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flag South Korea South Korea: Economic and Political Outline

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline

 

Economic Indicators

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. In 2013, growth only reached 2.7% due to the slowly recovering global demand, especially in China and the United States, as well as the weak Japanese Yen. Growth is expected to accelerate in 2014 (3.7%) thanks to a more favourable international situation.

Since 2012, South Korea has been suffering from the economic slowdown of its two main trading partners, China and the United States. President Park Geun-hye, who was elected in 2012, began his five-year term by announcing more economic democracy, in other words a rebalancing of the economy which is too dependent on the so-called chaebol (conglomerates) in favour of SMEs, and to promote creative economy based on services nad innovation. The government is pursuing a policy favourable to business and economic growth through a combination of tax incentives and a favourable monetary policy. Both the state and individual households are having to deal with the increasingly worrying issue of rising debt. The 2014 budget, which increased by 2% compared to 2013, focuses its spending on welfare, healthcare and employment, as well as the defense sector. The government does not expect the deficit to change (1.8% of the GDP) and a rising state debt which now represents 36.4% of the GDP. The Central Bank is trying to keep prices stable while also stimulating the economy. The county also needs to deal with the structural problems of an underdeveloped financial market, population aging, and the country's declining competitiveness as the Chinese economy has been moving more upmarket.

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, reaching its minimum since 2002, the number of irregular workers is very high and social inequalities are deepening.

 
Main Indicators 20112012201320142015 (e)
GDP (billions USD) 1,202.461,222.811,304.471,449.49e1,560.57
GDP (Constant Prices, Annual % Change) 3.72.33.03.7e4.0
GDP per Capita (USD) 24,15624,45425e28,73930,808
General Government Balance (in % of GDP) 1.61.7e0.90.60.7
General Government Gross Debt (in % of GDP) 31.732.333.9e35.4e36.2
Inflation Rate (%) 4.02.21.3e1.6e2.4
Unemployment Rate (% of the Labor Force) 3.43.23.13.13.1
Current Account (billions USD) 18.6650.8479.88e84.1990.10
Current Account (in % of GDP) 1.64.26.15.8e5.8

Source: IMF - World Economic Outlook Database , Last Available Data

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 40% of the GNP, while the tertiary sector accounts for almost 60%.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 6.6 17.0 76.4
Value Added (in % of GDP) 2.3 38.6 59.1
Value Added (Annual % Change) 5.8 3.2 2.9

Source: World Bank - Last Available Data.

 
 
 
Monetary Indicators 20092010201120122013
South Korean Won (KRW) - Average Annual Exchange Rate For 1 USD 1,276.931,156.061,108.291,126.471,094.85

Source: World Bank - Last Available Data.

 
 

Learn more about Market Analyses about South Korea on Globaltrade.net, the Directory for International Trade Service Providers.

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
71.2/100
Position:
Mostly Free
World Rank:
31/178
Regional Rank:
8/25

Distribution of Economic freedom in the world
Source: 2014 Index of Economic freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
7.35
World Rank:
26/82

Source: The Economist - Business Environment Rankings 2014-2018

 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

South Korea is the world's 15th trading nation, trade represents nearly 110% of the country's GDP (average figure for 2010-2012). It's the world's 7th largest exporter of goods and the 9th largest importer.

The trade balance of the country presents a high surplus and should remain so in the coming years. In 2013, the surplus reached a record level of more than 44 billion USD because of a rise in exports and a decline in imports. In 2014, the surplus should diminish due to the recovery of imports and a slower growth of exports. The main trade partners of the country are China, Japan, the European Union and the United States.

 
Foreign Trade Indicators 20092010201120122013
Imports of Goods (million USD) 323,085425,212524,413519,584515,584
Exports of Goods (million USD) 363,534466,384555,214547,870559,632
Imports of Services (million USD) 79,52594,95699,970104,872105,922
Exports of Services (million USD) 72,46686,26694,063110,324111,783
Imports of Goods and Services (Annual % Change) -6.817.314.32.41.6
Exports of Goods and Services (Annual % Change) -0.312.715.15.14.3
Imports of Goods and Services (in % of GDP) 42.946.254.353.548.9
Exports of Goods and Services (in % of GDP) 47.549.455.756.353.9
Trade Balance (million USD) 47,81447,91529,09049,40680,569
Trade Balance (Including Service) (million USD) 38,22433,67716,81144,19272,641
Foreign Trade (in % of GDP) 90.495.7110.0109.9102.8

Source: WTO - World Trade Organization ; World Bank , Last Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2013
China 26.1%
United States 11.1%
Japan 6.2%
Hong Kong 5.0%
Singapore 4.0%
See More Countries 47.7%
Main Suppliers
(% of Imports)
2013
China 16.1%
Japan 11.6%
United States 8.1%
Saudi Arabia 7.3%
Qatar 5.0%
See More Countries 51.8%

Source: Comtrade, Last Available Data

 
 

Main Products

- bn USD of products exported in 2013
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 9.1%
Electronic integrated circuits and microassembliesElectronic integrated circuits and microassemblies 8.4%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 7.9%
Liquid crystal devices not constituting articles...Liquid crystal devices not constituting articles provided for more specifically in other heading; lasers (excl. laser diodes); other optical appliances and instruments not elsewhere specified in chapter 90 4.5%
Cruise ships, excursion boats, ferry-boats, cargo...Cruise ships, excursion boats, ferry-boats, cargo ships, barges and similar vessels for the transport of persons or goods 4.4%
See More Products 65.7%
- bn USD of products imported in 2013
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 19.3%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 7.0%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 5.6%
Electronic integrated circuits and microassembliesElectronic integrated circuits and microassemblies 5.4%
Coal; briquettes, ovoids and similar solid fuels...Coal; briquettes, ovoids and similar solid fuels manufactured from coal 2.5%
See More Products 60.2%

Source: Comtrade, Last Available Data

 
See More Products
More imports (Intracen Data)
More exports (Intracen Data)
 
 
 

Main Services

- bn USD of services exported in 2012
36.78%
20.68%
19.80%
12.86%
3.10%
2.88%
1.13%
1.12%
0.78%
0.45%
0.42%
- bn USD of services imported in 2012
35.26%
27.88%
18.59%
7.76%
4.77%
1.49%
1.08%
1.04%
0.94%
0.77%
0.44%

Source: Comtrade, Last Available Data

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Sources of General Economic Information

Ministries
Ministry of Strategy and Finance
Korea Communications Commission (KCC)
Ministry of Foreign Affairs and Trade (MOFAT)
Ministry of Environment (MOE)
Ministry of Health & Welfare (MOHW)
Ministry of Agriculture, Food and Rural Affairs
Statistical Office
Korea National Statistical Office
Central Bank
Bank of Korea (BOK)
Stock Exchange
Koea Exchange
Search Engines
Google
Chol
Yahoo! Korea
Economic Portals
Government Website

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Political Outline

Executive Power
The President is the chief of the state as well as head of the government. He's elected by a popular vote for a single five-year term. President is the commander-in-chief of the armed forces and enjoys executive powers. He appoints the Prime Minister and the State Council (cabinet) with consent of the parliament.
Prime Minister is not required to be a member of parliament and his main role is to assist the President.
Legislative Power
The legislature in South Korea is unicameral. The parliament called National Assembly has 299 seats distributed between parties in proportion to their share of the vote to serve four-year terms.
The executive branch of the government is directly or indirectly dependent on the support of the parliament, often expressed through a vote of confidence.
Main Political Parties
South Korea has a multi-party system, but parties have little chance of gaining power alone. The major parties in the country are:
- GNP (Grand National Party): a conservative party which won the presidential election in Dec 2007. It is strong in the Gyeongsang region;
- United New Democratic Party (UNDP): a liberal party which is strong in the Jeolla region.
- DLP (Democratic Labor Party): a democratic socialist party with its support base in farmers, industrial workers, and progressive intellectuals;
- MDP (Millennium Democratic Party): a party with its support base in provinces of Jeolla.
Current Political Leaders
President: PARK Geun-hye (since 25 February 2013) - Saenuri ; Prime Minister: Chung Hong-won (since 26 February 2013) - Saenuri
Next Election Dates
National Assembly: April 2016
Presidential: December 2017
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
57/180
Evolution:
7 places down compared to 2013

Source: Worldwide Press Freedom Index 2014, Reporters Without Borders

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
2/7

Map of freedom 2014
Source: Freedom House

 

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Last Updates: October 2014