South Korea Continues Strong Growth Despite Threats


For several years, South Korea was considered just below the BRICS (Brazil, Russia, India, China, South Africa) nations on the list of emerging economies. South Korea showed continued strength with recent news of its best quarterly growth rate since early 2011, even as members of the BRICS bloc have watched significant growth rate and business condition declines.

The nation posted 1.1% growth for the second quarter, beating the results of last quarter, the second quarter of 2012 and analysts’ estimates. Confidence appears to be booming on other fronts, as well. A Wall Street Journal report found that business startups have nearly doubled over the last four years.

NACM Economist Chris Kuehl, PhD said the latest news out of South Korea "verges on the spectacular. The growth is the fastest seen in two years, and the reason for the surge is a rapid expansion of the consumer sector.” The expansion was particularly interesting given the turmoil with North Korea and easing growth in China, its biggest destination for exports, Kuehl said.

The Chinese growth issue is one that has many analysts, including those at Wells Fargo Securities LLC Economics Group, concerned about South Korean prospects beyond the short term. It noted Korean exports to China comprised more than 10% of its overall GDP. Other worries listed in a Wells Fargo report published late last week include the aging population that will result in a shrinking workforce as well as perceived advantages other countries, including China, have in the region when it comes to currency value.

-Brian Shappell, CBA, CICP, NACM staff writer

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