Australia
China
India
Indonesia
Japan
Malaysia
Philippines
Singapore
South Korea
Taiwan
Thailand
Vietnam
Germany
Hong Kong
USA
Switzerland
Singapore
United KingdomSouth Korea’s economy has undergone a remarkable transformation since the end of the Korean War in 1953. Initially focusing on textiles and light manufacturing, the nation shifted towards heavy industries such as steel and chemicals in the 1970s. By the 1980s, South Korea had embraced high-tech sectors, including automotive and electronics. Today, it is the 14th-largest economy worldwide.
The government’s economic strategy allowed real GDP growth to average 7.3% annually between 1960 and 2019.
In 2020, South Korea’s Gross Domestic Product (GDP) contracted by 0.7%, marking its first economic decline since 1998, primarily due to the Covid-19 pandemic’s impact. The economy rebounded in 2021 with a 4.6% growth rate, the highest in 11 years, driven by strong semiconductor and automotive exports. Growth moderated to 2.7% in 2022 and further to 1.4% in 2023. The International Monetary Fund’s October 2024 World Economic Outlook projects South Korea’s economy to grow by 2.5% in 2024 and 2.2% in 2025.
South Korea GDP Annual Growth Rate (in %)
Currency and Central Bank
The South Korean won (KRW) is the nation’s official currency, issued by the Bank of Korea (BOK), which was established on June 12, 1950, in Seoul. As of October 2024, the BOK is led by Governor Rhee Chang-yong, who began his four-year term on April 21, 2022.
The BOK’s Monetary Policy Board is responsible for formulating and implementing the country’s monetary and credit policies.
After peaking in mid-2022, headline inflation in South Korea has declined significantly, with core inflation showing a more gradual decrease. The International Monetary Fund projects that inflation will reach 2.5% by the end of 2024.
South Korean economy: Inflation (in %)
Industry and Trade
South Korea’s economy is characterized by a robust industrial sector and a dynamic trade environment. The nation has established itself as a global leader in industries such as semiconductors, automotive manufacturing, shipbuilding, petrochemicals, and consumer electronics.
The service sector remains the largest component of South Korea’s economy, contributing approximately 63.8% to the nation’s GDP in 2023, as per Statista. This sector encompasses industries such as retail—including department stores, store chains, and supermarkets—and tourism. The tourism industry, while previously a fast-growing sector, faced challenges due to the global pandemic but has been on a recovery trajectory.
The manufacturing sector accounts for 26.5% of South Korea’s GDP in 2023. The main industries in this sector are textile, steel, automobile manufacturing, shipbuilding and electronics.
Meanwhile, the agricultural is contributing below 2% of the nation’s GDP while employing around 4% of the active population. The main agricultural products in South Korea are barley, wheat, corn, soybeans and sorghum. Large-scale livestock farming also plays a big part in this sector.
Trade is a cornerstone of South Korea’s economy, with exports and imports collectively accounting for a substantial portion of the GDP (about 87% in 2023). Its main export products are integrated circuits, automobiles, refined petroleum, vehicle parts, and passenger and cargo ships. The nation’s main export partners are China, the US, Vietnam, Hong Kong, and Japan.
Its top import products are crude petroleum, integrated circuits, petroleum gas, refined petroleum, and coal briquettes. The country’s top import partners are China, the US, Japan, Germany and Vietnam.
South Korea Balance of Trade
Stock Exchanges and Capital Markets
The Busan-based Korea Exchange (KRX) is the only securities exchange operator in the country after the Korea Stock & Futures Exchange Act integrated the Korea Stock Exchange (KSE), Korea Futures Exchange, and KOSDAQ Stock Market.
KRX is the 15th largest stock exchange in the world, with a market capitalisation of about $2 tn. It hosts over 2,000 companies, including a mix of South Korea’s large conglomerates (chaebols) like Samsung Electronics or Hyundai Motor and innovative tech startups.
The Korea Composite Stock Price Index (KOSPI), which is the representative stock market index of South Korea, is calculated based on market capitalization.
Bond Market
The South Korean bond market is one of the largest in Asia. Over the past years, it has undergone several reforms and development geared toward slow but steady market liberalisation. Foreign investors are welcome to purchase all types of fixed-income instruments. Korean bonds are either government or corporate bonds.
The government issues bonds across various maturities, including 3-year, 5-year, and 10-year tenors. These are issued in the form of treasury bonds, National Housing Bonds, and Seoul Metropolitan Subway Bonds.
In response to market volatility, the South Korean government has taken steps to stabilize the bond market. In 2022, during a period of credit market stress, the government activated a bond stabilization fund and implemented measures to provide liquidity, demonstrating a commitment to maintaining market stability.
In September 2023, South Korea conducted its first ever Samurai or yen-denominated bond sales in Japan, raising a total of 70 bn yen ($474 mn). This move not only diversified the investor base but also signaled improved economic ties between South Korea and Japan.
Notably, in October 2024, FTSE Russell announced to include South Korean government bonds in its World Government Bond Index (WGBI), starting in November 2025. The move is expected to attract substantial foreign investment and bolster the domestic bond market’s liquidity.
Real Estate Market
South Korea’s real estate sector in 2024 shows resilience and dynamism amid economic pressures and policy interventions. The residential market, especially in Seoul, has seen rising home prices due to strong demand in redevelopment areas, prompting the government to launch a plan for over 400,000 new homes over the next six years.
South Korea Housing Index (in %)
In contrast, the commercial real estate sector has encountered challenges, with high interest rates increasing financing costs and affecting transaction volumes. The government has tightened oversight, particularly on real estate project financing, to address debt concerns and support restructuring in the construction sector.
With owning a house traditionally perceived as a sign of stability, surveys show that 83% of South Koreans want to have their own houses. The most common type of housing in the country are apartments, which are often located in high-rise residential buildings ranging between five- to 20-storeys high. These apartments are the most preferred housing type among locals as they are built around facilities like shopping centres, sports complexes, and childcare centres.
South Korea’s property market is forecasted to reach $552.7 mn by 2030, from 306.2 mn in 2023. According to Next Move Strategy Consulting, there is a growing emphasis on smart home features and sustainable living.
Editorial Note:
This article was written with the assistance of AI. A human editor reviewed and refined the text for accuracy and quality before publication.
Source of charts: tradingeconomics.com
