economic analysis of south korea

Economic Analysis Of South Korea

Aprameya JoshiNagarjuna KalluruManju SreeManikanteshwar RaoArjith SinghaChaitanyaVinoo Jose

SOUTH KOREA

• Capital: Seoul

• Government: unitary presidential constitutional republic

• President: park geun-hye

• Prime minister: hwang kyo-ahn

• Currency: won

• Central Bank: Bank Of Korea

SWOT ANALYSIS

STRENGTHS

• Diversified industrial base

• Leader in high-quality electronics

• Excellent education system

• High level of public R&D spending

• Growing Korean investments in China, Vietnam and India

WEAKNESSES

• Steel, textile and naval industry affected by Chinese competition

• High import content of raw material imports

• High level of indebtedness of households and small companies

• Aging population

PRESENT POSITION

• Population: 50.236 million

• GDP value: 1197.506 US$ billion

• Country risk assessment rating: A2(coface)

• Country rating: AA (standard and poor)

• Present GDP growth: 3.5%

• Present inflation: 1.6%

• International reserves: US$ 366.639 billion

MAJOR MACRO ECONOMIC INDICATORS

2012 2013 2014 2015(e)

GDP growth (%) 2,0 2,8 3,5 3,5

Inflation (yearly average) (%)

2,2 1,3 1,3 1,6

Budget balance (% GDP)

1,6 0,7 0,3 0,3

Current account balance (% GDP)

4,2 6,2 6,3 7,1

Public debt (% GDP)

32,3 33,9 35,7 36,9

(e) Estimate (f) Forecast

GDP SECTORIAL COMPOSITION

2.639.4

58.2

GDP

agricultureindustriesservice

GDP GROWTH TREND

2010 2011 2012 2013 2014 20150

1

2

3

4

5

6

76.5

3.7

2.3

3

3.74

DRIVERS FOR THE GROWTH OF GDP

• Construction investment grew by 4.5%

• Private consumption expanded by 1.1 percent on quarter

• Government spending rose by 1.9 percent.

DRIVERS FOR THE GROWTH OF GDP

WEAK POINTS OF GDP

• The export sector remains a weak spot, but while a strong rebound is unlikely, we expect a modest improvement in external demand, particularly from China.

• Exports contracted 0.2 percent on quarter, with decreases in shipments of LCDs, chemical products and ships.

METHOD OF CALCULATION OF GDP

• Expenditure Method• Income Method • Production Method

METHOD OF CALCULATION OF INFLATION

• Consumer Price Index• Product Price Indices

INFLATION TREND

2011 2012 2013 2014 20152.95

33.05

3.13.15

3.23.25

3.33.35

3.43.45

3.4

3.2

3.1 3.1 3.1

MONETARY POLICY

The central bank of South Korea is the Bank of Korea. Price stability is the main objective of the monetary policy of the central bank of South Korea. Inflation targeting is the monetary policy which aims to achieve an explicit target for the level of inflation.

INTEREST RATES TREND

INTEREST RATES TIMELINE change date percentag

e june 11 2015 1.500 %

march 12 2015 1.750 %

october 15 2014 2.000 %

august 14 2014 2.250 %

may 09 2013 2.500 %

october 11 2012 2.750 %

july 12 2012 3.000 %

june 10 2011 3.250 %

march 10 2011 3.000 %

january 13 2011 2.750 %

FISCAL POLICY

• South Korea recorded a Government Budget deficit equal to 1.80 percent of the country's Gross Domestic Product in 2014

• Government Budget in South Korea averaged -0.24 percent of GDP from 1988 until 2014,

• reaching an all time high of 3.47 percent of GDP in 2007 and a record low of -4.10 percent of GDP in 2009.

FISCAL POLICY 2015

• Growth projections recently revised down to 3.7% from 4.1%• Individual income tax collections are forecast to rise by 5.7%• Corporate and value added taxes projected slightly increased

due to weak economic conditions 0.1%&0.8%• Import duty collections are budgeted to fall by 5.1% in 2015• The Government also plans to increase tax transparency and

continue to work on revising and enacting laws to combat tax non-compliance, in particular with regards to overseas tax evasion.

BUDGET TREND IN TERMS OF GDP

GOVERNMENT REVENUES

GOVERNMENT EXPENDITURES

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