Ageing workforce will dampen South Korea’s GDP outlook

Significance

Year-on-year GDP growth was little changed at 2.7% in the first quarter after easing to 2.8% in 2015 and 2016 from an average of 3.7% in the five years to 2014. In 2016 consumer spending grew by less than 2.5%, machinery investment did not grow at all and net export volumes subtracted from growth.

Impacts

• The US administration may threaten to pull out of the US-South Korea free-trade deal unless terms are renegotiated.
• Samsung in the first quarter of 2017 reported its best profits since 2013, but it will face an increasingly competitive market.
• Talk of reunification with North Korea as a solution to demographic pressures is fanciful.