Republic of Korea: Economic Performance and the Role of Centralized Regulation

Abstract

South Korea is one of the world's most developed economies, ranking 13th globally with a GDP per capita exceeding $30,000. It is also the 9th largest exporter, with exports reaching $820 billion in 2022. The country's rapid economic growth stems from innovative policies and adaptability to global challenges. The COVID-19 crisis caused a GDP decline in 2020, followed by a strong recovery in 2021. However, growth slowed in 2022-2023 due to supply chain disruptions, declining domestic demand, and rising energy and food prices. Despite these challenges, South Korea's economy is expected to stabilize, with projected real GDP growth of 2.3% in 2024 and 2.1% in 2025-2026. Inflation peaked in 2020 but declined to 3.6% in 2023. To stimulate domestic demand, the Bank of Korea reduced its policy rate to 3.0% in November 2023. Meanwhile, the labor market remains strong, with a low unemployment rate of 2.8% in early 2024, though long-term unemployment has increased. With an HDI of 0.929 in 2022, South Korea ranks 19th globally. Despite demographic shifts and economic uncertainties, the country continues to demonstrate resilience and adaptability in sustaining growth. CZU: 338.1(519.5); JEL: E24, E31, E43, E58, F14, J11