South Korea is a country at East Asia which located at the southern portion of Korean peninsula. Being the 4th largest economy in Asia and 11th largest in the world, it is an industrialized and developed country (Hahn, Im, Lew, Lee and Yu, 2019). However, there is still some risks that the country will be facing. Thus, in this report, we are going to analyse the country risk of South Korea.
Being bordered by North Korea, South Korea is a single nation formed in 1948, located at the southern part of Korean Peninsula. The condition of the country can actually be studied from the economic, political and social perspective.
Firstly, the economic environment of South Korea for the past 10 years can be shown from the Gross Domestic Product (GDP) of the country.
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The GDP of South Korea has been growing steadily from 2008 to 2017. However, there is slight drop in GDP to $ 901.93 billion in year 2009 due to weak exports resulting from sagging global demand. Later in 2017, the GDP of the country then reached a peak of $1530.75 billion, representing 2.47% of the world economy (Trading Economics, 2019).
The Economy in South Korea
In 2008, the South Korea’s economy was affected due to the subprime crisis in US. The economy of the country grew by only 2.2% which is less than half of its average growth (Park, 2010). But, they managed to recover their economy with the surplus trade in current account at the end of 2013 which is derived from the export of technology products. Moreover, South Korea has also adapted the strategy of export-oriented economic to drive the country’s economy. In 2014, it became the seventh greatest importer and exporter in the world (“Economy and Business Opportunities from South Korea”, 2019). Besides, the government of South Korea has increased their spending in 2015 in order to support the economic growth (Carlens, 2016).
In year 2017, the economy of South Korea is growing at fastest pace owing to the increased in export of technology products and increasing consumer spending (“South Korean economy grows 3.1% in 2017”, 2018)
Secondly, the political environment of South Korea can be represented by the political stability index of the country.
Political Stability in South Korea
The political stability index of South Korea was the lowest in 2014 which is only 0.11 is due to the internal conflict between South Korea and North Korea in which both countries are involved in exchange fire across the border. This is because South Korea activists had condemned Kim Jong-un, the North Korea’s leader by launching balloons containing leaflets. In addition, when the Northern patrol ship crossed over the maritime border, gun fire was then exchanged between the both countries at the same year (“South Korea Timeline”, 2018). Later, the rising index is due to the fact that the North Korea and South Korea had lately reached a peace treaty (“Best’s Country Risk Report”, 2018).
Thirdly, the social stability or safety of South Korea can be represented by the crime rate of the country. Violence and theft have made up most of the cases in the whole criminal cases per 100,000 population. Meanwhile the criminal rate in South Korea is showing a constant trend from 2008 to 2015 and a slight drop in 2016 and 2017. The slight drop in criminal rate in South Korea in 2016 and 2017 is probably because of the application of new Criminal Justice System in 2014 by the Supreme Public Prosecutors’ Office. Moreover, there is also the enforcement of “Special Act on the Prevention of Insurance Fraud” in September 2016 (Kindicator, 2019). In overall, the crime rate in South Korea can be considered one of the lowest in the world (OSAC, 2018). This may reflect the social stability of South Korea.
Conclusion
As a whole, throughout the years, South Korea has been transforming into an extremely urbanized country. The political and social stability of the country is very important to drive the economy growth of the country as it can mitigate the country risk and attract more foreign investment.
