A low birthrate and rapidly aging population is projected to pull South Korea’s economic growth rate from second place to ninth among Organization for Economic Cooperation and Development members by 2026.

A report by the club of 34 major economies said the annual rate of growth in the South Korean economy will fall to 2.4 percent after 2026, a sharp downturn from its 6.2 percent expansion in 2010, second-highest in the OECD.

In the short term, the OECD predicts that the local economy will continue to show above-average growth.

Between 2010 and 2015, it expected Korea to grow at an annual pace of 4.3 percent, behind only Chile at 4.8 percent and Israel at 4.4 percent among OECD members.

It also forecast that the Korean economy will expand 3.8 percent per year between 2016 and 2026.

But the forecast dropped to 2.4 percent during the years beyond that, putting it at ninth.

The potential growth rate here refers to the maximum expansion an economy is capable of accomplishing without building inflationary pressure.

The state-run Korea Development Institute said the country’s potential growth rate fell to 4.3 percent from the pre-crisis level of mid-4 percent range.

The country’s feeble birthrate and aging population in turn spur welfare expenditures. A research team at Sungkyunkwan University said welfare spending for Asia’s fourth-largest economy will account for almost half of its gross domestic product by 2050. In a report released earlier this month, it noted that welfare took up about 3 percent of the GDP in 1990 but said the figure will jump to 45.6 percent in 2050.

The country spent $110 billion on social welfare last year, which the team estimated will grow to $2 trillion in 40 years time.

The team advised policymakers to increase the tax burden on working-age people to more than 40 percent in 2050.

By Cynthia J. Kim (cynthiak@heraldcorp.com)