South Korea is the fourth largest economy in Asia, attracting a number of our clients. South Korea is home to many world-class companies employing cutting-edge technology in the production of everything from mobile phones to ships, which are exported globally. Open trade policies gives the country access to international markets, which has been further advanced by the many free trade agreements the Korean government has signed.

We keep our clients informed of the latest market moves and political developments in South Korea as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 21 of the country’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert research teams. We aim to keep you ahead of the curve in South Korea, so business is made easy.

Country Risk

South Korea Country Risk

BMI View:

Core Views

  • The landslide victory in the April 29 by-elections shows that South Korea's ruling Saenuri party retains considerable support despite corruption allegations against senior party members. The victory will support President Park Geun-hye's ongoing efforts to improve the economy by enabling the passage of revitalisation bills through parliament.

  • South Korea's Q115 real GDP grew by 2.4% year-on-year (y-o-y), reflecting the economy's second slowest growth rate in nine quarters. With the country facing dual headwinds in the form of weak external demand and anaemic domestic conditions, we maintain our forecast for 2015 real GDP growth to come in at 2.8%, below consensus expectations of 3.2%.

  • President Park Geun-hye's proposed drive to shift the economy away from manufacturing towards one led by...

To read the full article Register for Free or Login

South Korea Operational Risk Coverage (9)

South Korea Operational Risk

BMI View:

BMI View: South Korea's labour market is reasonably well suited to attract foreign businesses. It boasts a high level of education and employable skills amid reasonably high unemployment. This means there are a large number of educated, skilled labourers seeking work, representing a significant opportunity for employers. However, major risks involve a shrinking labour force - the result of an aging population - and the limitations and pressure placed on South Koreans by the rigid education system. Overall, South Korea receives a Labour Market Risk score of 68.4, placing it sixth out of 38 states in the Asia region.

The education system in South Korea is regionally and globally...

To read the full article Register for Free or Login

South Korea Crime & Security

BMI View:

BMI View: South Korea offers a generally safe and secure operating environment for foreign workers and businesses, with a low crime rate and minimal risks from terrorist activity. This makes it one of the safest locations for expatriates in the world. However, the country faces a perpetual risk of interstate conflict with its northern neighbour, with long periods of heightened tensions being the norm, punctuated by occasional armed confrontations. Although there has been no full-scale military conflict with North Korea for several decades, the risk of miscalculation, misunderstanding or belligerent actions leading to war remains high. In addition, cyber attacks, often launched by North Korea, are becoming a key risk to business activity, particularly due to South Korea's reliance on the internet. South Korea's...

To read the full article Register for Free or Login

South Korea Labour Market

BMI View:

BMI View: South Korea's labour market is reasonably well suited to attract foreign businesses. It boasts a high level of education and employable skills amid reasonably high unemployment. This means there is a large number of educated, skilled labourers seeking work, representing significant opportunity for employers. However, the major risks involve a shrinking labour force - the result of an aging population - and the limitations and pressure placed on South Koreans by the rigid education system. Overall, South Korea receives a Labour Market Risk score of 67.6, placing it sixth out of 30 states in the Asia region.

The education system in South Korea is regionally and globally excellent. South Korea boasts one of the most intensive education-orientated cultures in the world, with academic success and scholastic achievement considered one of the...

To read the full article Register for Free or Login

South Korea Logistics

BMI View:

BMI View: South Korea has a very developed logistics network, with a high-quality and diverse transport network providing good access to international supply chains. Businesses will further benefit from the minimal trade procedures and low trade costs. That said, while utilities costs remain low for now, over the long term we expect South Korea's overdependence on raw material imports to drive up costs if it fails to diversify its energy supply.

South Korea's transport network provides extensive transportation links across the country for both cargo and passengers. Road is the predominant form of freight transport, and extensive and high-quality roads traverse the country. The country's high-quality rail infrastructure, with bullet-style trains such as the Korea Train eXpress (KTX) reaching up to 350km/h, facilitates quick and efficient transport across the island,...

To read the full article Register for Free or Login

South Korea Trade & Investment

BMI View:

BMI View: Trade and investment risks are low in South Korea owing to the country's open economy, relatively low fiscal and trade barriers and minimal red tape plaguing its bureaucracy, as well as the effective enforcement of the rule of law. As a result, despite a dip during the global financial crisis, foreign investment inflows are recovering, a trend we expect to continue in the foreseeable future. That said, risks remain for foreign investors, notably a number of burdensome taxes and the weak enforcement of physical property rights. For these reasons, the country receives an overall score of 67.8 out of 100 in the BMI Trade And Investment ...

To read the full article Register for Free or Login

South Korea Industry Coverage (21)

Agribusiness

South Korea Agribusiness

BMI View:

BMI View: We believe that any significant changes in the South Korean agricultural industry will be mostly public sector-led due to the strong unions behind the industry. The numerous free trade agreements signed in 2015, with the Trans Pacific Partnership being the most significant, signal to us that the agriculture industry is truly going through a much-needed transformation that will lead to increasing competitiveness with global agri-players. Other efforts, such as promoting high-value add food and beverages, also support our view.

Government-led efforts will benefit the industry over the longer...

To read the full article Register for Free or Login

Autos

South Korea Autos

BMI View:

According to the Korea Automobile Manufacturers Association (KAMA), domestic vehicle sales in January 2015 grew 4.9% y-o-y to 112,407 units. The positive start to the year bodes well for our full-year sales growth forecast of 2.7% and we are happy to maintain that at present.

Five South Korean automakers - Hyundai Motor, Kia Motors, GM Korea, Renault Samsung Motors and Ssangyong Motor - reported a 0.6% year-on-year (y-o-y) decline in combined sales to 797,839 units in April amid weak exports, according to data provided by the respective companies. While domestic sales increased 2.9% to 133,935 units during the month, overseas shipments were down 1.3% to 663,904 units. Hyundai Motor attributed the drop in overseas sales to persisting weak economic growth in emerging markets and deepening currency uncertainty.

Auto sales have been steadily growing over the past year, helped by Bank of Korea's base rate cut in...

To read the full article Register for Free or Login

Commercial Banking

South Korea Commercial Banking

BMI View:

...
Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

To read the full article Register for Free or Login

Consumer Electronics

South Korea Consumer Electronics

BMI View:

BMI View: We expect the South Korean consumer electronics market to plateau in terms of market value over the medium term. Growth will be slow due to market maturity and significantly underperform emerging markets in the region, but crucially will remain lucrative in per capita spending terms. In the short term, high household debt levels will be a constraint on consumer spending and over the medium term high penetration rates in almost all device categories means there...

To read the full article Register for Free or Login

Defence & Security

South Korea Defence & Security

BMI View:

BMI View:   South Korea's defence and security outlook is dominated by the unpredictable and tense relationship with Pyongyang. Uncertainty drives defence spending increases and technological development, with missile-defence and jet fighters the pre-eminent concerns for Seoul at present. Domestic defence companies have generally stagnated in 2013 and 2014, with a handful of key civilian orders providing a much-needed boon to their finances. Longer-term, we see emerging markets in the Middle East and Sub-Saharan Africa as key areas for South Korean defence export growth.

A significant portion of defence expenditure funds are expected to be used to upgrade South Korea's missile defence system. The Korea Air Missiles Defence system (KAMD), or so called 'kill chain project' will see Seoul move from its German-made PAC-2 missile system to the PAC-3 system produced by American contractor...

To read the full article Register for Free or Login

Food & Drink

South Korea Food & Drink

BMI View:

BMI View: Total food consumption in South Korea is expected to increase at a moderate compound annual growth rate of 4.0% over the forecast period between 2014 and 2019. The market is relatively mature, with per capita spending on food items already high, which effectively limits the possibilities for more substantial expansion over the coming years. Nonetheless, growth will be sustained by a relatively stable economic outlook, which will offer opportunities for premiumisation.

Headline Industry Data (local currency)

  • Total food consumption growth year-on-year (y-o-y) in 2015: +2.3%; compound annual growth rate (CAGR) 2014-2019: +3.5%.

  • Per capita food consumption growth (y-o-y) in 2015: +1.9%; CAGR 2014-2019: +3.1...

To read the full article Register for Free or Login

Freight Transport

South Korea Freight Transport

BMI View:

BMI View: We envisage the outperformer in South Korea's freight mix to be road freight in 2015, growing by a healthy 4.00%. This is down on 2014's estimate, however as domestic demand for goods drops this year. We expect to see steady, if uninspiring growth in both the rail and air freight modes in 2015 (2.50% and 1.52% respectively), as moving further into 2015, South Korea will face an increasingly challenging external environment with the falling Japanese yen (relative to the Korean won) leading to increased competition with Japanese producers; Korean and Japanese companies are major rivals in the global export market.

With both the domestic and global outlook remaining weak, we have downgraded our real GDP forecast for 2015 to 3.1% from 3.5% to reflect persistent weaknesses in Korea's main trading partners along with relatively anaemic domestic...

To read the full article Register for Free or Login

Information Technology

South Korea Information Technology

BMI View:

BMI View: We extended our forecast for IT spending growth in South Korea to 2019 in the Q2 2015 update, but we maintain our core view that it will outperform the majority of developed markets 2015-2019 due to robust growth rates in the software and services segments, particularly in comparison to EU markets. The South Korean IT market is forecast to grow at a CAGR of 5...

To read the full article Register for Free or Login

Infrastructure

South Korea Infrastructure

BMI View:

BMI View: The construction sector is showing some positive signs of recovery with local companies reporting an increase in new orders, but despite this we do not expect a significant improvement in South Korea's construction real growth in 2015. This is primarily due to the country's weak macro fundamentals and poor export outlook that will affect residential and non-residential buildings respectively. On the other hand, greater potential for an increase in public infrastructure opportunities has boosted the outlook for infrastructure over the near term.

Some notable factors that affected infrastructure development in recent quarters were:

  • As expected, South Korea's construction sector experienced a slowdown throughout 2014. Latest data from the Bank of Korea (BoK) showed that in seasonally...

To read the full article Register for Free or Login

Insurance

South Korea Insurance

BMI View:

BMI View: We have a favourable outlook for South Korea's life and non-life insurance segments over the next five years. As both segments are considerably concentrated due to the domination of offshoots of the chaebol corporate groups, they are characterised by disciplined underwriting and absence of brutal price competition, which will continue to enable steady growth in the foreseeable future. We identify future investment opportunities in health insurance in particular, as a result of demographic changes and rising private health expenditures.

South Korea's life insurance comprises the larger segment of the country's overall insurance sector, accounting for nearly 59% of total premiums written in 2015. Non-life insurance, however, will grow at a considerably higher rate over the next five years, which...

To read the full article Register for Free or Login

Medical Devices

South Korea Medical Devices

BMI View:

BMI Industry View: The South Korean medical device market continues to see sluggish growth. Nevertheless, market fundamentals remain strong with a rapidly ageing population and increasing demand for sophisticated medical technology. Medical device imports are likely to come under increasing pressure from locally produced products in certain sectors. Although the domestic manufacturing industry remains fragmented, the number of producers has more than doubled in recent years and domestic output is expected to see steady growth as South Korea seeks to further reduce its reliance on imported products, whilst boosting its share of the global medical device market.

...

To read the full article Register for Free or Login

Metals

South Korea Metals

BMI View:

BMI View:  South Korean metals consumption growth is set to moderate in 2015, as the country's exports of manufactured goods are hit by a global economic slowdown and an expected contraction in Europe. South Korea is a major producer of steel and slab zinc, but domestic mining output of ferrous and nonferrous metals is small and reliant on imports for the raw materials required by the metals industry. Domestically produced metals and metal products are fundamental to the country's industrial base, as well as trade.

South Korea has very small reserves of copper and the production level of both mined and refined copper is insufficient to meet domestic demand. The country has to rely on imports to supplement domestic production, and is the world's sixth largest...

To read the full article Register for Free or Login

Mining

South Korea Mining

BMI View:

BMI View: The cooling of the Chinese economy will remove the shine off mining investment in South East Asia. Frontier regions will be the first places where miners pull back their investment as brownfield projects take precedence. Nonetheless, it is certainly not all gloomy in the mining sector. Resilient demand from the power sector will continue to support growth in coal production, while Indonesia's export ban on unprocessed ores will help support bauxite prices.

Despite the rich deposits of untapped minerals on offer, we believe South East Asia's mining sector will struggle to uncover its potential over the coming years. The cooling of Chinese economic growth will remove a crucial pillar of support for mineral prices, particularly industrial metals such as iron ore and copper. For...

To read the full article Register for Free or Login

Oil & Gas

South Korea Oil & Gas

BMI View:

BMI View: South Korea will benefit from a lower oil price environment. Not only will its refiners gain some breathing space after years of poor refining margins, it also could see a lower import bill. Gas consumption is likely to trend downwards over our forecast period, owing to slower economic growth in the short-term, and a shift away from gas in the power sector in the longer term.

Headline Forecasts (South Korea 2013-2019)
2013 2014e 2015f 2016f ...

To read the full article Register for Free or Login

Petrochemicals

South Korea Petrochemicals

BMI View:

South Korea's drive to expand paraxylene (PX) will tap into China's massive deficit in the polyethylene terephthalate (PET) chain. But BMI's latest South Korea Petrochemicals Report warns that as Chinese economic growth cools and its capacities develop, export-led growth will have to diversify.

Xylenes capacities surged to 10.5mn tpa in 2014, compared to 6mn tpa in 2010. PX demand has been strong in recent years, in tandem with new purified terephthalic acid (PTA) plant startups in China. However, demand is not likely to increase further, as no PTA plant startups are planned in 2015.

The industry is focusing on adding value to the chemicals chain and serving domestic electronics and automotive industries with an emphasis on quality and specialisation. South Korea's demand for naphtha, which is used as the country's sole petrochemical feedstock, is accelerating with the development of naphtha-...

To read the full article Register for Free or Login

Pharmaceuticals & Healthcare

South Korea Pharmaceuticals & Healthcare

BMI View:

BMI View: The South Korean government will continue to enforce price pressures on pharmaceuticals as a means to contain the escalating healthcare costs brought on by the country's ageing population. This is particularly as other avenues - including shifting the healthcare cost burden onto consumers - will remain more subdued as private expenditure already accounts for a large portion of total healthcare spending. Moreover, South Korea has developed multiple price control mechanisms that it can leverage upon to reduce pharmaceutical prices.

Headline Expenditure Projections

  • Pharmaceuticals: KRW16,590bn (USD15.8bn) in 2014 to KRW17,116.6bn (USD16.3bn) in 2015; +3.2% in local currency terms and -1.2% in US dollar terms. Forecast broadly in line with Q215.

  • ...

To read the full article Register for Free or Login

Power

South Korea Power

BMI View:

BMI View: The outlook for South Korea's renewables industry remains muted, despite the recent announcement of the government's clean energy investment plan. The country's challenging regulatory environment for renewables and the availability of cheaper sources of power, notably nuclear and coal, will undermine investment into the sector.

We forecast overall power generation to grow at an average of 3.8% a year between 2015 and 2024, reaching 791.3 terawatt hours (TWh) by the end of the period. While coal- and gas-fired generation will continue to play a vital role, we expect nuclear generation to have the fastest growth rates. That said, we believe high growth rates will feature more greatly in the second half of our 10-year forecast period, given the current high level of public distrust of nuclear power.

The South Korean market for liquefied...

To read the full article Register for Free or Login

Real Estate

South Korea Real Estate

BMI View:

BMI View: South Korea possesses a well developed commercial real estate sector that is supported by a robust financial sector as well as an increasingly affluent population. The country's economy, however, has experienced a sluggish recovery and this is temporarily holding back the overall potential of the sector. While we do not expect to see any real changes to rental rates across all the office, retail and industrial sectors during 2015 and 2016, the South Korean commercial real estate sector does have considerable potential in the long term.

Seoul's reputation as a regional financial hub is helping ensure strong demand for office space. Existing companies are generating much of the new demand through their expansion plans. The recent sale of the Korea Electric Power Corporation's (KEPCO) Gangnam headquarters to Hyundai Group...

To read the full article Register for Free or Login

Renewables

South Korea Renewables

BMI View:

BMI View: We have revised our 2014 power generation forecasts this quarter. Our growth forecast for non-hydropower renewable energy in South Korea in 2015 is 20% year-on-year thanks to the Korean Government's decision in April to invest USD1.7bn in renewables in 2015. Growth will be driven primarily by wind and biomass, and solar to a lesser extent. Despite this investment injection, our outlook for South Korea's renewables industry remains fairly muted, as the challenging regulatory environment and the availability of cheaper sources of power undermine investment into the sector. Coal is set to remain a key component of the power mix over the next decade, due to the low cost of coal-fired power generation - we forecast coal's share in the power mix to increase to 50% by 2024. As such...

To read the full article Register for Free or Login

Shipping

South Korea Shipping

BMI View:

BMI View: Our forecasts for Busan and Incheon, South Korea's two largest ports, reflect our concerns over a strengthening won, a slowdown in Chinese growth and uncertain demand among other key export partners. We have downgraded our forecasts for 2015 relative to 2014. For Busan we expect tonnage throughput to increase by 4.46%, down from 2014's 6.71%, while at Incheon we expect growth of 2.19%, a fall from 2014's 2.72% growth.

South Korea's exports declined in April, as the won's strength began undermining the competitiveness of sales abroad. This has an impact on the country's shipping industry, with shipments overseas falling by 8.1% year-on-year in April 2015, according to the Ministry of Trade, Industry and Energy. Bloomberg quoted Suh Dae Il, a Seoul-based economist for Daewoo Securities Co, as saying: 'Recovery in South Korea's export destinations...

To read the full article Register for Free or Login

Telecommunications

South Korea Telecommunications

BMI View:

BMI View: New initiatives for MVNO's could add some growth and increase competition, although the mobile growth is expected to slow over the forecast period. Although the regulator has objected to handset subsidies and fined operators for offering them, the access to new handsets has been driving the fast upgrade from 3G services to 4G. Additionally, a spectrum auction in H215 could pave way for 5G technology. South Korea is one of Asia's outperformers, with consumers happy to spend on mobile services and often keen to upgrade to the latest services. This is also reflected in the wireline market where high-speed broadband continues to show good growth.

Key Data

  • The migration from 3G to 4G continues to grow apace. The mobile market has continued to expand, even with penetration...

To read the full article Register for Free or Login

Latest South Korea Articles

Latest South Korea Blogs

  • Several developments of late suggest that something unusual is taking place...

  • The very survival of North Korea 20 years after the death of its founder an...

  • Some subtle geopolitical shifts are underway in North East Asia. Firstly...

Latest South Korea Podcasts

  • Several Asian countries are set to see their telecoms industries exper...

  • The increasingly important economic relationship between Asia and Sub-...

  • As China endeavours to revamp its industrial structure, it will become...