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GDP growth of 3% cannot be sustained in South Korea

Monday, July 31, 2017

Significance

This assumes optimistically that its policies are quick to boost growth in the second half of 2017. However, Bank of Korea data showed on July 27 that annual growth slowed to 2.7% in the second quarter from 2.9% in the first.

Impacts

  • South Korea's export-dependence puts it at a disadvantage against US pressure to renegotiate the bilateral free trade agreement.
  • Pyongyang's nuclear capabilities and doubts about US commitment may lead Seoul to raise military spending, eroding fiscal strength faster.
  • Unification with North Korea is a distant prospect with profound economic implications.

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