South Korea

10 Results, Refine search

South Korea has the fourth largest nominal GDP in Asia. Economic growth slowed down because of weaker world demand growth, internal shocks and structural factors (such as low labour productivity of SMEs vs. large corporates, high private-sector debt, rapid population ageing and a distorted labour market).

Yet the economy enjoys broad diversification and a high level of competitiveness, and more than ten years of prompt and effective policy response to global shocks have helped to build strong fundamentals.

The pandemic affected Korea through several channels, of which supply chain linkages, tourism and investment, but the effective management of the COVID-19 crisis and significant support measures have led to a less severe crisis than in most developed countries. The recovery is expected to be robust, supported by high global demand for Korean’s manufactured exports, while domestic demand’s recovery is expected to be delayed, as new contamination and mobility restrictions persist.

Household debt is the main risk in the financial system, though not in the short term, and macroprudential policies are effectively addressing financial-stability challenges so far. In the medium term, real GDP growth is expected to slow. However the economy’s diversity and competitiveness, as well as a relatively strong productivity growth and investment (supported by the government’s “Fourth Industrial Revolution” and the “Korean New Deal” plans, unveiled in 2020), will help mitigate these pressures.