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South Korea Political and Economic Outlook 2011 and Beyond

Updated on April 28, 2011

This hub presents the South Korea political and economic outlook for 2011 to 2015. Additionally, this presents demographic and geographical tidbits about South Korea. The main sources of information presented in this outlook and discovery were country intelligence organizations including the Economist Intelligence Unit, Country Watch, and CultureGrams, and International Futures (IFs) software created by a group headed by Dr. Barry Hughes of the University of Denver. IFs graphs included in this outlook show basic economic trends and projections to 2030 in terms of GDP per capita at year 2000 USDs purchase parity price, GDP growth rate, and percentage of GDP by industry sector. 

South Korea's General Political and Economic Outlook Overview 2011-2015

According to the Economist Intelligence Unit report filed January 2011, the following are the highlights of South Korea's political and economic outlook for 2011-2015:

  • The president, Lee Myung-bak, will remain in office until the next presidential election, due in late 2012. His Grand National Party (GNP) will retain its majority in parliament until the next legislative election, due in April 2012.
  • The increasingly belligerent signals coming from North Korea have prompted a postponement of the planned transfer of wartime operational command of joint forces from the US to South Korea.
  • The government will continue to pursue policies aimed at aiding a steady structural adjustment of the economy. These will include channelling funds into renewable energy resources and negotiating free-trade agreements.
  • On December 9th the Bank of Korea (BOK, South Korea.s central bank) opted to keep its main policy interest rate, the official cash rate, unchanged at 2.5%.The bank is likely to raise rates gradually during the forecast period (2011-15).
  • The Economist Intelligence Unit expects real GDP growth to average 3.9% in 2011-15. The main contributions to growth will come from private consumption and gross fixed investment.
  • The current-account surplus will fall from an estimated 3.9% of GDP in 2010 to1.3% in 2015, largely in line with a narrowing of the surplus on the trade account.

Where is South Korea Located?

South Korea is located in Far East Asia on the eastern border of China. It is a peninsula with North Korea and China on the north,  the Yellow Sea on the west, and across the Korea Strait from Japan on the East and South.

South Korea Political Outlook for 2011-2015

According to the Economist Intelligence Unit (EIU) report filed for January 2011, the South Korea political outlook for 2011-2015 appears mixed for President Lee Myung-bak and his ruling party, the Grand National Party. While President Myung-bak can take some credit for South Korea's economic recovery, many citizens blame him for causing heightened tensions with North Korea in 2010. Some anticipate that another downturn in the economy could spell trouble for the president's regime. Even so, his five-year term as president is not set to end until February 2013 and the next full National Assembly elections are not set to take place until April 2012.

In the meantime, EIU further reports that despite the fact that President Lee Myung-bak's GNP party holds a majority of the National Assembly seats (171 of 299), frictions within the GNP party may limit his ability to pass meaningful policymaking. The biggest obstacle to the president's agenda will come from Park Geun-hye, Mr. Lee Myung-bak's chief political rival in the GNP, who seems to oppose much of the president's policies. Due to her persistent opposition, at least some fear Park Geun-hye could decide to form a new party from 60 GNP members and other lawmakers which would ultimately deprive the ruling party of its majority in the National Assembly.

Even though such a challenge to the president is a very distinct possibility, the EIU team of experts reported that South Korea's political scene is more stable than it appears and believes a compromise will eventually be worked out between Park Geun-hye and President Lee Myung-bak. This compromise will be more for a case of political pragmatism than ideological integration as neither would want to see the GNP lose power to the main opposition Democratic Party (DP).

Still, this does not mean the South Korea political scene will be devoid of drama running up to the parlimentary elections in April 2012 and the presidential election in December 2012. While Lee Myung-bak is expected to complete his full-term, South Korean presidents are limited to one five-year term and it is not yet known who will emerge as the presumptive nominees of the GNP or main rival DP. For this reason it is anticipated that the run-up to the two national elections will dominate politics in 2011-2012 and that both main parties will be locked in fierce internal battles for their presidential nominations. EIU reports that neither the GNP or DP has a clear front-runner and both face the possibility that factions could break off to form new alternative political parties. Possible successors within the GNP include Park Geun-hye, business tycoon Chung Mong-joon, and current mayor of Seoul Oh Se-hoon. Names mentioned as potential contenders from within the Democratic Party include former candidate Chung Dong-young and DPs new and more moderate leader Sohn Moo-yun.


South Korea Economic Outlook for 2011-2015

According to The Economist Intelligence Unit (EIU), South Korea economic outlook will remain positive and relatively stable for 2011-2015. From their research EIU experts anticipate South Korea's GDP will rise an estimated 3.8 to 4.1 percent annually throughout the five year forecast period.

These modest rises in GDP follow a better than anticipated year of recovery in 2010, but fall well short of rates before the 1997-98 Asia crisis and the unusually gains in 2008-09. EIU projects growth in 2011 to be driven by recovering consumption and investment.

However, growth rates could be held in check by a loss of relative wealth among residents in developed markets around the world which could prevent a strong rebound of export prospects in those markets.

If demand for South Korean products abroad remains subdued, this could exert downward pressure on the relative wealth within the country and consequently dampen domestic demand and the economic recovery. According to EIU experts, such a scenario could mean South Korea's economic trajectory will be less smooth than anticipated.

In the meantime, the government will continue to pursue business-friendly policies for the forecast period of 2011-2015. Even though he faces oppoisition to his policies, president Lee Myungbak is expected to keep the short-term focus on continuing to apply fiscal stimulus measures in order to support the local economy amid uncertainty in the wider global economic outlook. Similar measures seemed to propel South Korea's domestic economy into a higher than anticipated recovery in 2010. While some economics sources forecasted GDP growth of less than 1%, EIU reports a GDP bump of 6.1% for 2010.

Bar graphs pictured above of this hub project a more long-term (2010-2030) outlook of South Korea's economic future including projections for GDP per capita at purchase parity price in year 2000 U.S. Dollars; GDP growth rate; and Growth rates by industry sectors. The graphs were constructed using International Futures (IFs) software. IFs software has been assembled through careful integration of intelligence information from multiple economic intelligence sources from around the world. The forecasts made by the software are based on causal analysis of observed trends.

Further examination of the IFs projections to 2030 shown above shows that the South Korean economy is dominated by the Agriculture, Manufacturing, and Services sectors. Moreover, the projections seem to indicate that all factors remaining equal the Manufacturing sector will play a much bigger role in South Korea's future, the Services sector will remain relatively stable, and the Agriculture sector will diminish by a significant margin.

Demogrpahic Information

The following key data was supplied by CountryWatch:

Population: 48,595,924

Area Total: 98,480km2

Area Land: 98,190km2

Coast Line: 2,413km

Capital: Seoul

Climate: Temperate, with rainfall heavier in summer than in winter.

Languages: Korean, English widely taught in high school

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

Holiday: Independence Day is 15 August (1945), Memorial Day is 6 June

Chief Airport: Incheon

Notable Cities

City Population Estimated

Seoul 9,567,665 2010

Pusan 3,307,449 2010

Incheon 2,554,528 2010

Ethnic Divisions Koreans 99 % Chinese 1 %

Religions Christianity 49 % Buddhism 47 % Confucianism 3 % Shamanist, Chondogyo, other 1 %

Average Daily Temperature

January: 0.30°C / 32.50°F

July: 28.80°C / 83.80°F

Annual Rainfall: 1364mm / 53


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      Charchit 6 years ago

      Hello sir , I am working on a paper on

      " South Korea as an investment destination " for my macroeconomics class. Your article was a great help. I just wanted to know if you could please provide me with some insight on the subject and if possible on how to approach the project. That will be of great help. So i was wondering if i could get your email id please .

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      charchit 6 years ago

      Thanks ecoggins.... a great help for my macroeconomic project on south korea ... now i know how to go about it .... A direction you have given me

    • ecoggins profile image

      ecoggins 6 years ago from Corona, California

      sungjun, thank you for letting me know.

    • profile image

      sungjun 6 years ago

      Independence Day is 15 August (1945),not 1948

    • ecoggins profile image

      ecoggins 6 years ago from Corona, California

      alexandrabreant, thank you. I appreciate your input. Your confidence seems to be well-founded. South Korea has shown to be proactive towards economic growth on the global level.

    • profile image

      alexandrabreant 6 years ago

      the government will continue to pursue business-friendly policies for the forecast period of 2011-2015.

    • matt6v33 profile image

      matt6v33 6 years ago from Bangkok, Thailand

      u sir,with your obivious God Given Talent/Heart, & Self-Proclaim Area of Expertise;I Feel, if its His Will, 4 U, Then Guess What? U Will! "Pack Your Bags" I'll buy u lunch in downtown Seoul! "Don't Be Late"! :)

    • ecoggins profile image

      ecoggins 6 years ago from Corona, California

      matt6v33, thank you so much for your wonderful comment. I appreciate it very much. I hope this information is helpful to others. I have been thinking about applying to teach there.

    • matt6v33 profile image

      matt6v33 6 years ago from Bangkok, Thailand

      Hello Young Man,

      Much Appreicate All That You Do!

      Excellent Hub!

      Being A Vet, and stationed in Korea (75-77)and will be returning there in April, your efforts here, are truly appreicated.... SideBar: Wondering What the South Korea Security Forces, are intending to do over the next 36 months. For I pray, that country will remain stable, and secured in the coming years..

      thanks again..

      Great Hub