South Korea’s potential growth rate could drop to near zero by the 2040s if the country’s record-low birthrate persists, Bank of Korea (BOK) Governor Rhee Chang-yong warned on March 21.
Speaking at a conference at Yonsei University marking the launch of the Institute for Population and Talent, Rhee said the country has already entered a super-aged society, with last year’s total fertility rate plunging to an all-time low of 0.75. If this trend continues, South Korea’s population could shrink to around 30 million within the next 50 years, he cautioned.
“It is hard to avoid the grim outlook that South Korea’s potential growth rate, currently around 2%, could decline to near zero by the late 2040s,” Rhee said. The potential growth rate represents the highest economic expansion a country can achieve when fully utilizing its labor and capital resources.
Rhee pointed to underlying structural issues fueling the nation’s low birthrate, including population concentration in the capital region, intense competition in education, job insecurity among young people, soaring housing and childcare costs, and a rigid labor market. While tackling these challenges may require short-term sacrifices, he stressed that a long-term strategy is essential.
Calling for education reforms, Rhee said South Korea’s rigid college entrance system limits young people’s ability to take risks and develop creativity. “I strongly hope the university admissions process evolves to cultivate talent with diverse backgrounds and experiences,” he said.
