior citizens. These seniors need people to provide and care for them. I've read estimates that even if every working South Korean quit their job and became a nurse, there still wouldn't be enough nurses to care for the elderly population. Of course, every single worker in a country being a nurse would be a terrible idea, but it just goes to show how lopsided their demographics are.
The biggest issue here is that, ironically, South Korea's older population is staunchly against any and all forms of immigration. South Korea isn't the only country filled with old people, but they're one of the only ones that refuse to import young people from other countries in order to balance things out.
These studies warning of collapsing economies are a way to try and persuade South Korea's old people to allow immigration before their country collapses.
They’ve really done it to themselves. Worked up into a religious fervor wishing the days of the 70s dictators would come back, where the disabled, dissenting students, and activists were rounded up and killed wholesale.
And before the chuds roll in, yes I have personally seen this. It’s almost universal with the older demographic.
These are people that worship the dictators of old to this day, keeping massive portraits of them in their homes.
Working the younger generations to death and keeping all the profits their labor generated. They have miraculously speedrun capitalism in two generations. Went from subsistence farmers to gleaming cities to complete societal collapse in 50 years. Fascinating.
They haven't collapsed yet. This is a warning, not a prophecy.
once their population crashes in a decade or so it'll probably be really rough for another decade before they bounce back. Samsung/LG's days are numbered though, unless they start offshoring everything now
Your analogy is false and in practice you are talking about real human beings that are going to have years of their life taken from them in stagnation. But hey prove that there is nothing wrong with it. Go take the worst low paying job you can find right now.
Wouldn't constant positive evonomic growth be unsustainable unless you have constant population growth?
Yep.
So far everyone has just expected that to be someone else's problem in the future and had zero interest in planning for it.
Yeah the "free market" will work itself out /s
USA is facing a similar problem with boomers retiring.
Constant productivity growth could allow it without constant population growth, as long as products growth exceeds impacts from population decline. This report is basically saying they don't see that happening.
I'm no economist but doesn't productivity have a maximum? On top of that wouldn't demand also have a maximum for a given population? At some point it'd hit steady state.
Don't worry economists don't know anything
It depends on what you feel about the future of technology. Most productivity growth comes from advances in technology. We haven't hit a maximum yet, so it's a question of if you think technology will or won't enable us to do more in the same amount of time for the indefinite future.
The ROK is sacrificing long-term growth (by mandating set work hours and increasing fertility) for short-term growth.