South Korea

Capital: Seoul

Local time:
It is %T:%M %A in Seoul

GDP growth rate: 4.2% in 2013

FDI stock: 127 047 million USD in 2010

Economic trends

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% 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. The country's growth again slowed down in 2011, however it remained supported by exports, taking advantage of the weak won. This downward trend should continue in 2012, the government expecting a growth of less than 4%, essentially driven by private consumption.

Due to the economic difficulties faced by the United States and the European Union, the government seeks to support the economy through tax incentives and an accommodating monetary policy. The central bank must strike a balance between stimulating the economy and maintaining price stability. The effects of free trade agreement signed with the United States are yet uncertain, namely concerning agriculture and small-scale trade. The budget passed in December 2012 provides for an increase in social spending of more than 7%. The high level of household debt compromises the sustainability of domestic demand. The country must also address the structural problems posed by the underdevelopment of the financial market and the aging population.

The revenue per capita in South Korea increased from USD 100 in 1963 to almost USD 20,000 today. Although unemployment rate has been decreasing, the number of irregular workers is very high and social inequalities are deepening.

Main branches 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%.

International trade

South Korea is the world's 15th trading nation, trade represents about 100% of the country's GDP. It's the world's 7th largest exporter of goods and the 10th largest importer.

The trade balance of the country presents a high surplus and should remain so in the coming years. Exports are encouraged by the currently weak won (Korean currency). In 2011 the surplus was reduced due to the exports rising less quickly than imports (which have recovered due to the price increase in goods, energy and the sheer volume of imports). A further decrease is expected for 2012 due to the European crisis, the halt in the growth of China and the difficulties of the U.S. labor market. The main trade partners of the country are China, Japan, the European Union and the United States.