South Korea Economic Forecast
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South Korea has proved its economic capacity as one of the four Asian Tigers by becoming one of the fastest growing developed countries in the 2000s. Since 2004, it has joined the ranks of the top world economies, with over a trillion dollars in GDP (PPP). In 2010, the South Korean economy posted a GDP (PPP) of US$1.459 trillion, a 7.12 percent growth from 2009. It is currently the 12th largest economy in the world in terms of GDP (PPP).
South Korea has proved its economic capacity as one of the four Asian Tigers by becoming one of the fastest growing developed countries in the 2000s. Since 2004, it has joined the ranks of the top world economies, with over a trillion dollars in GDP (PPP). In 2010, the South Korean economy posted a GDP (PPP) of US$1.459 trillion, a 7.12 percent growth from 2009. It is currently the 12th largest economy in the world in terms of GDP (PPP).
South Korea is also one of the few countries which avoided recession during the 2008 global financial crisis, partly salvaged by its low state debt and huge national reserves. In 2009, the economy managed to post a growth of 1.11 in GDP (PPP) from 2008, at US$1.362 trillion, and a GDP real growth rate of 0.2 percent, when many of its economic partners record negative growth.
The economy of South Korea expects to expand around 4.5 percent in the next few years after its recovery from the 2008 financial crisis. However, issues such as increasing aging population, undeveloped financial market, rigid labour regulations, and its ongoing tension with its neighboring North Korea may impede South Korea’s growth to be one of the world’s top economies.
Table of Contents
South Korea’s GDP Forecast
South Korea is currently the 12th largest economy in the world according the GDP (PPP) and 15th in the world according to GDP (Current Prices, US Dollars). In 2010, South Korea’s GDP (PPP) was US$1.459 trillion and GDP (Current Prices, US Dollars) was US$1.007 trillion. By 2011, South Korea’s economy GDP (PPP) will grow by 5.60 percent to US$1.541 trillion. After which, South Korea’s GDP (PPP) is expected to grow annually by 5.0 to 5.8 percent from 2012 to 2016. By the end of 2016, South Korea’s GDP (PPP) will reach US$2.031 trillion.
Similarly, South Korea’s GDP (PPP) per capita is expected to see similar patterns of growth. In 2010, South Korea’s GDP (PPP) per capita was US$29,835.92. From 2011 to 2016, South Korea’s GDP (PPP) per capita will grow annually by 5.06 – 5.59 percent to US$40,777.07. The growth is likely to match with other developed economies as South Korea’s GDP (PPP) per capita will still remain 26th largest in the world in 2016, as it is in 2010.
South Korea’s Unemployment Forecast
As Asian’s forth largest economy, South Korea has a unemployment rate of 3.725 percent in 2010. This figure is 2.05 percent higher than its 2009 figure. South Korea’s job market expects to improve in 2011, and will reduce the unemployment rate to 3.30 percent, which is 11.41 percent less than its 2010 figure. The unemployment rate is expected to remain at 3.30 percent for the next 5 years till 2016.
South Korea’s labor force has 70 percent of its workers employed as irregulars, people who take up temporary or uncommon employment. An imbalance of work protection and benefits between the regular and irregular workers have led to strikes and protests by the irregular workers. This irregular labour force is the driving factor behind South Korea’s economic recovery from the 2008 financial crisis and experts says that though the unemployment rate of 3.725 percent reflects on the growth of labor market, it does not reflect well on the fact that more than half of its workers are irregular workers receiving poverty wages.
South Korea’s Inflation rate & Current Account
In 2010, South Korea’s inflation rate (average consumer price change) was 2.956 percent, 7.22 percent higher than its 2009 figure. The inflation rate is expected to rise by 52.23 percent in 2011 to 4.50 percent, before eventually fall to 3 percent in 2012. Experts predicts inflation rate to be at 3 percent for the next 4 years.
Rising inflation rate is one of the key concerns to South Korea’s progressive economic growth. The Bank of Korea has raised its interest rate to 3.25 percent in May of 2011, the third time in a year, to curb the rising inflation rate.
South Korea posted a current account balance surplus of US$28.214 billion in 2010. This amount is 13.96 percent less than its 2009 figure. By 2011, South Korea’s current account surplus is expected to fall further by 57.86 percent, to US$11.89 billion. Reasons cite for the decline in current account surplus includes appreciation of the won and rise in household debts.
