Bank of Korea Governor Shin Hyun-song said expanding artificial intelligence investment could reverse the long-running decline in global potential growth. The central bank plans to publish its own estimates of potential growth in a working paper before the end of the year.
Shin made the remarks on the 23rd at a comprehensive parliamentary audit held by the National Assembly's Finance, Economy and Planning Committee, where he was asked about the downward trend in South Korea's potential growth rate. "I also see this as a very important inflection point," he said.
"Not just in Korea, but the secular stagnation thesis that has held since the 2010s is now being shaken," Shin said. "We believe the slope of potential growth for the global economy has risen."
Asked whether wider AI investment could also alter the growth path of the Korean economy, Shin said he agreed. "At this International Monetary Fund annual meeting as well, there was a shared view that investment trends, and in particular the rise in long-term interest rates, are tied not simply to fiscal issues but to higher returns on investment," he said.
He also outlined the central bank's plan to disclose its potential growth estimates. "Rather than an exact date, we plan to release our estimated potential growth rate in the form of a working paper before the end of the year," Shin said.
Potential growth refers to an economy's capacity to expand by drawing on inputs such as labor and capital without triggering inflation. With labor input shrinking because of demographic change, how much technological innovation, including AI, can lift productivity is seen as a key variable shaping the growth path ahead.