Demographics alter potential growth and equilibrium rates
The Bank of Korea opened a joint conference with the OECD and CEPR on September 24, 2026, exploring how rapid demographic ageing and artificial intelligence reshape potential growth, equilibrium interest rates and fiscal stability.
From structural headwinds to tech offsets
The Bank of Korea highlighted demographic transition as a critical structural issue facing central banks, directly driving potential growth and long-term equilibrium interest rates.
Speaking at a joint conference with the OECD and CEPR on ageing and longevity, the central bank underscored how demographic declines reshape the monetary policy environment.
The address outlined research examining whether artificial intelligence and technological innovation can offset shrinking workforces.
While South Korea benefits from significant semiconductor manufacturing and AI investments, demographic changes require early preparation.
Research topics also explore low fertility drivers, motherhood effects, education competition, and accelerated fiscal adjustments.
Lessons across seven decades
The conference convenes international researchers to evaluate structural policy lessons.
Keynote presentations include Fumio Hayashi on Japan’s three-decade experience, Jisoo Hwang on fertility dynamics, Kwanho Shin on technological adaptation, and Andrew Scott on seven decades of data linking birth rates with labor productivity.
The address stressed that “demography is not destiny,” urging policymakers to utilize current technological momentum rather than postponing structural reforms.
Visible crisis, sluggish response
Demographic decline gives central bankers decades of clear foresight, making institutional inertia completely inexcusable.
Relying on semiconductor exports and artificial intelligence alone will not rescue an economy facing severe fertility collapse.
Structural fiscal and labor market reforms remain unavoidable to prevent long-term stagnation.