The Organization for Economic Cooperation and Development(OECD) has predicted South Korea's economy will grow three percent this year, holding on to its earlier outlook.

In a biennial report published on the South Korean economy on Wednesday, the OECD said the fourth largest Asian economy will grow at three percent for both this and next year. 

The organization highly assessed the Moon Jae-in administration’s income-led growth initiative, saying a minimum wage hike and welfare expenditure expansion would contribute to household income growth and private consumption expansion. 

However, it said the country needs to enhance labor productivity to avoid growing labor costs weakening competitiveness. 

It also pointed to the nation’s excessive dependence on particular industries, including semiconductors, as its risk factor along with possible expansion of trade protectionism and high household debt.