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Korea South Korea South

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Korea South

Table of Content


EconomicPoliticalStructural

Korea South – Quick View
ECR score72.28 (Mar 2011)
ECR rank29 (Mar 2011)
Economic
Nominal GRDP (2009)USD 0.83 trillion
GNI (2009)USD 17,175
FDIUSD 13.07 billion
Inflation 20102.9%
National Wealth (2009)USD 5.80 trillion
Unemployment rate3.8%
Government deficitUSD 0.0017 trillion
Tax revenueUSD 0.0011 trillion
Political
Government typePresidential Republic
Economic freedom score31st
Freedom of information score42nd
Corruption perception index39th
Structural
Number of live births (‘000) Q3 2010392.9
Population balance (2009)0-14 years – 16.8%
Population balance (2009)15-60 years – 70.2%
Population balance (2009)60+ years – 13.0%
Life expectancy (at birth)Male 77 years
Life expectancy (at birth)Female 83.8 years
Number of deaths (‘000) Q3 2010210.2
Internet access81.1%

[Top] Economic Overview

Gross domestic product (GDP)

In Q3 2010, real GDP increased by 0.7% over the previous quarter- Q2 2010 and increased by 4.5%, compared to Q3 2009.

 

South Korea GDP Growth Rate
(Source: The Bank of Korea)               
South Korea GDP Quarterly Growth Rate

(Source: The Bank of Korea)

 

Gross national income (GNI)

The GNI for 2009 was USD 17,175 with a year-on-year decrease of 11% from 2008.

South Korea GNI per capita

 

(Source: The Bank of Korea)

Gross regional domestic product (GRDP)

In 2009, South Korea's nominal GRDP across all the metropolitan cities and provinces was KRW 1,066 trillion, an increase of 3.7% from 2008.

In 2009, real GRDP increased by 0.4% over 2008, due to the growth in finance, insurance, health and social work sectors of the economy.

Economic growth rates of metropolitan cities and provinces (2009)

 

Metropolitan cities

 

Growth

Rates (%)

 

Provinces

 

Growth

Rates (%)

Seoul

1.2

Gyeonggi

1.1

Busan

-1.6

Gangwon

-0.2

Daegu

-3.8

Chungbuk

4.0

Incheon

-0.3

Chungnam

5.8

Gwangju

0.4

Jeonbuk

0.5

Daejeon

0.1

Jeonnam

0.6

Ulsan

-1.1

Gyeongbuk

-3.2

 

 

Gyeongnam

-0.8

 

 

Jeju

5.2

(Source: Statistics South Korea)

 

Nominal regional income

In 2009, the nominal regional income of all metropolitan cities and provinces was KRW 1,069 trillion, an increase of 3.2% from 2008.

In 2009, the regional income of Jeju province increased by 11.1% and Gyeonggi by 6.7%, while the regional income of Gyeongbuk and Ulsan decreased by 7.1% and 5.7% respectively from 2008.

(Source: Statistics South Korea)

National wealth

The national wealth of South Korea in 2008 was calculated to be KRW 6,939.6 trillion, an increase of 4% over 2007.

National wealth (KRW trillion)

 

National wealth 2008

National wealth 2009

2009

Tangible fixed assets

Intangible fixed assets

Inventories

Land

Standing timber assets

Subsoil assets

Consumer durables

 

Value

6,992.5

7,385.1

3,162.7

43.4

450.7

3,464.6

24.8

47.8

191.2

Y-o-Y change

315.8

392.7

147.1

0.8

28.6

200

1.7

5.3

9.3

(Source: Statistics South Korea)

 

Inflation rate (CPI)

In South Korea, CPI is the official inflation indicator. An increase in fuel and food prices led to higher inflation in 2010.

South Korea Inflation Rate

 

(Source: Statistics South Korea)

Foreign direct investment (FDI)

In 2010, FDI in the economy reached USD 13.07 billion, an increase of 13.8%, compared to 2009. In 2010, FDI in the manufacturing sector increased to USD 6.54 billion with a year-on-year increase of 75.6%, while investments in the service sector decreased by 18% from 2009. In 2010, FDI through mergers and acquisitions decreased by 40.4% over 2009.

 

South Korea FDI inflow & Growth Rate

(Source: Ministry of Knowledge Economy South Korea )

Income tax rate

In South Korea individual income tax rates vary from 6% to 35%.

 

Tax Base of Global Income

 

Tax Rates

 

KRW 12 million or less

 

6% of tax base

 

KRW 12 million - 46 million won

 

KRW 0.72 million + 15% of the amount

exceeding KRW 12 million

 

KRW 46 million– 88 million won

 

KRW 5.82 million + 24% of the amount

exceeding KRW 46 million

 

Over KRW 80 million

 

KRW 15.90 million + 35% of the amount exceeding KRW 88 million

(Source: Ministry of Strategy and Finance South Korea)

Corporate tax

South Korean corporate tax rates for the business year commencing from January 1, 2010 to December 31, 2011 are given below.

 

 

Taxable Income

 

Tax rate

 

KRW 200 million or less

 

10% of Tax base

 

over KRW 200 million

 

KRW 20 million + 22% of the

excess over KRW 200 million

(Source: Ministry of Strategy and Finance South Korea)

[Top] Financial Indicators & Government Financial

Consumer price index (CPI)

South Korea's CPI has been on a steady rise, increasing from 100 in 2005 to 116.1 in 2010.

The CPI for December 2010 was measured at 117.8 (2005=100), an increase of 0.6% from November 2010.

 (Source: Statistics South Korea)

 

South Korea Consumer Price Index

(Source: Statistics South Korea)

Producer price index

 

Producer Price Index (2005=100)

Period

All Items

Y-o-Y change (%)

2008

111.1

8.6

2009

110.9

-0.2

2010

Jan

112.7

2.8

Feb

113.0

2.4

Mar

113.7

2.6

Apr

114.6

3.2

May

115.2

4.6

Jun

114.8

4.6

Jul

114.9

3.4

Aug

115.2

3.1

Sep

116.3

4.0

Oct

116.4

5.0

Nov

116.7

4.9

(Source: Ministry of strategy and finance South Korea)

Exchange rates

The average exchange rate for the KRW/USD was 1055.8 by the end of 2010.

Exchange rate (KRW/USD)

Period

Average

Y-o-Y change (%)

2008

1,102.6

18.7

2009

1,276.4

15.8

2010

Jan

1,138.8

-15.4

Feb

1,157.1

-19.1

Mar

1,137.6

-22.2

Apr

1,117.1

-16.8

May

1,163.1

-7.6

Jun

1,212.3

-3.9

Jul

1,207.3

-4.5

Aug

1,179.9

-4.7

Sep

1,167.0

-4.3

Oct

1,123.4

-4.4

Nov

1,126.2

-3.3

Dec

1,147.6

-1.6

(Source: Ministry of strategy and finance South Korea)

Interest rates

In Oct 2010, the overnight call rate for Korean banks was 2.26%; for three year treasury bonds the interest rate was 3.25% and 4.03% for interest on three year corporate bonds.

Interest rates (Yields %)

 

 

Dec 2006

 

Dec 2007

 

Dec 2008

 

Dec 2009

 

Dec 2010

Call rate

(1 day)

4.5

5.0

3.3

2.0

2.5

CD

(91 days)

4.8

5.7

4.7

2.8

2.8

 

Corporate bonds

(3 years, AA-)

5.2

6.7

8.4

5.4

4.2

Treasury bonds

(3 years)

4.8

5.9

4.0

4.2

3.3

Treasury bonds

(5 years)

4.9

5.9

4.3

4.8

4.0

(Source: Ministry of strategy and finance South Korea)

 

Money supply and money market

There are three measures of money supply in South Korea – M1, M2 and Lf.

M1 equals the sum of currency held by the public and chequeable deposits; minus inter-institutional chequeable deposits and minus central government deposits.

M2 consists of M1 plus small time deposits, savings deposits, and non-institutional money-market funds.

Lf refers to liquidity aggregates of financial institutions (identical with M3).

The money supply - M1, M2 and Lf for the end of August 2010 are given below.

Money supply 2010 (KRW billion)

 

 

Reserve money

 

M1

 

M2

 

Lf

Jan

65,054.7

381,218.2

1,574,215.8

2,019,563.5

Feb

66,563.8

387,858.6

1,595,403.8

2,041,164.1

Mar

65,643.6

386,015.4

1,607,896.1

2,056,233.7

Apr

64,274.7

388,174.7

1,621,176.9

2,069,616.1

May

67,835.1

394,880.2

1,630,904.7

2,084,007.4

Jun

66,250.8

400,132.8

1,647,981.2

2,104,724.0

Jul

66,958.2

403,785.1

1,653,057.5

2,111,649.2

Aug

67,318.7

400,882.5

1,653,907.2

2,113.039.3

Sep

70,266.5

403,413.5

1,659,400.1

2,123.558.2

Oct

69,905.0

405,000.1

1,669,376.6

2,134,385.4

Nov

69,476.8

414,912.8

1,679,909.9

2,145,901.5

(Source: Ministry of strategy and finance South Korea)

In November 2010, bank deposits decreased due to slower growth of time deposits, lower yields and steady net redemption of market deposits. Asset management company (AMC) deposits decreased due to the outflow of corporate funds into money market funds (MMFs) and increased redemption of equity funds.

 

Balance at end November 2010

 (KRW trillion)

Monthly change end-period, 2010

 (KRW trillion)

 

 

Sep

Oct

Nov

 

Bank deposits

 

1,053

-3.3

13.7

-2.4

 

AMC deposits

 

326

-2.0

0.1

0.0

(Source: Ministry of strategy and finance South Korea)

Government finances

Sovereign debt dynamics

 

Total revenue

In 2010, South Korea's total revenue was KRW 290.8 trillion and is estimated to be KRW 314.4 trillion in 2011.

Total expenditure

Total government expenditure for 2010 was KRW 292.8 trillion and the estimated expenditure for 2011 is KRW 309.1 trillion.

Government deficit

The government deficit for 2010 was KRW 2 trillion.

(Source: Ministry of Strategy and Finance)

Tax revenue

In 2010, the Government tax revenue was KRW 1.3 trillion.

(Source: Ministry of Strategy and Finance)

Balance of payments

Up until Q3 2010, the current account surplus was USD 23.73 billion.

 

South Korea Balance Of Payments (USD million)

                                       

                                         2009

 

2010

Q1

Q2

Q3

Oct

Nov

 

Current account

32,790.5

263.3

8,568.0

9,411.2

4,892.5

1,929.8

 

Goods balance

37,866.0

4,785.4

12,183.3

12,287.5

5,385.4

3,348.7

 

Service balance

-6,640.5

-4,201.1

-2,106.0

-3,219.8

-870.4

-487.0

 

Income balance

2,276.7

546.5

-1,006.5

1,296.2

657.1

-690.2

 

Current transfers

-711.7

-867.4

-502.9

-952.7

-279.6

-241.7

Capital & financial

account

-34,651.2

-155.3

-9,099.0

-7,679.6

-5,869.7

-3,309.4

Direct

investment

-14,948.0

-2,307.5

-2,564.1

-6,217.4

-5,393.9

-1,286.8

Portfolio

investment

49,727.7

10,159.6

7,098.4

14,032.1

7,447.3

3,492.0

Financial

derivative

-3,093.0

746.6

-983.9

-388.6

0.4

106.9

Other

investment

2,038.9

16.7

-7,076.3

-4,725.3

-5,216.8

-3,876.9

Capital transfers

& acquisition of

non-financial

assets

289.6

-175.6

27.1

31.1

-48.1

-25.3

Changes in

reserve

assets

-68,666.4

-8,595.1

-5,600.2

-10,411.5

-2,658.60

-1,719.30

Errors and

omissions

1,860.7

-108.0

531.0

-1,731.6

977.2

1,379.6

(Source: Ministry of strategy and finance South Korea)

[Top] Labour Force and Employment Overview

As of January 2011,

  •          The economically active population was calculated to be 24,114,000, an increase of 0.1% over January 2010
  •          The total number of employed people in South Korea is 23,196,000 increasing by 1.4% in the past year
  •          The number of unemployed persons in the country was 918,000, a decrease of 24.5% over January 2010

(Source: Statistics Korea)

 

South Korea Economically Active Population Survey

(Source: Statistics KoreaPdf)

 

As of January 2011,

  • The labour force participation rate is 59.0%, decreasing by 0.6% in the past year  
  • The ratio of employed persons to population is 56.8 increasing by 0.2%in the past year
  • The unemployment rate is 3.8%, a decrease of 1.2% over 2010

 

Labour Force Data ('000 persons)

 

Jan 2010

Jan 2011

Economically active population ('000)

 

24,082

 

24,114

 

Participation rate (%)

 

59.6

59.0

 

Male Participation rate (%)

71.9

71.3

 

Female Participation rate (%)

 

47.8

 

47.3

 

Employed persons ('000)

 

22,865

 

23,196

 

Unemployed persons ('000)

 

1,216

 

918

 

Unemployment rate (%)

 

4.8

 

3.6

(Source: Statistics KoreaPdf)

 

Employment sector wise ('000 persons)

 

Jan 2010

Jan 2011

 

Agriculture, forestry & fishing

 

1,123

 

1,018

 

Mining & Manufacturing

 

3,947

 

4,171

 

Construction

 

1,617

 

1,632

 

Wholesale & retail trade, restaurants & hotels

 

5,602

 

5,499

 

Electricity, transport, telecom & finance

 

2,839

 

2,874

 

Business, personal, public service & others

 

7,737

 

8,001

(Source: Statistics KoreaPdf)

 

Level of unionisation

Trade unions are formed by the workers in South Korea as they have right to form independent associations and collective bargaining agreements. This right has been guaranteed by the constitution.

(Source: ILO.org)

[Top] Political Stability

South Korea is a presidential representative democratic republic. The president is the head of the state. The prime minister plays the role of principal executive assistant to the President.

The constitutional power is divided into three branches - executive, legislative and judiciary.

Executive

The executive branch consists of the president, prime minister, 15 executive ministers, cabinet and 16 independent agencies. The president is the head of executive branch of the government. The government policies are decided by the president and the cabinet- is made up of 15 to 30 members.

Agencies under the direct control of the president are:

  •          The Board of Audit and Inspection of Korea
  •          The National Intelligence Service
  •          The Broadcasting and Communications Commission

Legislative

The National Assembly of South Korea forms the legislative branch of the government. South Korea has a unicameral legislature with 299 members. The members of the assembly are elected for a four year term. The national assembly has the following powers:

  •          Right to propose and decide over amendments to the constitution.
  •          Right to enact and amend Law.
  •          Right to Consent to the conclusion and ratification of treaties.
  •          Right to deliberate and settle budget bills.
  •          Right to deliberate on the settlement of accounts
  •          Right to deliberate Funds
  •          Legislative right to finance
  •          Inspection and Investigation of State Administration

The main political parties in the country are

  •          Grand National Party
  •          Democratic Party
  •          Liberty Forward Party
  •          Democratic Labour Party
  •          New Progressive Party
  •          Creative Korea Party
  •          Creative Korea Party
  •          Pro-Park Coalition

Judiciary

The judiciary in South Korea is made up of the Supreme Court, High Courts, District Courts and their Branch Courts, and the specialized courts such as Family Courts.

The courts decide over civil, criminal, administrative cases, election lawsuits, impeachment and the dissolution of political parties.

The Supreme Court is the highest court of appeal. Appeals from the District courts are heard by the High Court. In the District Court, the minor crime offences are judged on by a single judge and crimes punishable by one year imprisonment or more are decided over by a panel of three judges.

The two year judicial training is provided at the Judicial Research and Training Institute after passing the National Judicial Examination.

(Source: Korea.net, the National Assembly of the Republic of Korea, Ministry of justice of Republic of Korea)

Regulatory environment

South Korea enjoys a high degree of economic freedom in Asia. South Korea's economy experienced steady growth due to openness to global trade and investment. The regulatory environment is efficient and transparent in terms of the tax system, property rights and the rule of law. However, economic freedom falls behind in terms of corruption and a low levels of labour freedom.

(Source: Heritage.org)

Business and economic freedom

South Korea scores 69.9 on the economic freedom index making it the 31st freest economy in 2010.

 

South Korea Economic Freedom Indices

(Source: Heritage.org)

Corruption perception

South Korea ranked 39th on the World’s Corruption Perception Index (CPI) 2010. CPI measures the perceived level of public-sector corruption in 180 countries and territories around the world.

(Source: transparency.org)

Freedom of information

The country ranked 42nd on the World press freedom index 2010 conducted by rsf.org.

South Koreas press media faces restrictions from the government in terms of openness and freedom of opinion. Chosun Ilbo, Dong-a Ilbo, Korea, Hangyore Sinmun Times are some of the English newspapers and regional language newspapers are Korea Daily News, Korea Economic Daily, Munhwa Ilbo and Segye Times. The Korea Broadcasting System (KBS), Munhwa Broadcasting Corporation (MBC) and Seoul Broadcasting System (SBS) are the main Television broadcasters in the country.

(Source: rsf.org, BBC News)

[Top] Demographic Overview

South Korea's population in 2010 was 48.2 million, growing at a rate of 2.0% from 2005 to 2010.

 (Source: Statistics South KoreaPdf)

 

South Korea Population by Gender

There is an almost equal gender representation in South Korea. The total female population of South Korea in 2010 was 24.17 million making up 50.13% of the total population, while the male population accounted for 49.87%.

(Source: Statistics South KoreaPdf)

South Korea's population indicates that the 15-60 year age group makes up a share of 70.2% of the total population followed by the 0-14 year age group which make up 16.8%. Approximately 13% of the population falls under 60+ year category.

South Korea Population

 

(Source: un.org)

In 2009, the life expectancy at birth for males was 77 years and 83.8 years for females. Female life expectancy at older ages is higher than males.

(Source: Statistics South Korea)

The rate of urbanisation in South Korea in 2010 was 82.1% compared to 81.5% in 2005.

(Source: Statistics South KoreaPdf)

In October 2010, the number of live births was recorded at 392.9 per 1,000 people and the number of deaths was registered at 210.2 per 1,000 people.


 

2008

2009

2010 (Till Oct)

Number of live births (‘000)

465.9

444.8

392.9

Year-on-year percent change

-5.5%

-4.5%

4.5%

 

 

2008

2009

2010 (Till Oct)

Number of deaths (‘000)

246.1

246.9

210.2

Year-on-year percent change

0.5%

0.3%

2.9%

(Source: Statistics South Korea)

Migration

In 2009, the number of international migrants was 1,210,000, a decrease of 7.9% from 2008. Due to the economic slowdown in 2009, there was a decrease in emigration. 

South Korea Total Migration

 

(Source: Statistics South Korea)

The country is ranked 12th on the Human Development Index 2010 (HDI) conducted by the United Nations. The HDI provides a composite measure of three dimensions of human development- living a long and healthy life (measured by life expectancy), being educated (measured by adult literacy and gross enrolment in education) and minimum/ basic standard of living (measured by purchasing power parity, PPP, income). 

(Source: UNDP)

[Top] Soft Infrastructure

South Korea has a centrally administered education system and is managed by the Ministry of Education. The education system includes:

·         Preschool

·         Primary

·         Secondary education

·         Higher Education

The different types of schools are:

·         Kindergartens

·         Primary Schools, Civic Schools

·         Middle Schools, Civic High Schools

·         High Schools, Trade High Schools

·         Special Schools

·         Miscellaneous Schools

The schools for higher education include:

·         Universities

·         Industrial Universities

·         Teachers Colleges

·         Junior Colleges

·         Air & Correspondence Universities

·         Technical Colleges

·         Miscellaneous Schools.

(Source: Ministry of Education South Korea)

 

Education Resources

In 2007 the total number of schools in South Korea was 19,865. The number of registered students was 11,883,628 and the total number of teaching staff was 506, 682.

(Source: Ministry of Education South Korea)

[Top] Hard Infrastructure

Mass public transit

In South Korea the modes of public transport include buses, trams and trains.

The Ministry of Land, Transport and Maritime Affairs administer the transportation system in the country.

Length of Roads in Km (2007)