South Korea

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Economic and political outline

Economic indicators | Foreign Trade in figures | Sources of general economic information | Political outline

Economic indicators

South Korea is the world 11th economic power.
South Korea has shown spectacular growth over the past thirty years and its per capita income went from USD 100 in 1963 to nearly USD 20,000 today. South Korea is amongst 20 of the world's largest economies in terms of size. However, the country's economic growth potential has dropped due to structural problems, an underdeveloped financial market, rising household debt, an aging population and especially the current financial crisis. The general lack of transparency in regulations is also of major concern to foreign investors.

After a strong reduction at the end of 2008, production tied in again with growth in the first quarter of 2009. Nevertheless, the unemployment level rose perceptibly (it went from 3.2% in 2008 to 3.8% in 2009), whereas inflation slowed down and the current account surplus clearly progressed. In parallel to the strengthening of global trade in the second half of 2009, production growth should continue to recover and reach the 4% level at the end of 2010 (source:OECD). To strengthen activity, the country should succeed in slowing the growth of public expenses in order to balance the budget, while maintaining tax reforms aimed at establishing a growth-friendly regime. While maintaining the structural reforms aimed at assisting growth in the medium term, authorities should also ensure that the negative impact of company reorganizations on the financial sector remains limited.

To deal with the crisis, the South Korean government announced a US dollars 13.2 billion refinancing plan for the banking sector. Additionally, the IMF is expected to provide a short term credit facility of US dollars 22 billion. These measures, together with the 2% Korean central bank reference rate drop, put the country's banks in a more comfortable situation. Very involved in the capital and financing of Korean companies, the banks, more than anywhere else, feel the consequences of the economy slowing down.

Main indicators	2006	2007	2008	2009	2010
GDP (billions USD)	952.03	1,049.32	947.01e	727.11e	740.59
GDP (constant prices, annual % change)	5.2	5.1	2.2	-4.0	1.5e
GDP per capita (USD)	19,712	21,655	19,505	14,946e	15,192
General government balance (in % of GDP)	1.7	3.5e	1.1e	-3.2e	-4.7
Inflation rate (%)	2.2	2.5	4.7	1.7e	3.0e
Unemployment rate (% of the labor force)	3.5	3.3	3.2	3.8	3.6
Current Account (billions USD)	5.39	5.88	-6.41	20.75	22.15
Current Account (in % of GDP)	0.6	0.6	-0.7	2.9	3.0

Source: IMF - World Economic Outlook Database

Note: (e) Estimated data

Main sectors of industry

The primary sector in Korea is weak, with only a negligible contribution to the country's GDP. 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 35% of the GDP, 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)	7.9	26.8	65.1
Value added (in % of GDP)	3.0	39.4	57.6
Value added (annual % change)	1.1	5.5	4.8

- last available data.

Monetary indicators	2004	2005	2006	2007	2008
South Korean Won (KRW) - Average annual exchange rate for 1 USD	1,145.32	1,024.12	954.79	929.26	1,102.47

Source: World Bank - World Development Indicators

Indicator of economic freedom

Score:: 68.1/100
Position:: moderately free
World Rank:: 40 out of 179
Regional Rank:: 8 out of 42

Distribution of Economic freedom in the world
Source: 2008 Index of Economic freedom, Heritage Foundation

Country risk

See the country risk analysis provided by Ducroire.

Foreign trade in figures

South Korea is the world's 11th trading nation. In 2007, its trade surpassed the USD 700 billion mark. The country's trade balance is highly surplus and should remain so in the coming years. Despite the effects of the financial crisis, which greatly reduced this surplus, the weakness of the won, the Korean currency, promotes exports.
In response to the crisis, the South Korean government focus on the free trade agreements. The country signed a free trade agreement with the United States in 2007 and with the European Union in 2009.

Foreign trade indicators	2003	2004	2005	2006	2007
Imports of goods (millions USD)	175,337	220,141	256,288	303,937	349,573
Exports of goods (millions USD)	197,289	257,710	288,971	331,842	378,982
Imports of services (millions USD)	40,381	49,928	58,788	68,851	83,609
Exports of services (millions USD)	32,957	41,882	45,129	49,891	63,034
Imports of goods and services (annual % change)	10.1	13.9	7.3	11.3	11.9
Exports of goods and services (annual % change)	15.6	19.6	8.5	11.8	12.1
Imports of goods and services (in % of GDP)	35.6	39.7	39.9	42.1	44.8
Exports of goods and services (in % of GDP)	37.9	44.0	42.3	43.0	45.6
Trade Balance (millions USD)	21,952	37,569	32,683	27,905	29,409
Trade Balance (including service) (millions USD)	14,528	29,523	19,025	8,945	8,835
Foreign trade (in % of GDP)	73.5	83.7	82.2	85.1	90.4

Source: World Bank

Main partner countries

Main customers (% of exports)	2007
China	22.1%
United States	12.4%
Japan	7.1%
Hong Kong	5.0%
Singapore	3.2%
Germany	3.1%
Russia	2.2%
Mexico	2.0%
United Kingdom	1.8%
India	1.8%
Indonesia	1.6%
Vietnam	1.6%
Malaysia	1.5%
Australia	1.3%
Netherlands	1.2%
Thailand	1.2%
Philippines	1.2%
Italy	1.1%
Turkey	1.1%
Saudi Arabia	1.1%
See more countries	50.2%

Main suppliers (% of imports)	2007
China	17.7%
Japan	15.8%
United States	10.5%
Saudi Arabia	5.9%
Germany	3.8%
Australia	3.7%
United Arab Emirates	3.5%
Indonesia	2.6%
Kuwait	2.5%
Qatar	2.4%
Malaysia	2.4%
Russia	2.0%
Singapore	1.9%
Iran	1.8%
India	1.3%
Chile	1.2%
France	1.1%
Oman	1.1%
Thailand	1.1%
Netherlands	1.0%
See more countries	46.4%

Source: Comtrade

Main products

Main exports (% of exports)	2007
Electrical machinery and equipment and parts...Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles	24.5%
Nuclear reactors, boilers, machinery and...Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof	13.4%
Vehicles other than railway or tramway...Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof	13.2%
Ships, boats and floating structuresShips, boats and floating structures	7.2%
Mineral fuels, mineral oils and products of their...Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes	6.6%
Optical, photographic, cinematographic, measuring,...Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof	6.5%
Plastics and articles thereofPlastics and articles thereof	4.8%
Iron and steelIron and steel	4.4%
Organic chemicalsOrganic chemicals	4.1%
Articles of iron or steelArticles of iron or steel	1.9%
Rubber and articles thereofRubber and articles thereof	1.2%
Copper and articles thereofCopper and articles thereof	1.1%
Knitted or crocheted fabricsKnitted or crocheted fabrics	0.9%
Man-made filamentsMan-made filaments	0.8%
Paper and paperboard; articles of paper pulp, of...Paper and paperboard; articles of paper pulp, of paper or of paperboard	0.6%
Aluminium and articles thereofAluminium and articles thereof	0.6%
Natural or cultured pearls, precious or...Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin	0.5%
Miscellaneous chemical productsMiscellaneous chemical products	0.5%
Man-made staple fibresMan-made staple fibres	0.4%
Tools, implements, cutlery, spoons and forks, of...Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal	0.4%
Inorganic chemicals; organic or inorganic...Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes	0.3%
Zinc and articles thereofZinc and articles thereof	0.3%
Impregnated, coated, covered or laminated textile...Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use	0.3%
Tanning or dyeing extracts; tannins and their...Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other colouring matter; paints and varnishes; putty and other mastics; inks	0.3%
Articles of apparel and clothing accessories,...Articles of apparel and clothing accessories, knitted or crocheted	0.3%
Fish and crustaceans, molluscs and other aquatic...Fish and crustaceans, molluscs and other aquatic invertebrates	0.3%
Raw hides and skins (other than furskins) and...Raw hides and skins (other than furskins) and leather	0.2%
Glass and glasswareGlass and glassware	0.2%
Furniture; bedding, mattresses, mattress supports,...Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated buildings	0.2%
Articles of apparel and clothing accessories, not...Articles of apparel and clothing accessories, not knitted or crocheted	0.2%
CottonCotton	0.2%
Wadding, felt and nonwovens; special yarns; twine,...Wadding, felt and nonwovens; special yarns; twine, cordage, ropes and cables and articles thereof	0.2%
Aircraft, spacecraft, and parts thereofAircraft, spacecraft, and parts thereof	0.2%
Pharmaceutical productsPharmaceutical products	0.2%
Miscellaneous articles of base metalMiscellaneous articles of base metal	0.2%
Special woven fabrics; tufted textile fabrics;...Special woven fabrics; tufted textile fabrics; lace; tapestries; trimmings; embroidery	0.2%
Other made-up textile articles; sets; worn...Other made-up textile articles; sets; worn clothing and worn textile articles; rags	0.2%
Miscellaneous manufactured articlesMiscellaneous manufactured articles	0.1%
Footwear, gaiters and the like; parts of such...Footwear, gaiters and the like; parts of such articles	0.1%
Miscellaneous edible preparationsMiscellaneous edible preparations	0.1%
Articles of stone, plaster, cement, asbestos, mica...Articles of stone, plaster, cement, asbestos, mica or similar materials	0.1%
Tobacco and manufactured tobacco substitutesTobacco and manufactured tobacco substitutes	0.1%
Toys, games and sports requisites; parts and...Toys, games and sports requisites; parts and accessories thereof	0.1%
Preparations of cereals, flour, starch or milk;...Preparations of cereals, flour, starch or milk; pastrycooks' products	0.1%
Soap, organic surface-active agents, washing...Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, 'dental waxes' and dental preparations with a basis of plaster	0.1%
See more products	35.1%

Main imports (% of imports)	2007
Mineral fuels, mineral oils and products of their...Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes	27.0%
Electrical machinery and equipment and parts...Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles	16.2%
Nuclear reactors, boilers, machinery and...Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof	11.2%
Iron and steelIron and steel	6.5%
Optical, photographic, cinematographic, measuring,...Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof	3.4%
Organic chemicalsOrganic chemicals	2.8%
Ores, slag and ashOres, slag and ash	2.6%
Plastics and articles thereofPlastics and articles thereof	1.9%
Copper and articles thereofCopper and articles thereof	1.9%
Vehicles other than railway or tramway...Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof	1.9%
Miscellaneous chemical productsMiscellaneous chemical products	1.7%
Aluminium and articles thereofAluminium and articles thereof	1.5%
Articles of iron or steelArticles of iron or steel	1.4%
Inorganic chemicals; organic or inorganic...Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes	1.0%
Natural or cultured pearls, precious or...Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin	1.0%
CerealsCereals	0.8%
Articles of apparel and clothing accessories, not...Articles of apparel and clothing accessories, not knitted or crocheted	0.8%
Pharmaceutical productsPharmaceutical products	0.8%
Fish and crustaceans, molluscs and other aquatic...Fish and crustaceans, molluscs and other aquatic invertebrates	0.7%
Wood and articles of wood; wood charcoalWood and articles of wood; wood charcoal	0.7%
Aircraft, spacecraft, and parts thereofAircraft, spacecraft, and parts thereof	0.7%
Glass and glasswareGlass and glassware	0.7%
Nickel and articles thereofNickel and articles thereof	0.6%
Rubber and articles thereofRubber and articles thereof	0.6%
Meat and edible meat offalMeat and edible meat offal	0.6%
Pulp of wood or of other fibrous cellulosic...Pulp of wood or of other fibrous cellulosic material; recovered (waste and scrap) paper or paperboard	0.5%
Ships, boats and floating structuresShips, boats and floating structures	0.5%
Furniture; bedding, mattresses, mattress supports,...Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated buildings	0.5%
Tanning or dyeing extracts; tannins and their...Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other colouring matter; paints and varnishes; putty and other mastics; inks	0.5%
Paper and paperboard; articles of paper pulp, of...Paper and paperboard; articles of paper pulp, of paper or of paperboard	0.4%
Articles of apparel and clothing accessories,...Articles of apparel and clothing accessories, knitted or crocheted	0.4%
Articles of stone, plaster, cement, asbestos, mica...Articles of stone, plaster, cement, asbestos, mica or similar materials	0.3%
CottonCotton	0.3%
Toys, games and sports requisites; parts and...Toys, games and sports requisites; parts and accessories thereof	0.3%
Residues and waste from the food industries;...Residues and waste from the food industries; prepared animal fodder	0.3%
Essential oils and resinoids; perfumery, cosmetic...Essential oils and resinoids; perfumery, cosmetic or toilet preparations	0.3%
Ceramic productsCeramic products	0.3%
Other base metals; cermets; articles thereofOther base metals; cermets; articles thereof	0.3%
Footwear, gaiters and the like; parts of such...Footwear, gaiters and the like; parts of such articles	0.3%
Photographic or cinematographic goodsPhotographic or cinematographic goods	0.3%
Oil seeds and oleaginous fruits; miscellaneous...Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial or medicinal plants; straw and fodder	0.3%
Raw hides and skins (other than furskins) and...Raw hides and skins (other than furskins) and leather	0.3%
Man-made staple fibresMan-made staple fibres	0.2%
Articles of leather; saddlery and harness; travel...Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut (other than silkworm gut)	0.2%
Man-made filamentsMan-made filaments	0.2%
Animal or vegetable fats and oils and their...Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes	0.2%
Salt; sulphur; earths and stone; plastering...Salt; sulphur; earths and stone; plastering materials, lime and cement	0.2%
Works of art, collectors' pieces and antiquesWorks of art, collectors' pieces and antiques	0.2%
Edible fruit and nuts; peel of citrus fruits or...Edible fruit and nuts; peel of citrus fruits or melons	0.2%
Sugars and sugar confectionerySugars and sugar confectionery	0.2%
Beverages, spirits and vinegarBeverages, spirits and vinegar	0.2%
Tools, implements, cutlery, spoons and forks, of...Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal	0.2%
Preparations of vegetables, fruit, nuts or other...Preparations of vegetables, fruit, nuts or other parts of plants	0.2%
Miscellaneous edible preparationsMiscellaneous edible preparations	0.2%
Soap, organic surface-active agents, washing...Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, 'dental waxes' and dental preparations with a basis of plaster	0.2%
Albuminoidal substances; modified starches; glues;...Albuminoidal substances; modified starches; glues; enzymes	0.1%
Preparations of meat, of fish or of crustaceans,...Preparations of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates	0.1%
Wool, fine or coarse animal hair; horsehair yarn...Wool, fine or coarse animal hair; horsehair yarn and woven fabric	0.1%
Miscellaneous articles of base metalMiscellaneous articles of base metal	0.1%
FertilizersFertilizers	0.1%
Arms and ammunition; parts and accessories thereofArms and ammunition; parts and accessories thereof	0.1%
Edible vegetables and certain roots and tubersEdible vegetables and certain roots and tubers	0.1%
Dairy produce; birds' eggs; natural honey; edible...Dairy produce; birds' eggs; natural honey; edible products of animal origin, not elsewhere specified or included	0.1%
See more products	35.7%

Source: Comtrade

See more products: More imports (Intracen Data)
More exports (Intracen Data)

Sources of general economic information

Ministries: Ministry of Commerce, Industry and Energy (MOCIE)
Ministry of Finance and Economy (MOFE)
Ministry of information and Communication (MIC)
Ministry of Foreign Affairs and Trade(MOFAT)
Ministry of Environment (MOE)
Ministry of Construction & Transportation (MOCT)
Ministry of Health & Welfare (MOHW)
Ministry of Agriculture & Forestry (MAF)
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

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: LEE Myung-bak: President (since 25 February 2008) L1- GNP (Grand National Party)
- HAN Seung-soo: Prime Minister since February 2008;
- SOHN Hak-kyu: Leader of United New Democratic Party (UNDP).
Next election dates: Presidential: December 2012
National Assembly: April 2008

Indicator of freedom of the press

World Rank:: 47/173
Evolution:: 7 places down compared to 2007

Source: Worldwide Press Freedom Index 2007, Reporters Without Borders

Indicator of political freedom

Ranking:: Free
Political freedom:: 1/7
Civil liberties:: 2/7

Map of freedom 2007
Source: Freedom House

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