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Korean economy climbs back to 11th on falling energy prices
By Park Hyung-kiPublished : Aug. 16, 2016 - 17:21
South Korea has regained its title as the world’s 11th-largest economy in nine years, according to national accounts data by the World Bank and the Organization for Economic Cooperation and Development.
The latest data showed that Korea’s gross domestic product stood at $1.38 trillion in 2015, climbing back up to 11th place, based on the average dollar currency rate over the last three years.
Korea’s ranking in terms of economic output has been sliding since 2006, beyond the top 10 during the Roh Moo-hyun administration, which focused its policy more on boosting social welfare than growth, as the economy was becoming mature and facing rising socioeconomic issues such as an aging population and low birth rate.
Also, the rise of the emerging economies of Brazil, Russia, India and China -- or the so-called BRIC nations -- has further put Korea out of the global GDP spotlight.
“The slowdown in world trade since 2010 has been especially detrimental to Korea, as exports account for nearly 60 percent of total demand,” the OECD said in a report.
“Moreover, Korea’s exports have faced strong competition from emerging economies, notably China, and with advanced economies in high-end markets,” it added.
The data showed that Korea’s GDP in 2015 had actually fallen from over $1.4 trillion in 2014.
Analysts say that the country’s rise in ranking in 2015 -- from 13th place in 2014 -- can be viewed as “ephemeral” as Russia and Australia saw their GDP dip amid decreasing raw materials and energy prices.
Russia’s GDP fell more than 34 percent to some $1.33 trillion, and Australia’s GDP decreased about 8 percent to $1.34 trillion last year. Russia ranked 12th in 2015, down from 10th in 2014, and Australia 13th, down from 12th in the same period.
The US’ GDP stood at $17.9 trillion, followed by the world’s second-largest economy China with GDP of about $10.9 trillion, and Japan’s GDP of $4.1 trillion last year.
With decreasing purchasing power due to its aging population and falling productivity, Korea’s GDP is expected to dip further.
Given the current conditions, in which Korea faces various “cliffs” ranging from demographics to consumption, analysts forecast the central bank will finish this year with another rate cut to give its economy a little extra push.
“We expect the central bank to cut its rate by 0.25 percentage points to back the country’s fiscal stimulus as part of a policy mix,” said Oh Chang-sob, an analyst at Korea Investment & Securities.
By Park Hyong-ki (hkp@heraldcorp.com)
The latest data showed that Korea’s gross domestic product stood at $1.38 trillion in 2015, climbing back up to 11th place, based on the average dollar currency rate over the last three years.
Korea’s ranking in terms of economic output has been sliding since 2006, beyond the top 10 during the Roh Moo-hyun administration, which focused its policy more on boosting social welfare than growth, as the economy was becoming mature and facing rising socioeconomic issues such as an aging population and low birth rate.
Also, the rise of the emerging economies of Brazil, Russia, India and China -- or the so-called BRIC nations -- has further put Korea out of the global GDP spotlight.
“The slowdown in world trade since 2010 has been especially detrimental to Korea, as exports account for nearly 60 percent of total demand,” the OECD said in a report.
“Moreover, Korea’s exports have faced strong competition from emerging economies, notably China, and with advanced economies in high-end markets,” it added.
The data showed that Korea’s GDP in 2015 had actually fallen from over $1.4 trillion in 2014.
Analysts say that the country’s rise in ranking in 2015 -- from 13th place in 2014 -- can be viewed as “ephemeral” as Russia and Australia saw their GDP dip amid decreasing raw materials and energy prices.
Russia’s GDP fell more than 34 percent to some $1.33 trillion, and Australia’s GDP decreased about 8 percent to $1.34 trillion last year. Russia ranked 12th in 2015, down from 10th in 2014, and Australia 13th, down from 12th in the same period.
The US’ GDP stood at $17.9 trillion, followed by the world’s second-largest economy China with GDP of about $10.9 trillion, and Japan’s GDP of $4.1 trillion last year.
With decreasing purchasing power due to its aging population and falling productivity, Korea’s GDP is expected to dip further.
Given the current conditions, in which Korea faces various “cliffs” ranging from demographics to consumption, analysts forecast the central bank will finish this year with another rate cut to give its economy a little extra push.
“We expect the central bank to cut its rate by 0.25 percentage points to back the country’s fiscal stimulus as part of a policy mix,” said Oh Chang-sob, an analyst at Korea Investment & Securities.
By Park Hyong-ki (hkp@heraldcorp.com)
