Seoul’s lively shopping districts are popular with young people ©kikujungboy/123RF
Seoul’s lively shopping districts are popular with young people ©kikujungboy/123RF

Country spotlight: South Korea

posted by Katie Beet
7 September 2018

Population
51.18m

Area
99,920 km²

The helicopter view
With an FDI rate in the top 20 worldwide, South Korea (aka Republic of Korea) is not only good for business but also a popular tourist destination. Since splitting from North Korea, the economy has blossomed. It has many free trade agreements and is now the fourth largest economy in Asia. 

Economic outlook
Rising exports and domestic consumption in 2017 should produce economic growth at over 3%. This will slow in 2018, with an ageing population, inflexible labour market and over-reliance on exports. 

Biggest investors
Fast economic development has drawn foreign investment, rising to over $22bn in 2017. Europe, Japan and the US are the biggest investors.

Supply chain issues
South Korea is one of the world's largest exporters. Exports include electronics, cars, steel and textiles. It imports crude oil, food, machinery and chemicals. 

Strengths
Once a recipient of international aid, it is now a contributor, and can provide lessons for developing economies. South Korea has highly skilled workers, and strong research and development capabilities. Its shipping and air cargo infrastructure offer potential for market expansion. 

Challenges
Some of the country’s regulatory framework is seen as restrictive. Productivity is reliant on a few large corporations, known as chaebols, but it is now looking to foster entrepreneurs and innovation. 

Bottom Line
South Korea is an established global trading partner, with an economy based largely on export. While a recent increase in minimum wage is hoped to drive up domestic household spend, global trade wars could affect demand for the country’s manufactured goods and components.

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