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Korea, South Economy

    Economy—overview: As one of the Four Dragons of East Asia, South Korea has achieved an incredible record of growth. Three decades ago its GDP per capita was comparable with levels in the poorer countries of Africa and Asia. Today its GDP per capita is seven times India's, 13 times North Korea's, and already near the lesser economies of the European Union. This success through the late 1980s was achieved by a system of close government business ties, including directed credit, import restrictions, sponsorship of specific industries, and a strong labor effort. 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 certain longstanding weaknesses in South Korea's development model, including high debt/equity ratios, massive foreign borrowing, and an undisciplined financial sector. By the end of 1998 it had recovered financial stability, rebuilding foreign exchange reserves to record levels by running a current account surplus of $40 billion. As of December 1998, the first tentative signs of a rebound in the economy emerged, and most forecasters expect GDP growth to turn positive at least in the second half of 1999. Seoul has also made a positive start on a program to get the country's largest business groups to swap subsidiaries to promote specialization, and the administration has directed many of the mid-sized conglomerates into debt-workout programs with creditor banks. Challenges for the future include cutting redundant staff, which reaches 20%-30% at most firms and maintaining the impetus for structural reform.

    GDP: purchasing power parity—$584.7 billion (1998 est.)

    GDP—real growth rate: -6.8% (1998 est.)

    GDP—per capita: purchasing power parity—$12,600 (1998 est.)

    GDP—composition by sector:
    agriculture: 6%
    industry: 43%
    services: 51% (1997 est.)

    Population below poverty line: NA%

    Household income or consumption by percentage share:
    lowest 10%: NA%
    highest 10%: NA%

    Inflation rate (consumer prices): 7.5% (1998)

    Labor force: 20 million

    Labor force—by occupation: services and other 52%, mining and manufacturing 27%, agriculture, fishing, forestry 21% (1991)

    Unemployment rate: 7.9% (1998)

    Budget:
    revenues: $100.4 billion
    expenditures: $100.5 billion, including capital expenditures of $NA (1997 est.)

    Industries: electronics, automobile production, chemicals, shipbuilding, steel, textiles, clothing, footwear, food processing

    Industrial production growth rate: 3.1% (1997 est.)

    Electricity—production: 194.163 billion kWh (1996)

    Electricity—production by source:
    fossil fuel: 61.18%
    hydro: 2.65%
    nuclear: 36.17%
    other: 0% (1996)

    Electricity—consumption: 194.163 billion kWh (1996)

    Electricity—exports: 0 kWh (1996)

    Electricity—imports: 0 kWh (1996)

    Agriculture—products: rice, root crops, barley, vegetables, fruit; cattle, pigs, chickens, milk, eggs; fish

    Exports: $133 billion (f.o.b., 1998)

    Exports—commodities: electronic and electrical equipment, machinery, steel, automobiles, ships; textiles, clothing, footwear; fish

    Exports—partners: US 17%, EU 13%, Japan 12% (1995)

    Imports: $94 billion (c.i.f., 1998)

    Imports—commodities: machinery, electronics and electronic equipment, oil, steel, transport equipment, textiles, organic chemicals, grains

    Imports—partners: US 22%, Japan 21%, EU 13% (1995)

    Debt—external: $154 billion (1998 est.)

    Economic aid—recipient: $NA

    Currency: 1 South Korean won (W) = 100 chun (theoretical)

    Exchange rates: South Korean won (W) per US$1—1,174.00 (January 1999), 1,401.44 (1998), 951.29 (1997), 804.45 (1996), 771.27 (1995), 803.45 (1994)

    Fiscal year: calendar year

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Revised 1-Mar-99
Copyright © 1999 Photius Coutsoukis (all rights reserved)