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

GROUP ASSIGNMENT

Instructor : Nguyễn Hoàng Yến Như

I INTRODUCTION TO KOREA 3

1 Geography 3

2 Climate .3

3 Population 3

II ANALYSIS OF KOREA’S GDP GROWTH FROM 2012 TO PRESENT 5

1 GDP growth situation 5

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

2.2 Inflation .10

V MAKE RECOMMENDATIONS TO OVERCOME THE CURRENT PROBLEMS 10

VI REFERENCE LIST 12

TABLE OF CONTENTS

1 Geography

Korea is a small but important peninsula

extending from the eastern side of the

Eurasian continent To find Korea on a

global map or globe, follow the 127o east

meridian north from the equator Notice the

intersection of the 38o north parallel with

this meridian The geographic center of the

Korean peninsula is not far from that

particular point The DMZ is a significant

geopolitical feature, and it is also very close

to the demilitarized zone, or DMZ The

1953 Korean Armistice that ended

hostilities in the Korean conflict created the

DMZ, a temporary political boundary

(1950–53) The Korean Conflict, which

lasted from 1950 to 1953, was a civil war

between two competing ideologies –

capitalism and communism – on the Korean

Peninsula

(Source: Map of the Korean peninsula)

(Source:David J Nemeth (2022))

2 Climate

The climate in Korea has four distinct seasons Temperatures and climates vary depending on the season Spring and autumn are quite short, summer is hot but humid, winter is very cold, dry and snowy The average temperature in Korea is about

6 degrees to 16 degrees, the summer weather is hot, the temperature is from 19 degrees 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 from 2018

- The population of South Korea in 2020 was 51,844,690, a 0.08% increase from 2019

- 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 from 2021

12.00% 71.00%

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 data showing that in 2012, real gross domestic product (GDP) growth was only 2%, much lower than the 3.6% growth rate 2011 and the record low from 2009 to the present Due to the impact of the recession in major markets such as the US and eurozone economies, Korea's export performance in the year 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 of export turnover, the record of trade surplus, and the record of trade surplus the scale

of commercial transactions exceeded 1 trillion USD Korea's export turnover increased by more than 2% compared to 2012, reaching over USD 562 billion, while imports decreased by 0.3% to USD 518 billion, bringing a trade surplus of USD 44 billion Besides, Korea is proud to join the ranks of only four countries in the world along with Germany, China, and the Netherlands with trade turnover exceeding 1 trillion USD for three consecutive years (The Japanese yen is competitive, the yen is reduced 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) reached 1,485 billion won, an increase of 3.9% compared to 2013 This is due to the Korean government's efforts to create a new economic environment that encourages economic inclusion information technology into the manufacturing sector, including the opening 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 a country With exports accounting for nearly 50% of the economic structure, Korea faced many difficulties in 2015 when export activities decreased continuously for 12 consecutive months One of the main reasons for this situation is that the domestic currency (won) has appreciated against the yen of Japan, while the country's largest trading 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% In addition, 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 forestry production sector decreased by 6.5% compared to the previous quarter due to a decrease in beef and vegetable output, but other sectors increased such as industrial production increased by 2.7%, construction investment increased by 1.3%, equipment investment increased by 0.5 %, services increased by 0.9%…were the main factors driving 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 in

2018 (According to the forecast of the Korean Ministry of Planning and Finance on December 27) The Korean economy may be affected by the policy of increasing taxes on businesses Specifically, the increase in corporate tax will reduce Korea's GDP by an average of 29,000 billion KRW ($27 billion) per year over the next decade

(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 when Asia'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 slow recovery in the global semiconductor market as the main reasons for the aforementioned low growth rate

(Source: Khanh Ly (2020)).

2020: The Organization for Economic

Cooperation and Development (OECD)

said that Korea's nominal GDP in 2020

is estimated at 1.624 billion USD,

ranking 10th in the world, surpassing

Russia in 11th place The Central Bank

of Korea (BOK) ) announced on

January 26 that Korea's real Gross

Domestic Product (GDP) growth rate in

the fourth quarter of 2020 reached

1.1% In the context of the Covid-19

crisis, after continuously decreasing in

the first quarter and second quarter of

2020, reaching -1.3% and - 3.2%, respectively, the economic growth rate has returned

to 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 first negative 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), up 6.4% year-on-year Statistical indicators show that exports play a leading role in pulling the growth momentum of the Korean economy In addition, the recovery of private consumption also plays a big role in bringing the economy to a high growth rate BOK assessed that last year, despite the spread of COVID-19, developed countries resumed economic activities thanks to vaccine coverage, making Korean exports, with a focus on the auto industry and semiconductor chip, achieved positive growth Regarding private consumption and additional budget, BOK analyzes that consumer actors have gradually adapted to the COVID-19 epidemic, so private consumption increased In addition, the Government's easing of epidemic prevention measures and additional budgeting has also impacted the Korean economy to grow by 4% in 2021

(Source: Hoang Phuong Ly (2022)).

(Source: phantichtaichinh.com,n.d)

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

1 South Korea’s GDP overview

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

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

(Source: KBS World (2021)).

2 North Korea’s GDP overview

(Source: L Yoon.(2022)).

According to the AFP news agency, the Bank of Korea (BOK) stated that North Korea's economy declined the most since 1997 as a result of UN sanctions, the COVID-19 epidemic, global trends, and terrible weather According to the BOK, North Korea's GDP declined by 4.5 percent in 2020, the largest fall since 1997, and reversed 0.4 percent increase in 2019, the country's first year North Korea has had positive growth in the last three years

(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 in

2021, South Korea's nominal GDP in that year was around 2,071 trillion South Korean won With this, South Korea's nominal GDP outpaced North Korea's by a factor of about 57 Over the past ten years, the nominal GDP of South Korea has steadily increased While North Korea's GDP has grown, it has done so at a relatively slow rate South Korea's GDP growth rate is 2.7%, compared to 0.8% for North Korea North Korea's economic and political isolation is the reason for the country's declining GDP Additionally, they spend a lot of money on the military but little on productivity sectors, which results in a serious infrastructure shortage and more than half 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 is the problem of GDP and inflation

MAJOR MACROECONOMIC PROBLEMS OF KOREA

Gross domestic product (GDP) is the total monetary or market value of all the finished 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 comprehensive scorecard of a given country’s economic health

( Source: Jason Fernando (2022))

According to Hwang Sang-Pil, director of economic statistics at the Central Bank of Korea, the impact of the COVID-19 pandemic has stalled the overall economy in the world within 3 years (2019-2021) According to COFACE news, based on the Korean economy 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 vaccination rates, and exports At the same time, consumers are gradually adapting to the epidemic situation, and people's consumption levels increase, the government gradually restores daily life, and the epidemic prevention and control measures and additional budgets increase, it also had a positive impact on GDP growth The Organization for Economic Cooperation and Development (OECD) and the Government of South Korea have jointly made a GDP growth forecast for 2022 of 3.1%

South Korea's GDP is set to surpass pre-pandemic levels in 2021 and is on track to grow in 2022, GDP has proven to have an impact on the country In 2021, Korea focuses on the automotive and semiconductor sectors to recover the economy after the pandemic and achieve good results Therefore, according to Reuters, the Korean government has pushed Korea to set a target of localizing 50% of components and equipment in the semiconductor manufacturing industry by 2030, up from the current 30% 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 rise sharply in 2022 According to Dr Ji Yeol Jimmy Oh, inflation is a continuous increase

in the general price level and eventually, prices will stop rising for two reasons, a decrease 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, the governments of many countries released a lot of cash, and Korea also deployed some emergency financial support in cash The main factors causing the current inflation are 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 through

a substantial infrastructure investment program and South Korea through the development of several rounds of emergency financial assistance in cash As a result, there is currently an imbalance between supply and demand due to increased demand but stagnant supply

(Source: Duc Hung (2022))

V MAKE RECOMMENDATIONS TO OVERCOME THE CURRENT PROBLEMS