South Korea represents one of Asia's most advanced, high-tech industrial economies, driven heavily by conglomerate-led exports (Chaebols) and a highly skilled workforce. During the global supply chain disruptions of 2021, South Korea managed to maintain relatively stable manufacturing output due to its early adaptation of automation and aggressive public testing regimes. While many global economies contracted sharply in 2020, South Korea's real GDP contracted by only a modest amount. By 2021, South Korea experienced a substantial export-led expansion, particularly in semiconductors and electric vehicle batteries.
Fig.1 – A comparison of South Korea and OECD-member average annual % real GDP growth rates – 2019–2024
| Year | South Korea (%) | OECD Average (%) |
|---|---|---|
| 2019 | 2.2 | 1.6 |
| 2020 | -0.7 | -4.3 |
| 2021 | 4.3 | 5.6 |
| 2022 | 2.6 | 2.9 |
| 2023 | 1.4 | 1.7 |
| 2024 | 2.2 | 1.9 |
Following the growth deceleration in 2023, South Korean policymakers faced stubborn inflationary pressures. The Bank of Korea raised its base rate multiple times, impacting domestic household debt servicing costs. However, massive private and public investment in semiconductor research and AI infrastructure continued to support long-term aggregate supply capacity.
Fig.2 – South Korea's Core Consumer Price Index (Core CPI) Quarterly Figures – Jan 2022 to Jan 2023
| Core CPI (2020 = 100) | Jan-22 | Apr-22 | Jul-22 | Oct-22 | Jan-23 |
|---|---|---|---|---|---|
| Index Value | 104.2 | 106.5 | 108.1 | 110.3 | 111.9 |
State two factors which might account for the increase in the rate of growth of the South Korean economy between 2020 and 2021.
