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THE ECONOMY

Looking Ahead to the 21st Century

In the last quarter century, Koreas economic growth has been among the fastest in the world. The country has overcome obstacles and challenges to transform itself from a subsistence-level economy into one of the worlds leading newly industrialized countries. Today, however, the Korean economy faces the new challenges of internationalization and globalization in an increasingly complex global economic environment.

Past Performance and Policies

Since Korea launched its First Five-Year Economic Development Plan in 1962, the countrys real GNP has expanded by an average of more than 8 percent per year. As a result, Koreas GNP has grown from US$2.3 billion in 1962 to US$328.7 billion in 1993; per capita GNP has increased from a meager US$82 in 1962 to US$7,466 in 1993 at current price levels.

The industrial structure of the Korean economy has also been completely transformed. The agricultural sectors share of GNP declined from 37.0 percent in 1962 to 7.1 percent in 1993. The manufacturing sectors share has increased from 14.4 percent to 27.1 percent in the same period. The service sector accounted for only 24.1 percent of GNP in 1962 but grew to 40.0 percent in 1993.

Koreas merchandise trade volume increased from US$500 million in 1962 to US$166 billion in 1993. The nation continuously posted trade deficits until 1985 when its foreign debt reached US$46.8 billion, the fourth largest in the world. From 1986 to 1989, Korea recorded current account surpluses and its debt declined.

Trends of Major Economic Indicators

Unit

62

70

80

85

90

92

93

GNP

US$ bil.

2.3

8.1

60.5

91.1

251.8

305.7

328.7

Per Capita GNP

US$

8.2

242

2,194

2,242

5,883

7,007

7,466

GNP Growth Rate

%

2.2

7.6

7.0

7.0

9.6

5.0

5.6

Domestic Savings

%

3.3

17.9

29.1

29.8

35.9

34.9

34.9

Ratio

Trade Volume

US$ bil.

0.5

2.8

39.8

61.4

134.9

158.4

166.0

Producer Price

%

9.4

9.2

38.9

0.9

4.2

2.2

1.5

Consumer Price

%

8.3

15.9

28.8

2.4

8.6

6.2

4.8