No Quick Fixes for South Korea’s Economic Woes
The country’s export-driven economy is straining to adapt.
South Korea’s economy, which relies on exporting high-value-added manufactured goods, has experienced slowed growth as a result of the ongoing global exporters’ crisis. This report examines the current status of the South Korean economy. It identifies both external threats and internal challenges, and it also discusses the government’s attempts to address them.
- Slowing economic growth and consistently declining exports have put strain on South Korea’s economy, and this strain has manifested as political pressure to act. The South Korean government has attempted to make long-term changes to reorient the country’s economy, and it has also introduced short-term efforts to prevent industry collapse.
- The largest external threats to the South Korean economy are twofold: over-reliance on exports (particularly to China) and decreased global demand for some of its largest export industries, including refined petroleum and shipbuilding.
- Internal threats include strict labor laws, economic dependence on massive conglomerations like Samsung and Hyundai, rising household and national debt and increasingly precarious financial institutions.
- The South Korean government’s efforts to reorient the economy may be effective in the long term, but for now, the country remains heavily dependent on exports and will continue to be negatively impacted by the global exporters’ crisis for the foreseeable future.
Multinational South Korean conglomerate Samsung recently made global headlines after announcing that it would recall and permanently end production of its popular Galaxy Note 7 phone due to a defect that caused the device to ignite and explode. The scandal is projected to have a serious impact on Samsung’s coffers. Losses and forgone sales could reach $17 billion, the impact of which is even more significant when considering that Samsung makes up roughly 20 percent of the entire South Korean economy.