[News Today] Zero growth possible by 2040s

[LEAD]
South Korea's economic growth has been slowing, with numerous factors contributing, like the martial law declaration and tariff impacts. But to make things worse, a far grimmer outlook is emerging. Experts warn that by the 2040s, the nation could enter a “zero growth”era. That's just 15 years away.

[REPORT]
This robot became the talk of the town after being featured in a Chinese Spring Festival performance this year.

It can squat, lie down and get up, rather skillfully.

The price of a low-end model has been pushed down to the 20 million won range, just about 14,200 dollars.

Marketing planner at China's Unitree

Our firm directly carries out the final assembly and shipment.

The company Unitree Robotics, in its 9th year of establishment, is worth some 1.6 trillion won, or around 1.1 billion dollars.

There are around 70 such unicorn firms in the field of artificial intelligence in China and some 120 in the United States.

Only one exists in Korea.

The bigger problem is productivity.

Total factor productivity.

It is a measure of intangible growth factors such as investment, technology and innovation, excluding labor and capital.

This productivity measure was responsible for about 40% of Korea's economic growth between 2001 and 2010.

But in the past decade, the contribution rate plunged to 24%.

Until recently, productivity decline was offset through increased labor injection but even this is no longer feasible due to the rapidly aging population.

Kim Ji-yeon / Korea Development Institute
Economic growth fell mainly due to a slowdown in total factor productivity.

Recently, slower growth in labor input is dragging down economic growth.

Outlooks issued three years ago projected potential economic growth rate of 1.9% to continue through 2030 but recent predictions have been lowered to 1.5%.

Potential growth outlook for the 2040s has gone down from 0.7 to 0.1%.

This means that in the 2040s, the Korean economy will log close to zero percent growth even by fully mobilizing its labor force, capital and technological prowess.