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Last Published: 9/8/2020

Korea’s market experienced a dramatic decline beginning with the first reported COVID-19 case on January 20, 2020, The Korea Small Business Federation reported that 97.6 percent of small businesses in Korea saw sales drop starting in mid-January due mainly to reduced consumer foot traffic and weaker sales. Indeed, the Korea Ministry of Land, Infrastructure, and Transport (MLIT) reported that public transportation usage in the country declined 51 percent for express buses, 56 percent for railroad trains, and 15 percent for highway traffic between February 21-24 compared to the same period last year.  Conversely, SSG.com, a leading on-line grocery store, reported that its grocery food sales grew 98 percent January 20 through February 20.  Market Curly, a top fresh food on-line retailer, reported that its daily sales of food products almost doubled in February as consumers opted for home-delivery orders.
According to Korea Development Institute, the value of the Korean won, in terms of the real effective exchange rate, will decline by about four percent in 2020 and change little into 2021.  Exports and imports will see huge initial downward pressure due to COVID-19, followed by a gradual upward trend led by increased goods exports in the second half of 2020. Inflation is expected to remain low due to shrinking economic activity and falling oil prices. Despite the sharp economic contraction, the unemployment rate is expected to edge only slightly upward to 3.9 percent in 202 from 3.8 percent in 2019 due to the drastic fall in the labor force participation rate.
In response to disruptions by COVID, the ROK Government announced a third rescue package in mid-April meant to protect businesses from failing. In all, the ROK Government has spent or announced plans to spend 135 trillion Korean won ($110 billion USD) in its COVID economic rescue effort, or around seven percent of GDP. 
Korea’s Gross Domestic Product (GDP) in 2019 was $1.64 trillion, ranking 12th in the world and third in East Asia (IMF estimates).  As Korea’s long-established strength in the steel and petrochemical industries has begun to wane in recent years, the country’s leaders are looking to more technology-intensive industries to drive growth. Such industries include healthcare (medical devices, pharmaceuticals, and biotechnology), industrial chemicals, information technology (IT) components, semi-conductor manufacturing, aerospace and defense, energy, environmental technology, transportation (including reviving the shipbuilding industry).
U.S. companies have already begun to identify opportunities in these growing industries. Additionally, U.S. firms have started partnering with local Korean companies to expand market opportunities to third-country markets, including ASEAN, the Middle East, and other Indo-Pacific markets. Korea remains one of the world’s most export-dependent industrialized nations, with exports valued at 40 percent of GDP. Given its robust shipping and air cargo infrastructure, Korea serves not only as a market destination for U.S. goods and services, but also as a hub for expansion into other markets.
PROFILE
Population (as of May 2020): 51.27 million
Capital: Seoul
Government: Democratic Republic

ECONOMY201720182019
GDP ($ billions) *1,6241,7201,642
GDP per capita (USD) *31,61733,34031,682
GDP Growth (% change) *3.22.72.0
Average Consumer Prices (% change)1.91.50.4
Unemployment (% of labor force)3.73.83.8
           Source: *OECD/Bank of Korea
TRADE
Foreign Merchandise Trade ($ billions)201720182019
Exports to World from ROK542.23604.86573.69
Imports from World to ROK503.34535.20478.48
U.S. Exports to ROK*49.2857.6257.89
U.S. Imports from ROK*71.8175.0178.09
U.S. Trade Balance with ROK*-22,53-17.39-20.20
Position in U.S. Trade201720182019
Rank of ROK in U.S. Exports*777
Rank of ROK in U.S. Imports*677
ROK Share of U.S. Exports (%)*3.13.23.2
ROK Share of U.S. Imports (%)*3.02.82.9
         *bea.gov
Principal U.S. Exports to ROK (2019)Principal U.S. Imports from ROK (2019)
1. Mineral Fuel and Oil (23.10%)                         
2. Nuclear Reactors, Boilers, Machinery (11.47%)
3. Electric Machinery, Sound Equipment, and TV Equipment (10.04%)
4. Optic, Photo, Medical and Surgical Instruments (6.10%)
5. Organic Chemicals (4.53%)		1. Vehicles (26.95%)
2. Nuclear Reactors, Boilers, and Machinery (19.37%)
3. Electric Machinery; Sound Equipment, and TV Equipment (18.22%)
4. Mineral Fuel and Oil (5.50%)
5. Plastics and Articles Thereof (3.70%).
 
  • BUSINESS AND ECONOMIC FREEDOM RANKINGS
    World Bank Ease of Doing Business Ranking 2020: 5 of 190
    Heritage/WSJ 2020 Index of Economic Freedom Ranking: 25 of 180
    WEF World Competitiveness Ranking 2019: 13 of 141

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