| SOUTH KOREA |
Economy:
Since the 1960s, South Korea has achieved an incredible record of growth and global
integration to become a high-tech industrialized economy. Four decades ago, GDP per
capita was comparable with levels in the poorer countries of Africa and Asia. In 2004,
South Korea joined the trillion dollar club of world economies, and currently is among the
world's 20 largest economies. Initially, a system of close government and business ties,
including directed credit and import restrictions, made this success possible. The
government promoted the import of raw materials and technology at the expense of
consumer goods, and encouraged savings and investment over consumption. The Asian
financial crisis of 1997-98 exposed longstanding weaknesses in South Korea's
development model including high debt/equity ratios and massive short-term foreign
borrowing. GDP plunged by 6.9% in 1998, and then recovered by 9% in 1999-2000. Korea
adopted numerous economic reforms following the crisis, including greater openness to
foreign investment and imports. Growth moderated to about 4-5% annually between 2003
and 2007. With the global economic downturn in late 2008, South Korean GDP growth
slowed to 0.2% in 2009. In the third quarter of 2009, the economy began to recover, in
large part due to export growth, low interest rates, and an expansionary fiscal policy, and
growth exceeded 6% in 2010. The South Korean economy's long term challenges include
a rapidly aging population, inflexible labor market, and overdependence on manufacturing
exports to drive economic growth.
GDP (purchasing power parity):
$1.459 trillion (2010 est.)
country comparison to the world: 13
$1.375 trillion (2009 est.)
$1.373 trillion (2008 est.)
note: data are in 2010 US dollars
GDP (official exchange rate):
$1.007 trillion (2010 est.)
GDP - real growth rate:
6.1% (2010 est.)
country comparison to the world: 49
0.2% (2009 est.)
2.3% (2008 est.)
GDP - per capita (PPP):
$30,000 (2010 est.)
country comparison to the world: 45
$28,300 (2009 est.)
$28,400 (2008 est.)
note: data are in 2010 US dollars
GDP - composition by sector:
agriculture: 3%
industry: 39.4%
services: 57.6% (2008 est.)
Exports - commodities:
semiconductors, wireless telecommunications equipment, motor vehicles, computers, steel,
ships, petrochemicals
Exports - partners:
China 23.2%, US 10.1%, Japan 5.8%, Hong Kong 5.3% (2009 est.)
Imports - commodities:
machinery, electronics and electronic equipment, oil, steel, transport equipment, organic
chemicals, plastics
Imports - partners:
China 16.8%, Japan 15.3%, US 9%, Saudi Arabia 6.1%, Australia 4.6% (2009 est.)
Key findings extracted from IMF Report - Republic of Korea: 2011 Article IV
Consultation (August 2011)
Near-term outlook. In the context of a robust expansion, growth in 2011 is projected
above potential at 4½ percent, supported by both domestic demand and exports,
before easing to 4.2 percent next year. Downside risks are mainly external,
including contagion from fiscal and financial stresses in Europe, weaker growth in
advanced economies or an escalation of geopolitical tensions with North Korea. Domestic
risks relate to higher-than-expected inflation and ongoing weaknesses in the
construction sector.
Ensuring a soft landing. Against the backdrop of a positive and rising output gap, and
easy monetary conditions, further monetary policy tightening and greater two-way
exchange rate flexibility are needed to contain overheating pressures, anchor inflation
expectations, and prevent a further buildup of leverage in the economy.
Enhancing the macrofinancial policy framework. More closely integrating
macroeconomic and financial policies in an internally consistent framework would help
capture their cross-sectoral implications and preempt the buildup of vulnerabilities. Key
elements include incorporating financial stability in the conduct of monetary policy,
harmonizing macroprudential policies with appropriate macroeconomic policy settings,
and integrating longer-term general government liabilities within the fiscal framework.
Ensuring sustainable and equitable growth. Policies need to be stepped up to
ensure that the sources of growth are broadened beyond exports, to make the
economy more resilient to shocks and growth more equitable. Priorities include
reforms to revitalize the nontradables sector and increase the formal labor force
participation rate.
Click here to view full report
Banking
Korea’s financial system consists of banking and non-bank financial institutions. The
Financial Supervisory Commission and the Financial Supervisory Service its regulatory
arm, are responsible for supervising and examining all banks, including specialized and
government-owned banks, as well as securities and insurance companies. The FSC
has played a key role in financial restructuring and has strengthened the regulatory and
supervisory framework governing the entire financial sector. Oversight standards are
improving but they will need more time to meet international standards. Currently a total
of 13 local commercial and 5 local specialized banks as well as 37 branches of foreign
banks are in operation in Korea.
Stock Exchange
Aggregate foreign investment ceilings in the Korean Stock Exchange (KSE) were abolished
in 1998, and foreign investors owned 32.9 percent of KSE stocks and 10.3 percent of the
KOSDAQ as of the end of 2010. The market turnover rate was 292 percent of market
capitalization in 2010. Retail investors are extremely active in the Korean stock markets.
More than 80 percent of KSE and KOSDAQ retail trading is conducted online. Thus, a
large majority of retail investors are day traders, implying a constant source of volatility
for the markets. The Korean government permits stock purchases on margin, requiring
that transactions be settled within three business days.
Since the 1960s, South Korea has achieved an incredible record of growth and global
integration to become a high-tech industrialized economy. Four decades ago, GDP per
capita was comparable with levels in the poorer countries of Africa and Asia. In 2004,
South Korea joined the trillion dollar club of world economies, and currently is among the
world's 20 largest economies. Initially, a system of close government and business ties,
including directed credit and import restrictions, made this success possible. The
government promoted the import of raw materials and technology at the expense of
consumer goods, and encouraged savings and investment over consumption. The Asian
financial crisis of 1997-98 exposed longstanding weaknesses in South Korea's
development model including high debt/equity ratios and massive short-term foreign
borrowing. GDP plunged by 6.9% in 1998, and then recovered by 9% in 1999-2000. Korea
adopted numerous economic reforms following the crisis, including greater openness to
foreign investment and imports. Growth moderated to about 4-5% annually between 2003
and 2007. With the global economic downturn in late 2008, South Korean GDP growth
slowed to 0.2% in 2009. In the third quarter of 2009, the economy began to recover, in
large part due to export growth, low interest rates, and an expansionary fiscal policy, and
growth exceeded 6% in 2010. The South Korean economy's long term challenges include
a rapidly aging population, inflexible labor market, and overdependence on manufacturing
exports to drive economic growth.
GDP (purchasing power parity):
$1.459 trillion (2010 est.)
country comparison to the world: 13
$1.375 trillion (2009 est.)
$1.373 trillion (2008 est.)
note: data are in 2010 US dollars
GDP (official exchange rate):
$1.007 trillion (2010 est.)
GDP - real growth rate:
6.1% (2010 est.)
country comparison to the world: 49
0.2% (2009 est.)
2.3% (2008 est.)
GDP - per capita (PPP):
$30,000 (2010 est.)
country comparison to the world: 45
$28,300 (2009 est.)
$28,400 (2008 est.)
note: data are in 2010 US dollars
GDP - composition by sector:
agriculture: 3%
industry: 39.4%
services: 57.6% (2008 est.)
Exports - commodities:
semiconductors, wireless telecommunications equipment, motor vehicles, computers, steel,
ships, petrochemicals
Exports - partners:
China 23.2%, US 10.1%, Japan 5.8%, Hong Kong 5.3% (2009 est.)
Imports - commodities:
machinery, electronics and electronic equipment, oil, steel, transport equipment, organic
chemicals, plastics
Imports - partners:
China 16.8%, Japan 15.3%, US 9%, Saudi Arabia 6.1%, Australia 4.6% (2009 est.)
Key findings extracted from IMF Report - Republic of Korea: 2011 Article IV
Consultation (August 2011)
Near-term outlook. In the context of a robust expansion, growth in 2011 is projected
above potential at 4½ percent, supported by both domestic demand and exports,
before easing to 4.2 percent next year. Downside risks are mainly external,
including contagion from fiscal and financial stresses in Europe, weaker growth in
advanced economies or an escalation of geopolitical tensions with North Korea. Domestic
risks relate to higher-than-expected inflation and ongoing weaknesses in the
construction sector.
Ensuring a soft landing. Against the backdrop of a positive and rising output gap, and
easy monetary conditions, further monetary policy tightening and greater two-way
exchange rate flexibility are needed to contain overheating pressures, anchor inflation
expectations, and prevent a further buildup of leverage in the economy.
Enhancing the macrofinancial policy framework. More closely integrating
macroeconomic and financial policies in an internally consistent framework would help
capture their cross-sectoral implications and preempt the buildup of vulnerabilities. Key
elements include incorporating financial stability in the conduct of monetary policy,
harmonizing macroprudential policies with appropriate macroeconomic policy settings,
and integrating longer-term general government liabilities within the fiscal framework.
Ensuring sustainable and equitable growth. Policies need to be stepped up to
ensure that the sources of growth are broadened beyond exports, to make the
economy more resilient to shocks and growth more equitable. Priorities include
reforms to revitalize the nontradables sector and increase the formal labor force
participation rate.
Click here to view full report
Banking
Korea’s financial system consists of banking and non-bank financial institutions. The
Financial Supervisory Commission and the Financial Supervisory Service its regulatory
arm, are responsible for supervising and examining all banks, including specialized and
government-owned banks, as well as securities and insurance companies. The FSC
has played a key role in financial restructuring and has strengthened the regulatory and
supervisory framework governing the entire financial sector. Oversight standards are
improving but they will need more time to meet international standards. Currently a total
of 13 local commercial and 5 local specialized banks as well as 37 branches of foreign
banks are in operation in Korea.
Stock Exchange
Aggregate foreign investment ceilings in the Korean Stock Exchange (KSE) were abolished
in 1998, and foreign investors owned 32.9 percent of KSE stocks and 10.3 percent of the
KOSDAQ as of the end of 2010. The market turnover rate was 292 percent of market
capitalization in 2010. Retail investors are extremely active in the Korean stock markets.
More than 80 percent of KSE and KOSDAQ retail trading is conducted online. Thus, a
large majority of retail investors are day traders, implying a constant source of volatility
for the markets. The Korean government permits stock purchases on margin, requiring
that transactions be settled within three business days.
Background:
An independent Korean state or collection of
states has existed almost continuously for
several millennia. Between its initial unification
in the 7th century - from three predecessor
Korean states - until the 20th century, Korea
existed as a single independent country. In
1905, following the Russo-Japanese War,
Korea became a protectorate of imperial Japan,
and in 1910 it was annexed as a colony. Korea
regained its independence following Japan's
surrender to the United States in 1945. After
World War II, a Republic of Korea (ROK) was
set up in the southern half of the Korean
Peninsula while a Communist-style government
was installed in the north (the DPRK). During
the Korean War (1950-53), US troops and UN
forces fought alongside soldiers from the ROK
to defend South Korea from DPRK attacks
supported by China and the Soviet Union. An
armistice was signed in 1953, splitting the
peninsula along a demilitarized zone at about
the 38th parallel. Thereafter, South Korea
achieved rapid economic growth with per capita
income rising to roughly 17 times the level of
North Korea. In 1993, KIM Young-sam became
South Korea's first civilian president following 32
years of military rule. South Korea today is a
fully functioning modern democracy. President
LEE Myung-bak has pursued a policy of global
engagement since taking office in February
2008, highlighted by Seoul's hosting of the
G-20 summit in November 2010. Serious
tensions with North Korea have punctuated
inter-Korean relations in recent years, including
the North's sinking of the South Korean warship
Cheonan in March 2010 and its artillery attack
on South Korean soldiers and citizens in
November 2010.Government type:
republic
Capital:
name: Seoul
time difference: UTC+9
Independence:
15 August 1945 (from Japan)
National holiday:
Liberation Day, 15 August (1945)
Constitution:
17 July 1948; note - amended or rewritten nine
times; current constitution approved on 29
October 1987
Legal system:
combines elements of continental European civil
law systems, Anglo-American law, and Chinese
classical thought; has not
accepted compulsory ICJ jurisdiction
Suffrage:
19 years of age; universal
Government:
Chief of state: President LEE Myung-bak (since
25 February 2008)
head of government: Prime Minister KIM
Hwang-sik (since 1 October 2010)
cabinet: State Council appointed by the
president on the prime minister's
recommendation
elections: president elected by popular vote for
a single five-year term; election last held on 19
December 2007 (next to be held in December
2012); prime minister appointed by president
with consent of National Assembly
election results: LEE Myung-bak elected
president on 19 December 2007; percent of
vote - LEE Myung-bak (GNP) 48.7%; CHUNG
Dong-young (UNDP) 26.1%); LEE Hoi-chang
(independent) 15.1; others 10.1%
For names of current Ministers, click here.
Disputes - international:
Military Demarcation Line within the 4-km wide
Demilitarized Zone has separated North from
South Korea since 1953; periodic incidents with
North Korea in the Yellow Sea over the
Northern Limiting Line, which South Korea
claims as a maritime boundary; South Korea
and Japan claim Liancourt Rocks
(Tok-do/Take-shima), occupied by South Korea
since 1954
note: the two rocky islets of Tok-do have
become a South Korean tourist destination -
over 132,000 people visited them in 2009, most
by ship but also a substantial number by
helicopter
All the information on this page sourced from
the CIA World Factbook, the US Commercial
Service and relevant FATF M.E.R.
An independent Korean state or collection of
states has existed almost continuously for
several millennia. Between its initial unification
in the 7th century - from three predecessor
Korean states - until the 20th century, Korea
existed as a single independent country. In
1905, following the Russo-Japanese War,
Korea became a protectorate of imperial Japan,
and in 1910 it was annexed as a colony. Korea
regained its independence following Japan's
surrender to the United States in 1945. After
World War II, a Republic of Korea (ROK) was
set up in the southern half of the Korean
Peninsula while a Communist-style government
was installed in the north (the DPRK). During
the Korean War (1950-53), US troops and UN
forces fought alongside soldiers from the ROK
to defend South Korea from DPRK attacks
supported by China and the Soviet Union. An
armistice was signed in 1953, splitting the
peninsula along a demilitarized zone at about
the 38th parallel. Thereafter, South Korea
achieved rapid economic growth with per capita
income rising to roughly 17 times the level of
North Korea. In 1993, KIM Young-sam became
South Korea's first civilian president following 32
years of military rule. South Korea today is a
fully functioning modern democracy. President
LEE Myung-bak has pursued a policy of global
engagement since taking office in February
2008, highlighted by Seoul's hosting of the
G-20 summit in November 2010. Serious
tensions with North Korea have punctuated
inter-Korean relations in recent years, including
the North's sinking of the South Korean warship
Cheonan in March 2010 and its artillery attack
on South Korean soldiers and citizens in
November 2010.Government type:
republic
Capital:
name: Seoul
time difference: UTC+9
Independence:
15 August 1945 (from Japan)
National holiday:
Liberation Day, 15 August (1945)
Constitution:
17 July 1948; note - amended or rewritten nine
times; current constitution approved on 29
October 1987
Legal system:
combines elements of continental European civil
law systems, Anglo-American law, and Chinese
classical thought; has not
accepted compulsory ICJ jurisdiction
Suffrage:
19 years of age; universal
Government:
Chief of state: President LEE Myung-bak (since
25 February 2008)
head of government: Prime Minister KIM
Hwang-sik (since 1 October 2010)
cabinet: State Council appointed by the
president on the prime minister's
recommendation
elections: president elected by popular vote for
a single five-year term; election last held on 19
December 2007 (next to be held in December
2012); prime minister appointed by president
with consent of National Assembly
election results: LEE Myung-bak elected
president on 19 December 2007; percent of
vote - LEE Myung-bak (GNP) 48.7%; CHUNG
Dong-young (UNDP) 26.1%); LEE Hoi-chang
(independent) 15.1; others 10.1%
For names of current Ministers, click here.
Disputes - international:
Military Demarcation Line within the 4-km wide
Demilitarized Zone has separated North from
South Korea since 1953; periodic incidents with
North Korea in the Yellow Sea over the
Northern Limiting Line, which South Korea
claims as a maritime boundary; South Korea
and Japan claim Liancourt Rocks
(Tok-do/Take-shima), occupied by South Korea
since 1954
note: the two rocky islets of Tok-do have
become a South Korean tourist destination -
over 132,000 people visited them in 2009, most
by ship but also a substantial number by
helicopter
All the information on this page sourced from
the CIA World Factbook, the US Commercial
Service and relevant FATF M.E.R.
| KnowYourCountry |
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| Last Updated: 14 September 2011 |