According to data from the Bank of Korea, the size of the South Korean economy is estimated to have fallen to 13th place in the world last year. While it ranked 10th in the global economy in 2020 and 2021, it dropped to 13th place in 2022. The decline can be attributed to the rise in the exchange rate and a decrease in the export of key products such as semiconductors.
On July 12, 2023, according to the Bank of Korea, South Korea’s GDP is estimated to have decreased by 7.9% to $1.6733 trillion compared to the previous year. The average exchange rate between the Korean won and the US dollar increased by 12.9% last year, leading to a contraction in GDP.
Concerns Deepen over South Korea’s Ranking Due to Rapid Population Decline
Experts from the Korea Development Institute warn that South Korea’s GDP ranking could further decline in the future. They highlight the rapid decrease in the working-age population due to low birth rates, which could weaken growth potential. According to the Korean Statistical Office, the country’s population is projected to decline to the 40-million range by 2041. In contrast, global population is expected to steadily increase.
South Korean Economy Needs to Diversify Away from Reliance on Specific Products like Semiconductors
Currently, South Korea’s trade deficit stands at a record high of $47.8 billion. With a projected growth rate in the low single digits, this year could be even more challenging. The continued trade deficit is further exacerbated by weak exports to China. Based on available data, exports from July 1 to 10 have decreased by 14.8% to $13.267 billion compared to the same period last year. Particularly, semiconductor exports have experienced a sharp decline of 36.8% during this period. As a result, there are calls for policy support, including the development of new industries and research and development. Experts emphasize the need for a long-term approach to address these issues.
Reference (GDP rank)