Economic Trends/Outlook in South Korea

Overview by

Economic Overview

Ranking fifteenth in the list of the world's largest economic powers, South Korea has shown a spectacular growth over the past thirty years. However, due to its strong incorporation into international trade and finance, South Korea was one of the most affected countries in Asia by the international financial crisis. Therefore, its GDP growth fell from 5.1% obtained in 2007 to 0.2% in 2009. South Korea was, nevertheless, one of the first economies to get out of the crisis, its recovery was strengthened by the dynamic growth in exports and an important budgetary and currency stimulus plan. Displaying a remarkable force, the country's growth attained 6.1% in 2010, according to the estimations, and it should remain at a high level.

Once the economy started to grow again, the government has started to withdraw progressively all the exceptional measures adopted during the crisis. In order to reinforce the activity, the country must succeed in controlling the increment of  public expenditures to be able to balance the budget, following the fiscal reform which intends to establish a system more favorable to the country’s growth.  The authorities must also supervise that this negative impact of restructuring the enterprises in the financial sector remains limited, continuing at the same time the structural reform that aims to maintain the growth during an average period.  The government’s fixed objective is to bring the budget deficit to 0.5% in 2013.  In the long term, the country has to deal with the structural problems which are: an underdeveloped financial market, the rising of household's debts and the ageing of the population.

The revenue per capita in South Korea increased from USD 100 in 1963 to almost USD 20,000 today. Nevertheless, the unemployment rate has noticeably increased during the crisis and the number of irregular workers is very high.

Main Indicators 20092010201120122013
GDP (billions USD) 832.51e1,007.08e1,126.50e1,201.54e1,282.43e
GDP (Constant Prices, Annual % Change) 0.2e6.1e4.5e4.2e4.2e
GDP per Capita (USD) 17,074e20,591e22,961e24,415e25,978e
General Government Balance (in % of GDP) 0.8e2.5e2.5e2.8e3.0e
General Government Gross Debt (in % of GDP) 32.6e30.9e28.8e26.9e25.1e
Inflation Rate (%) 2.83.0e4.5e3.0e3.0e
Unemployment Rate (% of the Labor Force) 3.73.7e3.3e3.3e3.3e
Current Account (billions USD) 42.67e15.93e24.02e25.66e-
Current Account (in % of GDP) 5.1e1.6e2.2e2.3e-

Source: IMF - World Economic Outlook Database

Note: (e) Estimated Data


Main Sectors of Industry

The primary sector in South Korea is weak, counting only with a negligible contribution to the country's GNP. Rice is the main agricultural crop. However, barley, wheat, corn, soybeans, and sorghum are also extensively cultivated. Likewise, livestock farming is done on a large scale. South Korea's mineral resources are limited to gold and silver.
The country's main sectors of activity are textile, the steel industry, car manufacturing, shipbuilding and electronics. South Korea is the largest producer of semiconductors in the world. The manufacturing sector represents about 35% of the GNP, while the tertiary sector accounts for more than 60%.

Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 7.4 25.9 66.6
Value Added (in % of GDP) 2.6 36.5 60.9
Value Added (Annual % Change) 1.6 -0.9 1.1

Source: World Bank - Last Available Data.

For more detailed background on Industries in South Korea, click here.

Indicator of Economic Freedom

Moderately free
World Rank:
Regional Rank:

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation


Country Risk

See the Country Risk Analysis Provided By Ducroire.


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