South Korea, the world’s 13th largest economy and a leader in high-tech industries, offers strong opportunities for U.S. businesses. However, exiting the pandemic, Korea’s economic growth has been relatively slow, recording 4.15 percent growth in 2021 and 2.59 percent growth in 2022. The South Korean economy is facing headwinds in multiple fronts, including an effort to control government spending, inflation, and a shrinking population.
South Korea announced it would enforce tighter fiscal rules to limit the deficit to 3 percent of the country’s gross domestic product (GDP). In December of 2022, South Korea’s parliament approved a 2023 budget of 639 trillion won ($499 billion), a tighter fiscal approach from last year in order to address rising economic risks. This reduction is aimed at reducing debt dependence and wean the economy off pandemic-era stimulus.The economy is expected to decelerate in 2023 due to weaker exports and elevated interest rates. The Bank of Korea recently cut its growth forecast for next year to 1.7 percent from a previous 2.6 percent.
Korea is a leader in high-tech industries. The industries targeted by the Korean Government include healthcare (medical devices, pharmaceuticals, and biotechnology), industrial chemicals, information technology (IT) components, semiconductor manufacturing, aerospace and defense, energy, environmental technology, and transportation (including reviving the shipbuilding industry). U.S. companies have not only identified opportunities in these growing industries, U.S. firms have also started partnering with Korean companies to expand market opportunities to third-country markets, including ASEAN, the Middle East, and other Indo-Pacific markets. Korea remains one of the world’s most export-dependent industrialized nations, with exports of goods and services valued at 35.6 percent of GDP in 2021. Given its robust shipping and air cargo infrastructure, Korea serves not only as a market destination for U.S. goods and services, but also as a hub for expansion into other markets.
Profile
Population (as of March 2023 - KOSIS): 51.4 million
Capital: Seoul
Government: Democratic Republic
ECONOMY | 2020 | 2021 | 2022 |
GDP (Current Value USD billions) ** | 1,645 | 1,811 | 1,734 |
GDP per capita (USD) * | 31,728 | 35,004 | 33,592 |
GDP Real Growth (% change) ** | -0.7% | 4.15% | 2.59% |
Average Consumer Prices (% change) * | 0.5% | 2.5% | 5.1% |
Unemployment Rate (%) ** | 3.94% | 3.67% | 3% |
Source: */**Statista.com
**Real GDP Growth in 2022 in KRW terms registered a positive 2.59% growth, however USD=KRW exchange rates drastically changed in 2022 causing a drop in USD terms (using current USD value).
Trade
Foreign Merchandise Trade ($ billions) | 2020 | 2021 | 2022 |
Exports to World from ROK** | 512.5 | 644.4 | 683.6 |
Imports from World to ROK** | 467.6 | 615.9 | 731.4 |
U.S. Exports to ROK* | 51.0 | 65.9 | 71.5 |
U.S. Imports from ROK* | 76.0 | 94.9 | 115.3 |
U.S. Trade Balance with ROK* | -25.0 | -29.0 | -43.9 |
Position in U.S. Trade | 2020 | 2021 | 2022 |
Rank of ROK in U.S. Exports* | 7 | 5 | 8 |
Rank of ROK in U.S. Imports* | 6 | 7 | 7 |
ROK Share of U.S. Exports (%)* | 3.6 | 3.7 | 3.5 |
ROK Share of U.S. Imports (%)* | 3.3 | 3.4 | 3.6 |
Source: *bea.gov/**Korea International Trade Association
Principal U.S. Goods Exports to ROK (2022) | Principal U.S. Goods Imports from ROK (2022) |
Oil & Gas (25.92%) Chemicals (13.02%) Machinery, Except Electrical (12.25%) Transportation Equipment (9.78%) Computer & Electronic Products (8.45%) | Transportation Equipment (27.25%) Computer & Electronic Products (19.66%) Electrical Equipment, Appliances & Components (10.15%) Chemicals (9.68%) Machinery, Except Electrical (8.95%) |
Source: USA Trade Online
Business And Economic Freedom Rankings
- Corruption Perceptions Index 2022: 31 of 180 – Transparency International
- Economic Freedom Ranking 2023 Index: 15th Freest - The Heritage Foundation
Political Environment
Visit the State Department’s website for background on the country’s political and economic environment