5 - Measuring the Korean economy

Summary

In this chapter, major economic indicators for the Korean economy, such as GDP, per capita GDP, competitiveness, productivity, financial indicators and employment rates, will be presented with short descriptions and analysis. The first section deals with GDP prices and productivity, followed by South Korea’s foreign sector. The government sector, including revenue and debt, is then examined, along with societal welfare and spending. The final section discusses key population statistics and trajectories.

GDP PRICES AND PRODUCTIVITY

Shortly following Park Chung Hee’s ascension to power in 1961, with the subtraction of various periods of political and economic instability, both domestic and international in origin, South Korea witnessed a high-growth era until 1997, with annual average growth rates upwards of 7–9 per cent. Following the financial crisis, after stability had been restored in 2001, growth rates returned to the positive with a 4.6 per cent average, only to be destabilized again between 2008 to 2010 with the global liquidity crisis. Following the most recent global crisis, rates have hovered just below or slightly above the 3 per cent range up until the most recent 2019 period.

While South Korea’s most recent annual GDP growth rates are significantly lower than in the high-growth era, comparatively speaking they have been above and/or at least in line with other major countries within the OECD. Most recently China has dominated the high-growth discussion but this economy, similar to South Korea’s, has tapered off too following, among other things, the development of a more mature economy (see Figure 5.1). In terms of overall ranking, South Korea emerged from one of the least developed polities to the top 20 in the 1990s and now remains in the top echelon as the 10th largest economy in the world (see Table 5.1).

In terms of GDP per capita in PPP terms, South Korea overtook Japan as of 2019, which few could have imagined or predicted. The more than tripled growth from 1997 ($14,213) to 2020 ($44,621) was more than dramatic considering the two global-scale economic downturns; that is, the subprime mortgage crisis of 2007–2008 and the Covid-19 pandemic since 2000.