SEOUL, Aug. 11 (Xinhua) -- The Organization for Economic Cooperation and Development (OECD) raised its growth outlook for the South Korean economy this year due to a prompt response to the COVID-19 outbreak and prompt measures to support economy, South Korea's finance ministry said Tuesday citing the OECD report.

The South Korean economy is forecast to fall 0.8 percent in 2020 under a scenario of no more COVID-19 outbreaks in the country, the Paris-based organization said in its OECD Economic Surveys: South Korea 2020 report.

It is higher than the previous forecast of 1.2-percent contraction announced two months earlier, marking the highest estimate among 37 OECD member countries.

The average growth forecast for the OECD member countries was set at 7.5-percent contraction this year.

Economies of the United States, Japan, Germany and Britain were expected to retreat 7.3 percent, 6.0 percent, 6.6 percent and 11.5 percent each this year.

However, the OECD expected that the South Korean economy would contract 2.0 percent this year under a scenario of the second wave of the COVID-19 pandemic later this year.

The country's real gross domestic product (GDP), adjusted for inflation, dropped 3.3 percent in the second quarter compared to the previous quarter. During the first quarter, the real GDP declined 1.3 percent on a quarterly basis.

Despite the contractions, the GDP was expected to rebound in the second half thanks to a partial recovery in global demand, caused by the reopening of businesses across the world, and the government's efforts to bolster consumer spending.

The OECD said that "a prompt reaction and an effective containment strategy" helped limit the COVID-19 spread, noting that the South Korean government took "appropriate and prompt measures to support economy."

"(South) Korea has been among the most successful countries in the world in limiting the spread of the disease ... without locking down any city or region, which minimized the economic impact," the OECD said.

To reinvigorate the flagging economy, South Korea unveiled the country's biggest-ever supplementary budget plan worth 35.1 trillion won (30 billion U.S. dollars) that was passed through the parliament in July.

The government announced a total of 250 trillion won (210 billion U.S. dollars) worth of stimulus packages to offer financial support for micro-business owners, small firms and big corporations that suffered losses from the COVID-19 pandemic.

The country's central bank lowered its target rate by 25 basis points to an all-time low of 0.50 percent in May, after slashing the rate by 50 basis points in March.

"The government has appropriately responded to the COVID-19 crisis by providing additional fiscal support to the economy ... Sound public finances provide room to increase spending," the OECD report said.

The report noted that the country's financial authorities took "determined action to address financial risks and now appear to have stabilized financial markets."

Referring to the recently announced South Korean versions of New Deal, composed of digital and green investments and the strengthened social safety net, the OECD said it had "the potential to support a green and inclusive recovery."

"Increased support for the transition towards renewable energy and clean technologies would strengthen the second phase of the recovery, in which fiscal multipliers will be higher," the OECD noted. Enditem

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