South Korea - Country Commercial Guide
Market Overview

Discusses key economic indicators and trade statistics, which countries are dominant in the market, the U.S. market share, the political situation if relevant.

Last published date: 2021-08-13


South Korean economic output suffered the COVID-19 effect along with the rest of world as exports declined by 4.7 percent in the first quarter of 2020 and again in the second quarter by 11.5 percent and services exports by 22.1 percent.  That said, South Korea quickly adapted and showed its ability to meet global needs by the second half of 2020. Exports to the U.S. grew by 10.1 percent in the 3rd quarter with similar growth recorded for Taiwan, Germany, and Canada.  In the 4th quarter, exports grew with South Asian and SE Asian countries.

According to Reuters, South Korea provided 310 trillion won ($270.74 billion) of fiscal support in 2020, including four extra budgets to help the country withstand the fallout of the coronavirus pandemic.  The government approved this year’s first supplementary budget worth 14.9 trillion ($12.23 billion) won in March.  Additionally, South Korea unveiled a 33 trillion won ($29.2 billion) supplementary budget on July 1, 2021, the largest on record for extra spending outside its annual budget, to offer pandemic relief to households, aid small businesses and create jobs.

Korea’s Gross Domestic Product (GDP) in 2020 was $1.63 trillion, ranking 12th in the world and third in East Asia (IMF estimates).  Korea’s national debt reached 1,985 trillion won ($1.78 trillion), surpassing its annual gross domestic product for the first time ever. As such, the IMF warned South Korea to closely monitor government spending to avoid a future debt explosion give its rapidly aging population.

As Korea’s long-established strength in the steel and petrochemical industries has waned in recent years, the country’s leaders are looking to more technology-intensive industries to drive future growth. The industries targeted by the Korean Government include healthcare (medical devices, pharmaceuticals, and biotechnology), industrial chemicals, information technology (IT) components, semi-conductor manufacturing, aerospace and defense, energy, environmental technology, transportation (including reviving the shipbuilding industry). U.S. companies have already begun to identify opportunities in these growing industries. Additionally, U.S. firms have started partnering with local 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 valued at 40 percent of GDP. 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 November 2020): 51.3 million

Capital: Seoul

Government: Democratic Republic

ECONOMY

2018

2019

2020

GDP ($ billions) *

1,725

1,646

1,631

GDP per capita (USD) *

33,429

31,838

31,495

GDP Growth (% change) *

2.9

2.0

-1.0

Average Consumer Prices (% change)**

1.5

0.4

0.5 (E)

Unemployment (% of labor force)**

3.8

3.8

8.1 (E)

Source: *Bank of Korea/**Statista.com

TRADE

Foreign Merchandise Trade ($ billions)

2018

2019

2020

Exports to World from ROK

604.9

573.7

512.5

Imports from World to ROK

535.2

478.5

467.6

U.S. Exports to ROK*

57.6

57.89

51.7

U.S. Imports from ROK*

75.0

78.1

76.7

U.S. Trade Balance with ROK*

-17.4

-20.2

-25.0

Position in U.S. Trade

2018

2019

2020

Rank of ROK in U.S. Exports*

7

7

7

Rank of ROK in U.S. Imports*

7

7

6

ROK Share of U.S. Exports (%)*

3.2

3.2

3.6

ROK Share of U.S. Imports (%)*

2.8

2.9

3.3

*bea.gov

 

Principal U.S. Exports to ROK (2020)

Principal U.S. Imports from ROK (2020)

Mineral Fuel, Oil Etc.; Bitume Subst; Mineral Wax (16.76%)

Nuclear Reactors, Boilers, Machinery Etc.; Parts (15.18%)

Electric Machinery Etc.; Sound Equip; Tv Equip; Pts (11.20%)

Optic, Photo Etc., Medic or Surgical Instruments Etc. (6.49%)

Vehicles, Except Railway or Tramway, And Parts Etc. (5.52%)

Vehicles, Except Railway or Tramway, And Parts Etc. (27.20%)

Nuclear Reactors, Boilers, Machinery Etc.; Parts (21.79%)

Electric Machinery Etc.; Sound Equip; Tv Equip; Pts (19.31%)

Plastics and Articles Thereof (3.69%)

Mineral Fuel, Oil Etc.; BitumenSubst; Mineral Wax (3.16%)

BUSINESS AND ECONOMIC FREEDOM RANKINGS

World Bank Ease of Doing Business Ranking 2020: 5 of 190

Transparency International Corruption Perceptions Index 2020: 33 of 180