S. Korea's potential growth to drop to 4.3 pct in 2011-2020: gov't committee

South Korea's potential growth rate could fall the low-4-percent range from 2011 to 2020 due to a drop in the country's labor force and the amount of working hours, a government advisory body said Monday.

The nation's potential growth rate is feared to average 4.3 percent from 2011 to 2020 from an average 4.9 percent from 2006 to 2010, according to "the Vision 2030 Project Advisory Committee" composed of state and private-level economists.

Potential growth rate refers to the growth rate that a nation can achieve by utilizing its capital and labor force at a full capacity without fueling inflation.

A rapidly aging population and a low fertility rate in South Korea have fueled concerns in recent years that the nation's labor pool may shrink. South Korea's population is forecast to decline from 2020 and the economically active population will drop to 35.51 million in 2020, according to the state statistics office last month.

In the 1990s, the potential growth rate dropped steadily in line with falling labor input and declining productivity, the committee said.

From 1991 to 2000, the potential growth rate was 6.3 percent, down from 8.2 percent in 1982-1990. From 2001 to 2005, the growth rate came to 4.4 percent.

In the 2011-2020 period, the economic growth from the labor input, gauging the number of a nation's workers and working hours, will fall to minus 0.1 percent from a 0.4 percent growth in 2006-2010, it said.

As the number of workers and per-capita working hours declines, the potential growth rate will fall to an average 2.8 percent from 2021 to 2030, the committee said. A variety of government measures, including childcare support and greater female employment, are needed to raise the labor pool.

South Korea's on-year economic growth slowed to 4.8 percent in the third quarter from 5.3 percent in the previous quarter, the nation's central bank said in late October. In 2007, the economic growth is expected to cool to 4.4 percent from a 5 percent advance this year, the central bank said.

Seoul, Dec. 18 (Yonhap News)