Korea Economic Snapshot

Economic Forecast Summary (November 2019)

20 June 2018 Economic Survey of Korea

Korea’s transformation from one of the poorest countries in the world in the 1950s to a major industrial power and member of the OECD was exceptionally rapid, reflecting good policies, notably sound fiscal and monetary policy, high levels of investment in human and physical capital and an outward orientation that increased its share of world trade. Per capita income increased from 6% of the OECD average in 1970 to 89% in 2017. Rapid development has been export-led, with large business groups, known as chaebols, making Korea the world’s sixth-largest exporter. However, the traditional growth model seems to be losing effectiveness, as income growth has slowed toward the OECD average. Korea’s low level of labour productivity, at 46% below the top half of OECD countries, suggests scope for continued convergence. Low labour productivity is offset by very long working hours, at the expense of well-being and female employment. The decline in the working-age population beginning in 2017 year will put downward pressure on per capita income growth.