This report analyzes economic models from three perspectives to respond to the evolving macroeconomic environment. First, the COVID-19 crisis has substantially increased economic volatility and uncertainty, underscoring the need for timely assessment of economic conditions. However, the delayed release of major indicators like gross domestic product (GDP) limits real-time understanding. In this report, we test the performance of economic models by incorporating high-frequency data from private sources alongside traditional low-frequency data. As data accumulate throughout the concerned quarter, real-time forecasts converge closely with actual outcomes, demonstrating strong potential for real-time economic forecasting models.

Second, South Korea’s economy has likely experienced both short-term fluctuations and structural shifts following shocks such as the COVID-19 pandemic. Macroeconomic policies should address short-term volatility and structural shifts differently, yet structural changes are often unobservable. Therefore, macroeconomic models should estimate these unobservable factors for effective policy responses. This report constructs a model to estimate aggregate demand pressure, a cyclical indicator, and the real neutral interest rate, a key guide for determining monetary policy stance. The estimation results are discussed in detail.

Third, since peaking in 2019, Korea’s working-age population has been declining, with rapid demographic shifts driven by low birth rates and an aging population expected to continue. These demographic changes affect labor input and can be a major factor in slowing down economic growth. Also, long-term forecasts serve as baseline data for managing government finances and national pension funds. In this report, we use population estimates from Statistics Korea to project long-term economic growth rates through 2050. Scenario analyses for demographic changes and trends in total factor productivity are used to suggest policy directions for sustainable growth.

Preface
Executive Summary

Chapter 1 Introduction (Kyu-Chul Jung)

Chapter 2: Development of a Forecasting System for Real-Time Economic Outlook (Jaeho Kim)
　Section 1 Introduction
　Section 2 Literature Review
　Section 3 Per Quarter Forecasting Model
　Section 4 Mixed Cycle Data Organization
　Section 5 Estimation Results of the Per Quarter Model
　Section 6 Concluding Remarks
　References

Chapter 3 Non-observables Estimation Models (Sora Chon)
　Section 1 Introduction
　Section 2 Major Literature Review
　Section 3 Model Setup and Results
　Section 4 Concluding Remarks
　References

Chapter 4: A Long-Term Economic Forecasting Model (Kyu-Chul Jung, Jiyeon Kim, Jinwook Hur)
　Section 1 Introduction
　Section 2 Forecast Methodology
　Section 3 Total Factor Productivity Assumptions
　Section 4 Labor Supply Projections
　Section 5 Estimation of Capital Stock
　Section 6 Long-Term Economic Growth Projections Results
　Section 7 Conclusions and Policy Implications
　References
　Appendix

Chapter 5 Conclusions (Kyu-Chul Jung)

ABSTRACT