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Title Vol. 95 Economic Forecast for 2021 and the Medium Term (English Edition)

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In 2021, the Korean economy is expected to gradually recover from the COVID-19 shock. However, real gross domestic product (GDP) growth is expected to reach 2.3% due to delayed improvement in household income and the job market. The nominal GDP growth rate is expected to rise to around the mid 3% level as a result of economic recovery and an increase in the GDP deflator. During 2020-2024, the average annual real GDP growth rate is expected to be approximately1.6%, which is 1.2%p lower than during the previous five years (2015-2019), reflecting the negative growth trend in 2020 (forecasted as -1.6%). Korea’s potential growth rate over the next five years is estimated at an annual average of 2.0%, down 0.6%p from the previous five years. In particular, capital's contribution to potential growth is expected to decline significantly, suggesting that expanding investment is paramount to increasing the growth potential of the Korean economy.
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