The Dive

The Economy of South Korea - Industry & Market Trends in 2023

Last Updated: May 2, 2023


What is The Overall Outlook in South Korea?

South Korea, officially known as the Republic of Korea, is located in the southern part of the Korean Peninsula in East Asia. It is the tenth largest economy in the world and has a pivotal position in the world in industry, cutting-edge technology, and even entertainment.

With the surrender of Japan after World War II, South Korea also ended its 35-year occupation and became independent. However, the country was also divided into north and south at 38 degrees north latitude at that time. The failure of subsequent reunification negotiations also triggered the outbreak of the Korean War. South Korea supported by the United States and North Korea supported by communism had a tragic war. Although the war lasted for several years It tends to be stable, but formally speaking, the civil war has not yet ended, adding a major variable to South Korea’s economic and social development.

After the end of the Korean War, South Korea established a military alliance with the United States, and the United States, Japan, and other advanced countries provided South Korea with huge economic and technical assistance, allowing South Korea to quickly enter the Western and Japanese markets, and the rapid growth of exports has brought South Korea a With the immigrant labor force, South Korea’s devastated economy began to soar. The per capita GDP grew rapidly at a rate of 7% per year. Together with Taiwan, Hong Kong and Singapore, it was called the Four Asian Tigers. This period of time is commonly known as the “Miracle of the Han River.” , during which South Korea transformed from a least developed country to a developed country, setting a record for the world’s fastest per capita GDP growth between 1980 and 1990.

After entering the 21st century, the South Korean economy has shifted from a centrally planned, government-led investment model to a more market-oriented investment model. Thanks to these economic reforms, South Korea has become one of the few growing economies in Asia, has been particularly successful in developing its industrial economy, and is a leader in the automotive, computing, and energy sectors.

The main drivers and variables for South Korea’s current development are changes in population trends, balancing Sino-US diplomacy, supply issues in the domestic labor market, and cost of living.

Among them, South Korea’s population problem is very serious. The total fertility rate of only 0.8 (2021) is not only the lowest in the world, but its already aging population has added pressure on labor, social security, and economic stability. In the next ten years, the population of South Korea is expected to decrease year by year, and the conflicts of domestic citizens on immigration policies will also make the progress of related policies difficult. Like Japan, the policy focus is not limited to childcare and immigration policies, but also to increase the proportion of women in the labor force and allow older citizens to retire later to reduce financial burdens.

Table of Contents
Real GDP Growth(%)|Data After 2023 is forecasted by IMF
GDP Per Capita (Current $)|Data After 2023 is forecasted by IMF

Economic Structure

South Korea - Economic Structure & Forecast

GDP Data is updated in January, 2023. Figures below represent GDP contribution with the expenditure approach by segment. Data is sourced from World Bank, IMF, and local government and refactored by our team. Forecasted data is from EIU.

Private Consumption
Government Expenditure
Capital Formation
Net Export

Economy Outlook

Economic Snapshot of South Korea

South Korea is a very export-oriented economy. Exports account for about 50% of total GDP in 2022. While comparing with other export-oriented economies like Taiwan, it is only two-thirds of the shares, it is however much higher than Japan, which is only 20%.

The economic complexity, measuring a country’s sophistication with their export structure, ranks fifth in the world, showing the resilience of its export economy to a certain extent. South Korea has also felt pressure in recent years as China’s industrial strength has gradually strengthened. Even in its most powerful memory market, rivals with sufficient R&D and manufacturing capabilities have emerged in China.

South Korea’s GDP growth in 2022 is about 2.6%. However, factors such as the global recession (generally estimated that global demand will drop sharply in 2023), China’s growth stagnation, and the extension of the Russia-Ukraine War also make South Korea China’s economic growth will further shrink in 2023, and international institutions (IMF, ADB, EIU) generally believe that its growth will be only 1.5-2%.

However, to a certain extent, this also symbolizes the transformation of South Korea’s economy, gradually shifting from export-led growth to domestic demand, and its private consumption will play an increasingly important role in the next decade.

Unemployment Rate(%)|Forecasted data for after 2023
Inflation Rate(%)|Forecasted data for after 2023

Industry Structure

South Korea - Industry Breakdown & Forecast

GDP Data is updated in January, 2023. Figures below represent GDP contribution with the expenditure approach by segment. Data is sourced from World Bank, IMF, and local government and refactored by our team. Forecasted data is from EIU.

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Demographic Outlook

Demographic Outlook in South Korea

According to data released by Statistics Korea, the country’s total population of nearly 52 million will drop by 0.18% by the end of 2021, the first negative population growth in South Korea. In addition, Statistics Korea predicts that the average age of the population will rise from a median of 43 years in 2021 to 62 years in 2070. The main reason for the population decline is the poor total fertility rate. South Korea’s fertility rate is the lowest in the world, with a total fertility rate (TFR) of 0.92, which means that, on average, each woman has less than 1 child. Much lower than the population replacement rate of 2.1.

The extremely low fertility rate in South Korea will lead to a rapid increase in population aging. Many people believe that, in addition to high economic inequality and high living costs, “educational enthusiasm” is also one of the main reasons. After the end of the Korean War, South Korea’s economic growth The many opportunities created by rapid development and growth have led to the belief that education is critical to a child’s future job opportunities. Therefore, most families hope to provide their children with “elite education”, which means that they will spend a high amount of expenditure on education every year, which is a huge burden for the family, causing most families to only have one child. It is also difficult for women to return to work after giving birth, making Korean women reluctant to give birth.

Successive governments have tried to counter the sharp decline, but even with many policies and grants, increased spending has so far done little to boost fertility. Population aging affects almost all aspects of South Korean society, including national security and conscription (and North Korean geopolitics), a declining workforce, and the burden of taxes and healthcare.

In addition to the problem of population decline, rapid urban development has also brought various problems to South Korea. Due to the rapid immigration caused by the rapid economic expansion in the 1970s, its population density is very high, more than 10 times the global average, and the country is nearly 70 % of the area is mountainous, making the environment mostly uninhabitable, and the concentration of the population in lowland areas results in a population density higher than the world average and creates a housing shortage.

While many high-rise condominiums have been built in recent years to help alleviate the housing shortage, it has also created greater hardship for many people who have been forced to relocate from older neighborhoods because they cannot pay rent for new buildings. Since the late 1980s, one-story shanty towns still exist in different parts of Seoul, usually with cramped housing for most except the wealthy. At the same time, the over-concentration of factories in urban areas and the use of coal for heating in severe winters have caused South Korea’s environment to suffer from air pollution and water pollution.

Racial Profile


Languages Used

Korean, English (widely taught in elementary, junior high, and high school)

Religions Practiced

Protestant 19.7%, Buddhist 15.5%, Catholic 7.9%, none 56.9% (2015 est. by CIA)

Population Structure

South Korea - Population Pyramid

Political Outlook

Political Outlook & Policy Trends in South Korea

South Korea has had a democratic institution in place since around 1990, and its chaotic but relatively peaceful presidential elections and party rotation every five years. In the most recent South Korean presidential election (2022), Yoon Suk Yeol of the National Power Party defeated Lee Jae-myung of the ruling party at the time by 1% of the votes, and successfully completed the party rotation in the middle of the year.

However, in the previous year’s election, due to the overwhelming majority of 180 seats of the Democratic Party, Yoon Suk-yue also faced a big political problem with the North Korean government. At the same time, North Korea also frequently tested missiles due to factors such as South Korea’s increased exchanges with the United States. , also increased the risk of border conflicts; moreover, the outbreak of domestic protests based on people’s livelihood issues (prices) also brought the issue of political stability to the surface.

The current policy focus of the Yoon Suk Yeol government will mainly focus on the deregulation of the labor market and a series of tax cuts to stimulate the mobility of labor, the momentum of investment and employment, and the stability of the economy. At the same time, the Yoon Suk Yeol government is also actively promoting the investment and development of advanced technology and digital infrastructure, hoping that South Korean companies can continue to maintain their leading position in industrial technology for the next ten years.

South Korea 2020 National Assembly Election
Note: No Left–Right Categorization
Current Account Balance (% of GDP)|Forecasted data for after 2023
Government Debt (% of GDP)|Forecasted data for after 2023

Foreign Policy

Trade & Foreign Investment In South Korea

Export (Million Dollars | Nominal)
Export - Percentage of World (‱)
Foreign Direct Investment (Million Dollars | Nominal)
FDI - Percentage of World (‱)

Consumer Outlook

South Korea - Consumer & Market Outlook

We work with 3rd party data offices and our experts network to deliver the most comprehensive retail & consumer behavior landscape there is.

E-Commerce Development, Penetration, Trends & Outlook in South Korea

Social Media Development, User Demographics, Platforms, and Trends in South Korea

  • Economic Data:OECD, World Bank, IMF、Government Statistics Bureau
  • Currency Exchange:Based on IMF data in 2023/1
  • GDP Growth Projection:OECD、IMF, OECD, EIU、Government Bureau
  • Demographics:UN Population Database
  • Race, Culture, and Languages:CIA Factbook
  • Unemployment Rate Projection:ILO, UNECE
  • Trade:UN Comtrade, UNCTD
  • ICT Infrastructure:ITU
  • Data Calculation &
  • Analysis:OOSGA Analytics
Author: Economic Team, FR Team

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