The South Korean economy is standing at a critical point in the face of falling potential growth amid a lack of innovation and weak momentum across industries, the finance minister said Friday.

Choi Sang-mok issued the warning during a discussion session with experts and relevant institutions meant to explore ways to address economic challenges and secure longer-term momentum, according to the Ministry of Economy and Finance.

“We’ve seen high entry regulations and weakened ladders for growth, which have hindered innovation and affected dynamism across industries and companies. Accordingly, the potential growth rate has fallen constantly,” he said.

“This year, we are at a very critical moment in terms of an economic rebound,” Choi said, calling for resolving structural issues and spurring innovation.

The country’s potential growth rate, which means the maximum economic growth that can be achieved without triggering inflationary pressure, is estimated to come to around 2 percent amid demographic changes an
d other challenges, according to policymakers.

The government expected the economy to grow 2.2 percent in 2024 on the back of the rebound of the semiconductor cycle and rising exports, accelerating from last year’s 1.4 percent expansion.

But the forecast comes just slightly higher than the potential growth rate, and the country is projected to fall short of the global economic growth of around 2.9 percent this year.

Upon taking office this month, Choi has vowed to come up with a comprehensive road map to realize a “dynamic economy.”

During the session, the participating experts called for the need to be better prepared for the transition to digital and green economies, to boost productivity and to push for educational and labor reforms to boost social mobility, the ministry said.

Source: Yonhap News Agency