Zero economic growth refers to a state in which the economic growth rate of a country or the global economy remains close to 0% over a certain period. In other words, the economy neither expands nor contracts. This concept is often used to describe a stagnating economy and has recently been frequently discussed among advanced economies.
1. Definition
- A situation where GDP growth fluctuates around 0%
- The economy is no longer expanding but not in severe recession either
- Can be temporary and short-term, or persist as a long-term structural condition
2. Causes
(1) Demographic Factors
- Low birth rate → shrinking working-age population
- Aging population → reduced consumption and slowing productivity
- Decline in labor supply
(2) Productivity Stagnation
- Limitations in technological innovation
- Decrease in investment
- Growth limits of existing industries
(3) Demand Slowdown
- Weak consumer sentiment
- Decline in corporate investment
- Adverse export conditions
(4) Structural Factors
- Mature industrial structures with limited additional growth potential
- Resource depletion or environmental constraints
3. Characteristics
- Low inflation or tendencies toward deflation
- Slower wage growth
- Reduced corporate investment
- Increasing fiscal burden on the government
- Higher volatility in asset markets (real estate, stocks)
4. Advantages and Disadvantages
🌱 Advantages
- Reduced excessive production and consumption → less environmental burden
- Opportunity to pursue sustainable development
- Shift toward economic structures that prioritize stability
⚠️ Disadvantages
- Fewer employment opportunities
- Stagnant wage growth → lower quality of life
- Declining returns on capital
- Increased pressure on social security and pension systems
5. Representative Cases
- Japan’s “Lost 30 Years”: the most well-known case of long-term stagnation
- Some European countries: growth slowdown driven by low birth rates and aging
- South Korea: also facing risks of zero or low growth due to demographic changes
6. Strategies for Response
National Level
- Improve productivity (digital transformation, AI, automation)
- Secure labor force (immigration policy, increased participation of women and seniors)
- Foster innovative industries
- Strengthen education and R&D investment
Corporate Level
- Develop high value-added products and services
- Expand into global markets
- Enhance efficiency using digital and AI technologies
Individual Level
- Invest in self-development (skill acquisition)
- Diversify income sources
- Adopt long-term asset allocation strategies