Country Risk Service South Korea Updater
The Economist Intelligence Unit, May 2013, Pages: 18
The election as president of the conservative Park Geun-hye, who was inaugurated in February, broadly presages policy continuity. She will maintain a pro-business approach but will take steps to rein in the power of the chaebol (industrial conglomerates). The president has pledged greater engagement with North Korea, but recent events may hinder that effort in the short term. Real GDP is forecast to expand by 2.8% in 2013. Economic expansion will be driven primarily by private consumption growth this year, as the external sector's contribution will remain meagre. The economy will then expand by 3.9% a year on average in 2014-17. In 2013 annual average inflation is expected to come in just below the central bank's 2.5-3.5% target range. Price rises will average 3% a year in 2014-17. As a proportion of GDP, the current-account surplus will shrink in 2013-17.
In April the government and the main opposition Democratic Unity Party agreed to open discussions on constitutional reform. On the table will be a proposal to allow future presidents to serve two four-year terms instead of a single five-year term at present. There is wide bipartisan support for the change.
The government, once it obtains parliamentary approval, will introduce a W17.3trn (US$15.8bn) supplementary budget designed to provide a boost to the subdued economy. If passed by parliament, the government expects a larger fiscal deficit this year-equivalent to 1.8% of GDP, compared with 0.3% in the budget for fiscal year 2013-while the public debt is also likely to rise.
Country Risk Service South Korea Updater
South Korea at a glance: 2013-17
OVERVIEW
Key changes from last month
Political outlook
Economic policy outlook
Economic forecast
Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Rating definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk
Central scenario for 2013-17: Political stability
Central scenario for 2013-17: Election watch
Central scenario for 2013-17: International relations
Central scenario for 2013-17: Policy trends
Central scenario for 2013-17: Fiscal policy
Central scenario for 2013-17: Monetary policy
Central scenario for 2013-17: Economic growth
Central scenario for 2013-17: Inflation
Central scenario for 2013-17: Exchange rates
Central scenario for 2013-17: External sector
Key risk indicators
Ratings summary
Quarterly indicators
International assumptions summary
Economic structure
Public finances
Exchange rates, interest rates and prices
Financial sector
Current account
International liquidity
Foreign payment and liquidity indicators
External trade
External financing requirement
External debt stock
External debt service
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