Korea Economic Forecast

Korea Economic Outlook

September 21, 2021

After accelerating in annual terms in Q2, economic growth has likely slowed in Q3: The economy is facing headwinds from an outbreak of the virus that began in early July, which eventually led to the imposition of the highest level of restrictions in Greater Seoul, and, later in August, in Busan—the country’s second largest city. Despite some loosening in the capital region in early September, restrictions are still relatively tough overall. That said, upbeat consumer confidence and lower unemployment point to resilient private consumption in the quarter. Externally, merchandise exports kept some momentum in July–August, but soaring imports led to a shrinking trade balance. In other news, the government recently tabled its draft 2022 budget, which sees expenditure rising by 8.3% to USD 37.4 billion, increasing the fiscal deficit from its projected level in 2021.

Korea Economic Growth

After an expected robust expansion in 2021, the economy should continue to grow healthily in 2022. Sustained fiscal support, resuming private consumption and a buoyant external sector should be the key drivers of growth. That said, downside risks stem from indebted households suffering from higher financing costs as the Bank of Korea normalizes policy. FocusEconomics panelists see GDP growth at 4.0% in 2021. For 2022, GDP is seen expanding 3.0%, which is unchanged from last month’s estimate.

Korea Economy Data

2015 2016 2017 2018 2019
Population (million)
GDP per capita (USD)28,72329,27331,55533,39131,731
GDP (USD bn)1,4651,5001,6241,7251,646
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)
Industrial Production (annual variation in %)-
Retail Sales (annual variation in %)
Unemployment Rate3.
Fiscal Balance (% of GDP)
Public Debt (% of GDP)37.337.636.737.940.7
Money (annual variation in %)
Inflation Rate (CPI, annual variation in %, eop)
Inflation Rate (CPI, annual variation in %)
Inflation (PPI, annual variation in %)-4.0-
Policy Interest Rate (%)1.501.251.501.751.25
Stock Market (annual variation in %)2.43.321.8-17.37.7
Exchange Rate (vs USD, aop)1,1321,1601,1311,1001,166
Exchange Rate (vs USD)1,1731,2081,0711,1161,156
Current Account (% of GDP)
Current Account Balance (USD bn)10597.975.277.560.0
Trade Balance (USD billion)90.389.295.269.738.9
Exports (USD billion)527495574605542
Imports (USD billion)436406478535503
Exports (annual variation in %)-8.0-5.915.85.4-10.4
Imports (annual variation in %)-16.9-6.917.811.9-6.0
International Reserves (USD)368371389404409
External Debt (% of GDP)27.025.525.425.628.4

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Korea Facts

Value Change Date
Bond Yield1.681.55 %Dec 31
Exchange Rate1,1560.21 %Dec 31

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