REPUBLIC OF KOREA
Capital: Seoul (9.8 million)
Other main cities: Busan, Incheon, Daegu, Daejon, Gwangju
Head of state and government: President Moon Jae-in
Population: 51 million (2017 est.) Official language: Korean Currency: won
GDP: $2.027 trillion, making it the world’s 15th-biggest economy
GDP annual growth: 3% (2017 est.)
Unemployment: 3.8% (2017 est.) Inflation: 1.9% (2017 est.)
Main exports: semiconductors, petrochemicals, cars and auto parts, ships, wireless communication technology, electronics and displays
Main imports: crude oil/ petroleum products, semiconductors, natural gas, coal, steel, computers, cars
Religion: 19.7% Protestant, 15.5% Buddhist, 9.7% Catholic and 56.9% none
OECD data shows that 48.6 per cent of people over 65 live in “relative poverty”.
Pardo, who is also the Korea Chair of the Brussels Institute for European Studies and Korea Foundation, says that a challenge for South Korea “is that it is now a mature economy”. This means that it needs to find “new engines of growth”, particularly among small to medium-sized businesses.
Export-driven growth
Like Germany, South Korea is highly dependent on exports to the rest of the world, particularly China, Japan, the US and the EU. The country ratified a free-trade agreement with the EU in 2015 and is now the EU’S ninth-largest export destination for goods. Meanwhile, the EU is South Korea’s third-largest export market and South Korea’s largest foreign direct investor.
Near neighbours Japan and China, plus the US, are important economic partners, and all three play a major role geopolitically. Japan’s colonial occupation of Korea continues to present a challenge to their relationship, while trade disputes between a Trump-led US and various trading partners don’t augur well for a South Korea reliant on smooth world trade.
In addition, worries about the reliability of South Korea’s biggest trading partner, China, crystallized in 2016. The installation in South Korea of the US anti-missile system THAAD led to a major dispute. China responded with an unofficial boycott, ranging from governmental meetings to tourism, which cost South Korea billions of dollars. The dispute was resolved in early 2017, though not before public trust in China was seriously damaged.
Tourism is another economic mainstay. Visitors are attracted by the country’s history and culture, shaped by Confucianism, as well as by its royal palaces, mountains, traditional architecture and food. After a drop in 2017, tourist numbers are rising again. Before the THAAD dispute, around half of all tourists came from China. In addition to winning them back, officials are making major efforts to lure visitors from a wider range of countries.
Rapprochement as the best hope
For further well-being and prosperity, as well as good relations with Japan and China, South Korea requires a healthy world trading system. Given this, global consumers will continue to buy the country’s products. But just as South Korea’s trade is heavily dependent on external economic factors, the question about whether the country can find some form of rapprochement with the North is also externally dependent: on the North itself, but also on the US. And while a German-style 1989 border collapse seems highly unrealistic, President Moon Jae-in’s policy of rapprochement with the North is the best hope for long-term peace and stability on the Korean Peninsula.