Over the past decade, South Korea's per capita income has grown an estimated 60 percent. This estimate is derived from International Monetary Fund (IMF) statistics including the IMF's prediction that per capita income in 2005 will reach US$19,515. This puts the country's per capita income in the top 20 percent of the 232 countries tracked by the CIA's World Factbook.
From 1999 through 2002 South Korea's GDP (adjusted for price changes) grew an average of 7.2 percent. In 2004, South Korea joined the 10 other countries in the world with a trillion dollar economy.
In 1998 at the height of the Asian financial crisis, South Korea's economy contracted 6.9 percent under pressure from too much debt, problems in the banking sector, and high debt/equity ratios. The following year, GDP grew 9.5 percent.
Since 2002, however, South Korea's growth has not been able to match its mid-decade performance. In 2003, GDP grew 3.1 percent and in 2004 GDP grew 4.6 percent. The IMF expects GDP to grow 4 percent in 2005.
In spite of South Korea's hi-tech manufacturing prowess and its formidable competitive presence in world electronics markets, its economy is driven by consumer spending.
Consumer spending has slowed during the first half of 2005 largely because of lackluster growth in disposable income. According to the Korea Herald (Seoul) the purchasing power of South Korea's consumers grew at the slowest pace in six years. This from a June 11, 2005 story using statistics developed by the Bank of Korea (BOK), South Korea's central bank.
Blamed for sluggish disposable income were: Worsening trade terms, real losses in trade, and sharp increases in dividend payments paid to overseas investors.
The Herald story also quoted economists who expressed worry that the rise of the won against the dollar, and higher oil prices, could negatively affect exports, which have contributed to economic growth for the past two years.
Nonetheless, according to a separate story in the Herald (June 12, 2005), there has been no slowdown in the marketing of luxury goods to VIP buyers, the top 1 percent of the nation's consumers.
AN AGING POPULATION WILL CREATE BURDENS FOR THE ECONOMY
The population growth...