Ko Hyoung-kwon
The 2021 OECD Ministerial Council Meeting, chaired by the United States with South Korea and Luxembourg as vice chairs, was held May 31-June 1 under the theme of “Shared Values: Building a Green and Inclusive Future.” The meeting, at which ministers from 38 member countries of the Organization for Economic Cooperation and Development shared their responses to COVID-19 and plans for a better recovery, had various implications for Korea.
First, the OECD Economic Outlook presented at the meeting gave a brighter economic growth projection. Thanks to vaccinations and fiscal stimulus, the global economy is now expected to grow at 5.8 percent this year, 0.2 percent point more than the forecast of last March. Korea is, according to the OECD, reaching pre-pandemic per capita income levels, with a 0.5 percent point upward revision, which is higher than 0.2 percent point of global adjustment. This upward revision of global prospects is providing the world additional room to “build back better.”
Second, despite the better prospects, according to the outlook, there remain downside risks such as uneven vaccine rollouts and economic recovery across countries as well as short-term inflationary pressure. In addition to general policy recommendations against these risks -- diversifying supply chains, strengthening vigilance on inflation, investing in digitalization and decarbonization and improving the fiscal framework -- the OECD advised Korea to take advantage of the Korean New Deal investment for an accelerated digital and green transition and to maintain expansionary fiscal policy until recovery is underway while better targeting vulnerable households and small business to enhance the efficiency and sustainability of public expenditures.
Third, in the same vein of the key messages of the economic outlook, ministers made it clear that the recovery from the COVID-19 crisis should pursue a greener and more inclusive future. Noteworthy are the three key points that Deputy Prime Minister Hong Nam-ki emphasized: fostering innovation for a digital and green transition, promoting inclusiveness to bridge the gap between countries and between socioeconomic groups and strengthening resilience in global value chains, multilateralism and international mobility.
Fourth, the leadership change of the OECD also deserves attention. At the council meeting, new Secretary-General Mathias Cormann, the longest-serving Australian Finance Minister until last year, succeeded Angel Gurria, who had headed the organization for 15 years. In his inaugural remarks, the new chief emphasized his priorities as ambitious climate action, digital transformation, digital taxation and a renewed focus on the Asia-Pacific region. In particular, the OECD’s outreach in the region to be strengthened during Cormann’s term is expected to provide Korea with a fresh opportunity with regard to the New Southern Policy.
In October, the ministers will meet again at the OECD to discuss more detailed measures to promote a green and inclusive future. At that time, there might be a more substantive discussion on a green and inclusive future. For Korea, which will continue to lead the ministerial discussion together with the US and Luxembourg, it is time to channel governmentwide wisdom to maximize diplomatic gains.
