Korea skyline

Korea Economy

Korea economic overview

Asian dynamo:

South Korea, officially the Republic of Korea, stands as a beacon of economic success in Asia. With a GDP of USD 1.7 trillion, it stands as the fourth largest economy in the region, only trailing much more populous neighbors China, Japan and India. South Korea has transformed itself from a war-torn country to among the world's richest and most advanced nations in only a few decades. This growth can be attributed to a combination of factors, including export-oriented policies, government-led industrialization strategies, and sustained investments in education and technology.

High-tech hub:

Today, South Korea is one of the world's main producers of electronics, semiconductors, and automobiles, and many of the company's firms are household names. Together with Taiwan's TSMC, Korea's Samsung produces the globe's most advanced chips, which are in increasing demand in an era of ever-rising digitalization. The Korean car firms Hyundai and Kia export automobiles around the world, while LG holds a large slice of the electronics market.

Export-oriented economy:

South Korea's economy is heavily dependent on international trade, with exports accounting for close to half of GDP. This makes the economy vulnerable to volatility in external demand and global trade flows. China and the U.S. are the country's major trade partners.

Challenges:

Society is aging rapidly, the fertility rate is currently the lowest in the world, and the population is declining. All three factors are weighing on private spending and putting pressure on fiscal resources, and they will do so increasingly in the coming years. Moreover, tensions with North Korea are a risk, as is a regional military conflict between China and the U.S.—most likely over the status of Taiwan. Elevated household debt is another factor to watch, as it could pose risks to financial stability. The country faces the need to reduce economic inequality and encourage greater competition in the economy. Finally, Chinese manufacturers could trim Korea's market share in global markets for cars, chips and electronics.

South Korea's economic outlook:

Growth in the coming years will be above that experienced in most other advanced economies, aided by South Korea's privileged position at the forefront of several high-tech industries. However, unfavorable demographics will exert an increasing drag on activity.

Korea's economy in numbers:

Nominal GDP of USD 1,673 billion in 2022.

GDP per capita of USD 32,409 compared to the global average of USD 10,589.

Average real GDP growth of 2.6% over the last decade.

Share of the region's population
Share of the region's GDP

Economic structure:

In 2021, services accounted for 66% of overall GDP, manufacturing 25%, other industrial activity 7%, and agriculture 2%. Looking at GDP by expenditure, private consumption accounted for 46% of GDP in 2021, government consumption 18%, fixed investment 32%, and net exports 4%.

GDP by economic sector
GDP by type of expenditure

International trade:

In 2020, manufactured products made up 90% of total merchandise exports, mineral fuels 5%, food 2%, ores and metals 3% and agricultural raw materials 1%, with other categories accounting for -1% of the total. In the same period, manufactured products made up 66% of total merchandise imports, mineral fuels 19%, food 7%, ores and metals 7% and agricultural raw materials 1%, with other goods accounting for 0% of the total. Total exports were worth USD 633 billion in 2023, while total imports were USD 643 billion.

Key exports
Key imports
Key export partners
Key import partners

Economic growth:

The economy recorded average annual growth of 2.6% in the decade to 2022. To read more about GDP growth in Korea, go to our dedicated page.

Fiscal policy:

Korea's fiscal deficit averaged 0.2% of GDP in the decade to 2022. Find out more on our dedicated page.

Unemployment:

The unemployment rate averaged 3.5% in the decade to 2022. For more information on Korea's unemployment click here.

Inflation:

Inflation averaged 1.7% in the decade to 2022. Go to our Korea inflation page for extra insight.

Monetary Policy:

Korea's monetary policy rate ended 2022 at 3.25%, up from 2.75% a decade earlier. See our Korea monetary policy page for additional details.

Exchange Rate:

From end-2012 to end-2022 the won weakened by 15.3% vs the U.S. dollar. For more info on the won, click here.
At 0.6%, quarter-on-quarter growth in Q3 was stable from Q2—the joint-strongest print since Q2 2022 and slightly above market expectations. Apart from imports, the contribution of all GDP components turned more positive. In Q4, our panelists expect GDP growth to have softened slightly. This forecast is supported by recent data, with business and consumer sentiment falling in the quarter, while industrial output contracted month on month in October before rebounding weakly in November. Moreover, unemployment rose in Q4 from Q3. That said, exports returned to growth in the quarter, likely helping GDP growth to remain robust compared to other advanced economies. In other news, in December, Parliament approved the government’s 2024 budget; it features the smallest year-on-year rise in spending for nearly two decades and will thus likely temper domestic demand this year.
Projections out to 2033.

47 indicators covered including both annual and quarterly frequencies.

Consensus Forecasts based on a panel of 32 expert analysts.

Want to get insight on the economic outlook for Korea in the coming years? FocusEconomics collects projections out to 2033 on 47 economic indicators for Korea from a panel of 32 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Korea economy. To download a sample report on the Korea's economy, click here . To get in touch with our team for more information, fill in the form at the bottom of this page .

Korea Economic Data

2018 2019 2020 2021 2022
Population (million) 51.6 51.8 51.8 51.7 51.6
GDP (USD bn) 1,725 1,651 1,645 1,817 1,673
GDP per capita (USD) 33,441 31,888 31,738 35,114 32,409
GDP (KRW tn) 1,898 1,924 1,941 2,080 2,162
Economic Growth (Nominal GDP, ann. var. %) 3.4 1.4 0.8 7.2 3.9
Economic Growth (GDP, ann. var. %) 2.9 2.2 -0.7 4.3 2.6
Private Consumption (ann. var. %) 3.2 2.1 -4.8 3.6 4.1
Government Consumption (ann. var. %) 5.3 6.4 5.1 5.5 4.0
Fixed Investment (ann. var. %) -2.2 -2.1 3.5 3.2 -0.5
Exports (G&S, ann. var. %) 4.0 0.2 -1.7 11.1 3.4
Imports (G&S, ann. var. %) 1.7 -1.9 -3.1 10.1 3.5
Industrial Production (s.a. ann. var. %) 1.5 -0.1 -0.1 8.1 1.3
Retail Sales (ann. var. %) 4.3 2.4 -0.4 5.9 -0.2
Wages (ann. var. %) 5.1 3.3 0.7 5.0 4.9
Unemployment (% of active population, eop) 3.4 3.4 4.1 3.5 3.0
Unemployment (% of active population, aop) 3.8 3.8 3.9 3.7 2.9
Fiscal Balance (% of GDP) 1.6 -0.6 -3.7 -1.5 -3.0
Public Debt (% of GDP) 40.0 42.1 48.7 51.3 53.8
Money (ann. var. of M2 %) 6.7 7.9 9.8 12.9 4.0
Inflation (CPI, ann. var. %, eop) 1.3 0.7 0.6 3.7 5.0
Inflation (CPI, ann. var. %, aop) 1.5 0.4 0.5 2.5 5.1
Inflation (Core, ann. var. %, aop) 1.2 0.7 0.4 1.4 3.6
Inflation (PPI, ann. var. %, aop) 1.9 0.0 -0.5 6.4 8.4
BOK Base Rate (%, eop) 1.75 1.25 0.50 1.00 3.25
3-Month KORIBOR (%, eop) 1.90 1.51 0.81 1.41 4.04
10-Year Bond Yield (%, eop) 1.95 1.68 1.71 2.25 3.73
Stock Market (ann. var. of KOSPI %) -17.3 7.7 30.8 3.6 -24.9
Exchange Rate (KRW per USD, eop) 1,116 1,156 1,086 1,189 1,265
Exchange Rate (KRW per USD, aop) 1,100 1,166 1,180 1,145 1,292
Current Account Balance (USD bn) 77.5 59.7 75.9 85.2 25.8
Current Account Balance (% of GDP) 4.5 3.6 4.6 4.7 1.5
Merchandise Trade Balance (USD bn) 69.7 38.9 44.9 29.3 -47.8
Merchandise Exports (USD bn) 605 542 512 644 684
Merchandise Imports (USD bn) 535 503 468 615 731
Merchandise Exports (ann. var. %) 5.4 -10.4 -5.5 25.7 6.1
Merchandise Imports (ann. var. %) 11.9 -6.0 -7.1 31.5 18.9
Foreign Direct Investment (USD bn) 12.2 9.6 8.8 22.1 18.0
International Reserves (USD bn) 404 409 443 463 423
International Reserves (months of imports) 9.1 9.7 11.4 9.0 6.9
External Debt (USD bn) 441 471 551 631 665
External Debt (% of GDP) 25.6 28.5 33.5 34.7 39.8

Q&A:

  1. What kind of economy does South Korea have?

  2. South Korea has a mixed economy, characterized by a combination of free-market and government intervention. It's heavily reliant on international trade and is known for its major conglomerates like Samsung and Hyundai. The economy is also supported by robust technology, automobile, shipbuilding, and consumer electronics industries.

  3. Why is South Korea's economy so strong?

  4. South Korea's economy is strong due to its focus on high-tech industries, extensive education system, significant investment in research and development, and a highly skilled workforce. Additionally, the presence of global conglomerates like Samsung and Hyundai and a strong export sector contribute to its economic strength.

  5. What is the trend in the economy of South Korea?

  6. The South Korean economy is expected to slow down in 2023 due to global headwinds such as rising interest rates, supply chain disruptions, and the war in Ukraine. However, the economy is still projected to grow; the government is implementing measures to support growth, such as fiscal stimulus and infrastructure investments.

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