Insights

South Korea and the World.

The export-oriented policies of South Korea are one of the most important factors of its economic success. The country is the world's seventh largest exporter of goods and the ninth largest importer (World Trade Organisation, 2021). In 2020 trade represented almost 70.1% of its GDP (World Bank, 2022). The country exports mainly Electrical and electronic equipment (31% of total exports in 2021), machinery, nuclear reactors, boilers (13%), vehicles other than railway, tramway (11%), plastics (6.2%), Mineral fuels, oils, distillation products (5%) and optical, photo, technical, medical apparatus (3.9%). Its main imports are Electrical and electronic equipment (20%), Mineral fuels, oils, distillation products (19%), machinery, nuclear reactors, boilers (12%), optical, photo, technical, medical apparatus (4.1%), vehicles other than railway, tramway (3.9%) and iron ores slag and ash (3.4%). The International Monetary Fund (IMF) is forecasting a rebound of 9,2% in the volume of exports of goods and services of this country in 2022, after an increse of 10.5% in 2021 and 0,9% in 2020 due to the COVID pandemic, and an increase of 2.2% of its imports, after a fall of 0.8% in 2020 and 0% in 2021 (IMF Country Report, 2021).

South Korea is heavily integrated into international trade and finance and is subsequently highly vulnerable to external influences, especially from China, which is its main trade partner (27% of total exports in 2021), followed by United States (15%), Vietnam (9.8%), Hong Kong (6.2%) and Japan (5.1%). Its main suppliers are China (24%), United States (13%), Japan (10%), Germany (4.6%) and Vietnam with 4.2% (Comtrade, 2021). South Korea has concluded free-trade agreements with many countries (the last one with five Central American countries) representing more than 70% of the global economy. The country is still considering joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which was signed by 11 Asia-Pacific countries in March 2018. On the 15th of November 2020 South Korea has signed the Regional Comprehensive Economic Partnership (RCEP) with 14 other Indo-Pacific countries. This free trade agreement is the largest trade deal in history, covering 30 per cent of the global economy. It includes the Association of Southeast Asian Nations (ASEAN : Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam) and ASEAN’s free trade agreement partners (Australia, China, India, Japan, New Zealand and Republic of Korea). The RCEP covers goods, services, investment, economic and technical cooperation. It also creates new rules for electronic commerce, intellectual property, government procurement, competition, and small and medium sized enterprises.

According to WTO, exports of goods amounted to USD 512.49 billion in 2020, while imports amounted to USD 467.63 billion. Exports of services amounted to USD 86.14 billion, while imports amounted to USD 101.58 billion. Since February 2012, the country's trade balance has been in high surplus and is expected to remain so in the coming years. According to WTO, trade surplus including services amounted to USD 29.42 billion in 2020.