Ko Hyoung-kwon is the Ambassador and Permanent Representative of Korea to the OECD. – Ed.
The 2021 OECD Ministerial Council meeting, chaired by the United States with South Korea and Luxembourg as vice-chairs, was held from May 31 to June 1 under the theme “Shared values: building a green and inclusive future ”. The meeting, in which ministers from 38 member countries of the Organization for Economic Co-operation 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 projection of economic growth. Thanks to vaccinations and fiscal stimulus, the global economy is now expected to grow 5.8% this year, 0.2 percentage point more than forecast last March. According to the OECD, Korea is reaching pre-pandemic per capita income levels, with an upward revision of 0.5 percentage point, which is more than 0.2 point of the global adjustment. This upward revision of the global outlook gives the world more scope to “build back better”.
Second, despite the better outlook, according to the outlook, there remain downside risks such as uneven vaccine deployments and an economic recovery in all countries as well as short-term inflationary pressures. In addition to policy recommendations against these risks – diversifying supply chains, increasing vigilance on inflation, investing in digitization and decarbonization, and improving the fiscal framework – the OECD has advised Korea to leverage investment party of the Korean New Deal for a Digital Acceleration and Green Transition and to maintain an expansionary fiscal policy until the recovery is underway while better targeting vulnerable households and small businesses to improve the efficiency and sustainability of public spending.
Third, in the same vein of key messages from the economic outlook, ministers made it clear that recovery from the COVID-19 crisis should aim for a greener and more inclusive future. It is worth noting the three key points that Deputy Prime Minister Hong Nam-ki highlighted: fostering innovation for a digital and green transition, promoting inclusion to bridge the gap between countries and between socio-economic groups and building resilience in global value chains, multilateralism and international mobility.
Fourth, the change in the direction of the OECD is also worth noting. At the board meeting, new Secretary General Mathias Cormann, Australia’s longest-serving finance minister until last year, took over from Angel Gurria, who had led the organization for 15 years. In his inaugural remarks, the new chief highlighted his priorities such as ambitious climate action, digital transformation, digital taxation and a renewed focus on the Asia-Pacific region. In particular, the outreach of the OECD in the region which will be strengthened during Cormann’s tenure should offer Korea a new opportunity with regard to the new South policy.
In October, ministers will meet again at the OECD to discuss more detailed measures to promote a green and inclusive future. At that point, there could be a more substantive discussion about a green and inclusive future. For Korea, which will continue to lead the ministerial discussion with the United States and Luxembourg, it is time to channel the wisdom of the whole government to maximize diplomatic gains.
By Ko Hyoung-kwon