SEJONG -- South Korea is one of the few developing countries whose economy expanded sufficiently over the past decades to compete with advanced nations in Europe.
Korea achieved the world’s 10th-largest gross domestic product in 2005. It was 28th in 1980, ranked behind Indonesia (21st), Iran (20th) and Saudi Arabia (14th).
As exports in sectors such as semiconductors and automobiles greatly contributed to its GDP, there have been predictions that the nation could consistently become one of the world’s 10 largest economies, alongside China and Japan.
Though its ranking fell to 15th in 2008 and 14th in 2009 during the global financial crisis, Korea rose back to 11th in 2015 and 2016, and 12th in 2017 and 2018.
In addition, Korea has become the world’s sixth-largest exporter, overtaking France, Italy, the UK, Belgium and Hong Kong between 2015 and 2018, while its export ranking was 12th in 2008.
Since 1948, Korea saw its yearly exports grow 16.1 percent on average to account for 3.4 percent of the world’s collective exports as of 2018.
Officials from Korea’s public and private sectors cut the tape during an export fair in Moscow in May 2019. The Korea Trade-Investment Promotion Agency backed up the event in an attempt to help private enterprises make inroads into new markets. (Lotte Home Shopping)
The country was challenging the world’s top five export powerhouses -- China (top), the US, Germany, Japan and the Netherlands.
But the outlook for its 2019 rankings for GDP and exports is quite gloomy given the poor performance during the first half.
South Korea saw its economy grow just 1.7 percent on-year in the first quarter and 2.1 percent in the second quarter. Research analysts raise the possibility that GDP growth in 2019 will drop to its lowest level in 10 years since 0.8 percent in 2009. The second-lowest yearly growth of the 2009-2018 period was 2.4 percent, posted in 2012.
According to the World Bank Group, its 1.7 percent growth in the first quarter of 2019 contrasts with figures held by major economies for the corresponding period -- 5 percent in Indonesia (16th-highest in terms of 2018 GDP), 2.4 percent in Spain (14th), 5.8 percent in India (7th), 6.4 percent in China (2nd) and 3.2 percent in the US (1st).
“There is a possibility that Korea will see its 2019 GDP ranking slide by one or two notches to 13th or 14th,” one macroeconomic analyst in Seoul said.
He raised the possibility that Indonesia – not one of Korea’s usual GDP competitors like Spain, Australia or Mexico -- will overtake Korea, citing its high growth rate and population, which is the world’s fourth largest.
As the GDP is calculated based on the US dollar, the Korean won’s noteworthy weakness against the greenback and major key currencies this year will aggravate negative effects on the economic-size ranking and per-capita gross national income, he added.
(Graphic by Han Chang-duck/The Korea Herald)
The nation’s export performance is the worst in recent decades, which has raised concerns that its global ranking may tumble to around 10th from the current 6th.
According to the Koreas Customs Service, its outbound shipments fell by 9 percent on-year for the Jan. 1 to July 20 period.
While the top three superpowers, China, the US and Germany, hold a steady position, eight or nine other exporters are closely vying for higher posts. Among them are Japan, the Netherlands, South Korea, Hong Kong, France, the UK, Italy, Belgium and Canada.
Analysts shared the view that a variety of state benefits for export-oriented enterprises have been of little use. Early this year, the Ministry of Trade, Commerce and Industry offered semiconductor manufacturers and machinery businesses an extension of trade insurance, allowing them an insurance ceiling up to twice as high.
A professor at Hankuk University of Foreign Studies issued the need to brace for the era of the “fourth industrial revolution.” He said that “items based on futuristic technologies and creativity will guarantee steady exports in the coming decades.”
The Korea Institute for Industrial Economics & Trade said in a report that “the Korean economy has faced a low-growth era in the wake of negative factors such as cutthroat competition in export markets, a drop in working age population and a drop in working hours.”
By Kim Yon-se (firstname.lastname@example.org)