Synopsis
The Governor of South Korea's central bank warns that the country's ultra-low birth rate could lead to economic decline post-2050. He highlights the need for measures to address job competition, housing costs, and childcare burdens. Urgent demographic and climate challenges were also discussed during his keynote at the Global Engagement & Empowerment Forum.Key Takeaways
- Low birth rate poses a national emergency.
- Potential economic growth may fall to zero by the late 2040s.
- Young people face significant challenges in job market and housing.
- Call for development of regional hub cities.
- Emphasis on realistic carbon pricing to tackle climate risks.
Seoul, March 14 (NationPress) The head of the South Korean central bank cautioned on Friday that the persistently low birth rate could lead to negative economic growth for the country after 2050. He urged for actions to alleviate the severe competition and pressures related to employment, housing, and childcare.
The Governor of the Bank of Korea (BOK), Rhee Chang-yong, delivered this warning in a keynote address at the Global Engagement & Empowerment Forum (GEEF) in Seoul, highlighting the demographic crisis and climate change as urgent issues confronting the nation, according to a report from Yonhap news agency.
"The current fertility rate constitutes a national emergency. If this trend continues, Korea faces an irreversible population crisis that threatens economic stability and social cohesion," Chang-yong remarked.
He further stated, "If the fertility rate remains at 0.75, Korea will inevitably face prolonged negative economic growth after 2050," referencing a recent BOK study indicating that the country’s potential growth rate may drop to nearly zero percent by the late 2040s from its current rate of 2 percent.
The total fertility rate—which reflects the average number of births expected per woman over her lifetime—stood at 0.75 in 2024, significantly lower than the 2.1 births per woman necessary to keep the population stable without immigration, as reported by government data.
Chang-yong noted, "Young people today face intense competition for limited, high-quality jobs, making career stability elusive. Concurrently, skyrocketing housing prices render home ownership almost impossible. Under these conditions, raising children is not merely difficult; it poses an overwhelming financial and emotional burden."
The governor attributed the demographic crisis to the "extreme concentration" of population and economic activities within the Seoul metropolitan area and the highly competitive university entrance system, advocating for efforts to develop regional hub cities and a regional proportional college admission system.
"We must strategically cultivate two to six selected regional hub cities. Significant, targeted investments in key infrastructure are crucial to enhance quality of life comparable to that of Seoul, thereby effectively attracting and retaining residents," Chang-yong added.
Regarding climate-related challenges, the governor emphasized the importance of making carbon pricing more realistic and enhancing the country's emission trading system to foster market incentives for emission trading.
"Localized climate damage could lead to substantial financial losses for households and businesses, destabilizing financial institutions and spreading shocks throughout the economy. The BOK continues to study the effects of climate risks on our industries and financial system, with plans to release the results of our climate stress tests under various scenarios soon," Chang-yong concluded.
