macroeconomics group assignment analysis of koreas gdp growth from 2012 to present

2013.2014: According to the published statistics from the Bank of Korea, the grossdomestic product GDP in 2014 increased by 3.3% over the previous year.. Nominal Gross Domestic Product N

1.1 The period from 2013 to 2018 5

1.2 The period from 2019 to 2022 6

III COMPARE AND ANALYSE GDP POSIYION WITH THE COUNTRIES WITHIN THE AREA 7

1 South Korea’s GDP overview 7

2 North Korea’s GDP overview 8

3 Compare between North and South Korea 8

IV MACROECONOMIC ISSUES 9

1 Definition of Macroeconomic 9

2 Major Macroeconomic problems of Korea 9

2.1 Gross domestic product (GDP) 10

1 Geography

Korea is a small but important peninsulaextending from the eastern side of theEurasian continent To find Korea on aglobal map or globe, follow the 127o eastmeridian north from the equator Notice theintersection of the 38o north parallel withthis meridian The geographic center of theKorean peninsula is not far from thatparticular point The DMZ is a significantgeopolitical feature, and it is also very closeto the demilitarized zone, or DMZ The1953 Korean Armistice that endedhostilities in the Korean conflict created theDMZ, a temporary political boundary(1950–53) The Korean Conflict, whichlasted from 1950 to 1953, was a civil warbetween two competing ideologies –capitalism and communism – on the KoreanPeninsula.

(Source: Map of the Korean peninsula)

(Source:David J Nemeth (2022))

2 Climate

The climate in Korea has four distinct seasons Temperatures and climates varydepending on the season Spring and autumn are quite short, summer is hot buthumid, winter is very cold, dry and snowy The average temperature in Korea is about6 degrees to 16 degrees, the summer weather is hot, the temperature is from 19degrees to 27 degrees, the winter is cold, the temperature is from -8 to 7 degrees.

3 Population

Chart and table of South Korean population from 2018 to 2022

- The population of South Korea in 2019 was 51,803,829, a 0.25% increase from2018.

- The population of South Korea in 2020 was 51,844,690, a 0.08% increase from2019.

- The population of South Korea in 2021 was 51,830,139, a 0.03% decline from 2020.- The current population of South Korea in 2022 is 51,815,810, a 0.03% decline from2021

POPULATION

II ANALYSIS OF KOREA’S GDP GROWTH FROM 2012 TO PRESENT

1 GDP growth situation

1.1 The period from 2013 to 2018

2012: The Central Bank of Korea

on January 24 released datashowing that in 2012, real grossdomestic product (GDP) growthwas only 2%, much lower than the3.6% growth rate 2011 and therecord low from 2009 to thepresent Due to the impact of therecession in major markets such asthe US and eurozone economies,Korea's export performance in theyear was less efficient

(Source: Phuc Minh (2013)).

2013: Trade transaction volume reached 1 trillion USD for three consecutive years in

2013, Korea simultaneously achieved three trade records, including the record ofexport turnover, the record of trade surplus, and the record of trade surplus the scaleof commercial transactions exceeded 1 trillion USD Korea's export turnoverincreased by more than 2% compared to 2012, reaching over USD 562 billion, whileimports decreased by 0.3% to USD 518 billion, bringing a trade surplus of USD 44billion Besides, Korea is proud to join the ranks of only four countries in the worldalong with Germany, China, and the Netherlands with trade turnover exceeding 1trillion USD for three consecutive years (The Japanese yen is competitive, the yen isreduced by 20%, but the quality remains the same)

(Source: KBS World (2013)).

2014: According to the published statistics from the Bank of Korea, the gross

domestic product (GDP) in 2014 increased by 3.3% over the previous year In 2013,the increase was 2.9% Nominal Gross Domestic Product (Nominal GDP) reached1,485 billion won, an increase of 3.9% compared to 2013 This is due to the Koreangovernment's efforts to create a new economic environment that encourages economicinclusion information technology into the manufacturing sector, including theopening of a Stock Exchange for small and medium-sized enterprises called KOMEX(Korea New Exchange) at the end of 2013.

2015: According to the Central Bank of Korea (BoK), this is the lowest GDP growth

per year since 2012, and also significantly lower than the figure of 3.3% in 2014 As acountry With exports accounting for nearly 50% of the economic structure, Koreafaced many difficulties in 2015 when export activities decreased continuously for 12consecutive months One of the main reasons for this situation is that the domesticcurrency (won) has appreciated against the yen of Japan, while the country's largesttrading partner, China, has continuously devalued the yuan.

2016: According to the BOK, the upward adjustment in GDP growth rate is due to an

increase in private spending which accounts for about half of South Korea's GDP and government spending Specifically, in 2016, private spending increased by 2.5%compared to the previous year, while government spending increased by 4.3% Inaddition, construction investment - which is the factor driving the economic recovery- also increased by 10.7%, while investment in equipment decreased by 2.3%.

-(Source: TTXVN (2017)).

2017: The gross domestic product (hereinafter referred to as GDP) of Korea in 2017

achieved a growth of 3.1% compared to 2016 Although the agricultural and forestryproduction sector decreased by 6.5% compared to the previous quarter due to adecrease in beef and vegetable output, but other sectors increased such as industrialproduction increased by 2.7%, construction investment increased by 1.3%, equipmentinvestment increased by 0.5 %, services increased by 0.9%…were the main factorsdriving the Korean economy's high growth in 2017.

2018: In 2018, South Korea's GDP growth rate reached 3%, lower than 2017's 3.2%

growth in the context of the Bank of Korea's intention to raise the basic interest rate in2018 (According to the forecast of the Korean Ministry of Planning and Finance onDecember 27) The Korean economy may be affected by the policy of increasingtaxes on businesses Specifically, the increase in corporate tax will reduce Korea'sGDP by an average of 29,000 billion KRW ($27 billion) per year over the nextdecade.

(Source: The Ministry of Finance (2018)).

1.2 The period from 2019 to 2022

2019: According to data from the BoK, Korea's Gross Domestic Product (GDP) grew

2% in 2019 from the previous year This was the slowest growth since 2009 whenAsia's fourth-largest economy grew by just 0.7% after the global financial crisis.Besides weak export performance, the BoK cited US-China trade tensions and a slowrecovery in the global semiconductor market as the main reasons for theaforementioned low growth rate.

(Source: Khanh Ly (2020)).

2020: The Organization for Economic

Cooperation and Development (OECD)said that Korea's nominal GDP in 2020is estimated at 1.624 billion USD,ranking 10th in the world, surpassingRussia in 11th place The Central Bankof Korea (BOK) ) announced onJanuary 26 that Korea's real GrossDomestic Product (GDP) growth rate inthe fourth quarter of 2020 reached1.1% In the context of the Covid-19crisis, after continuously decreasing inthe first quarter and second quarter of

2020, reaching -1.3% and - 3.2%, respectively, the economic growth rate has returnedto growth momentum positive in the third quarter (2.1%) and the fourth quarter

(1.1%) Accordingly, Korea's GDP growth rate in 2020 will reach -1%, the firstnegative growth in 22 years, since the Asian currency crisis in 1998 (-5.1%)

(Source: “Tien Giang Department of foreign affairs”, n.d.)

2021: From a nominal GDP perspective, which reflects price changes, Korea's

nominal GDP in 2021 is 2,057.4 trillion won (approximately VND 39,039 trillion), up6.4% year-on-year Statistical indicators show that exports play a leading role inpulling the growth momentum of the Korean economy In addition, the recovery ofprivate consumption also plays a big role in bringing the economy to a high growthrate BOK assessed that last year, despite the spread of COVID-19, developedcountries resumed economic activities thanks to vaccine coverage, making Koreanexports, with a focus on the auto industry and semiconductor chip, achieved positivegrowth Regarding private consumption and additional budget, BOK analyzes thatconsumer actors have gradually adapted to the COVID-19 epidemic, so privateconsumption increased In addition, the Government's easing of epidemic preventionmeasures and additional budgeting has also impacted the Korean economy to grow by4% in 2021.

(Source: Hoang Phuong Ly (2022)).

The nominal gross domestic product (GDP) of Korea is projected to reach $1,823.9billion in 2021, according to the International Monetary Fund's (IMF) WorldEconomic Outlook Report, which was published on December 26 10th place overallamong 191 nations and territories.

The IMF projects that Korea's GDP would total 1,907.7 billion USD in 2022 If this isthe case, South Korea's GDP will continue to rank 10th starting in 2020 In terms ofGDP, Korea was 10th in the world in 2005, dropped out of the Top 10, and thenclimbed back to the top spot in 2018 Korean GDP fell two spots to 12th in 2019 afterrising to 10th the year before The IMF concluded that despite the COVID-19epidemic's effects, Korea may continue to rank 10th in the world in terms of grossdomestic product because of its steady economic growth.

(Source: Thu Hang (2021)).

3 Compare between North and South Korea

In the past 10 years, South Korea's economy has always surpassed North Korea's.Compared to North Korea's nominal GDP of 35.89 trillion South Korean won in2021, South Korea's nominal GDP in that year was around 2,071 trillion SouthKorean won With this, South Korea's nominal GDP outpaced North Korea's by afactor of about 57 Over the past ten years, the nominal GDP of South Korea hassteadily increased While North Korea's GDP has grown, it has done so at a relativelyslow rate South Korea's GDP growth rate is 2.7%, compared to 0.8% for NorthKorea North Korea's economic and political isolation is the reason for the country'sdeclining GDP Additionally, they spend a lot of money on the military but little onproductivity sectors, which results in a serious infrastructure shortage and more thanhalf of North Korea's population living in poverty.

IV MACROECONOMIC ISSUES

1 Definition of Macroeconomic

Macroeconomics is the study of economy-wide phenomena, including inflation,unemployment, and economic growth.

(Source: N Gregory Mankiw (Ninth edition))

2 Major Macroeconomic problems of Korea

There are two typical problems in the macro-economy that Korea is facing, which isthe problem of GDP and inflation.

MAJOR MACROECONOMIC PROBLEMS OF KOREA

Gross domestic product (GDP) is the total monetary or market value of all thefinished goods and services produced within a country’s borders in a specific period.As a broad measure of overall domestic production, it functions as a comprehensivescorecard of a given country’s economic health.

( Source: Jason Fernando (2022))

According to Hwang Sang-Pil, director of economic statistics at the Central Bank ofKorea, the impact of the COVID-19 pandemic has stalled the overall economy in theworld within 3 years (2019-2021) According to COFACE news, based on the Koreaneconomy grew negative (-0.9%) in 2020 and recovered to 4% in 2021 Last year,economic activity in the developed world restarted with an increase in vaccinationrates, and exports At the same time, consumers are gradually adapting to theepidemic situation, and people's consumption levels increase, the governmentgradually restores daily life, and the epidemic prevention and control measures andadditional budgets increase, it also had a positive impact on GDP growth TheOrganization for Economic Cooperation and Development (OECD) and theGovernment of South Korea have jointly made a GDP growth forecast for 2022 of3.1%.

South Korea's GDP is set to surpass pre-pandemic levels in 2021 and is on track togrow in 2022, GDP has proven to have an impact on the country In 2021, Koreafocuses on the automotive and semiconductor sectors to recover the economy after thepandemic and achieve good results Therefore, according to Reuters, the Koreangovernment has pushed Korea to set a target of localizing 50% of components andequipment in the semiconductor manufacturing industry by 2030, up from the current30% to promote the overall economic

2.2 Inflation

According to BNews.vn, South Korea's inflation has surpassed the Bank of Korea's(BOK) target of 2% in 2021 and the government expects consumer prices to risesharply in 2022 According to Dr Ji Yeol Jimmy Oh, inflation is a continuous increasein the general price level and eventually, prices will stop rising for two reasons, adecrease in supply or an increase in demand Currently, both of those factors co-exist.In addition, Dr Ji Yeol Jimmy Oh said that to cope with the economic downturn, thegovernments of many countries released a lot of cash, and Korea also deployed someemergency financial support in cash The main factors causing the current inflationare a lack of both raw supplies and manpower.

Additionally, Dr Ji Yeol Jimmy Oh stated that to combat the global economic crisis,governments from other nations have invested a lot of money, such as the US througha substantial infrastructure investment program and South Korea through thedevelopment of several rounds of emergency financial assistance in cash As a result,there is currently an imbalance between supply and demand due to increased demandbut stagnant supply.

(Source: Duc Hung (2022))

V MAKE RECOMMENDATIONS TO OVERCOME THE CURRENT PROBLEMS

Summarizing the above issues, Korea needs to take measures to restore its economyand improve its GDP.

- To increase demand, South Korea must first increase household spending Toachieve this, it will be necessary to stop the dramatic drop in the percentage ofmiddle-class households Household debt has been rapidly increasing since more thanhalf of these households make less money each month than they spend Increaseddomestic demand and decreased income disparity would result from the transfer ofunneeded corporate savings to families and the reduction of low-wage temporary andpart-time workers.

Policies to boost female labor force participation and reduce the cost of privateeducation might also be beneficial The investment climate in South Korea needs tobe improved to increase both the quantity and quality of investment, especially fromsmall and medium-sized businesses (SMEs) in the services sector.

- On the supply side, structural reforms might, for instance, place a focus on theexpansion of contemporary services industries, such as health care, education,telecommunications, business processing, legal, and financial services The easing ofproduct rules and the lowering of obstacles to foreign investment would fostercompetition and technological advancement.

(Source: Lee Jong-Wha (2015))

REFERENCE LIST