Often referred to as the Miracle of the Han River, South Korea grew rapidly after the end of the Korean War – from one of the poorest countries to the 11th largest economy in the world, ahead of Canada. Despite the rising hostility from the North this year, South Koreans seem to take it all in stride, having become used to the annual provocations since the armistice of the Korean War in 1953.
Since the inauguration of President Park Geun-hye in 2013, South Korea has seen both political and economic divisions among its citizens. Her policies and corruption scandals caused her approval ratings to freefall to 5% by the end of 2016, and resulted in her impeachment and removal. President Moon Jae-in’s inauguration after Park’s impeachment seemed to herald a resurrection of democracy as well as a positive change over society after decades of decayed social practices.
South Korea’s vast majority of economic activity is concentrated around Seoul, the capital, and Gyeonggi-do, producing around 45% of the nation’s $1.4 trillion GDP.
GDP growth declined in the latter part of 2016 in the context of political uncertainty, corporate restructuring and a drop in exports. But the South Korean Finance Ministry projects 2.9% growth in 2018, supported by a pick-up in exports and rising business and consumer confidence, which is the fastest growth since 2014.
The Bank of Korea sees improving global demand for South Korean goods supporting growth in the second half of 2017, along with increased fiscal spending. It sees exports jumping 10.2% this year, while domestic consumer spending is forecast to increase 2.3%, held back by high household debt.
President Moon, whose approval rating was recently at 68.5%, has introduced a new healthcare plan to increase coverage under the National Health Insurance (NHI) for the public and to reduce their out-of-pocket costs, which have been historically high by OECD standards.