South Koreaâs Economic Prospects (CRS Report for Congress)
| Release Date |
Feb. 1, 1999 |
| Report Number |
RS20041 |
| Report Type |
Report |
| Authors |
Raymond J. Ahearn, Foreign Affairs, Defense, and Trade Division |
| Source Agency |
Congressional Research Service |
Summary:
As South Korea has completed a full year of restructuring under an International Monetary Fund
(IMF) imposed program, the prospects for a sustained economic recovery are mixed. While the
financial crisis that broke out in October 1997 has been alleviated, the contraction of South Korea's
economy intensified in 1998. A significant drop in Gross National Product, as well as a rapid
increase in unemployment, has precipitated Seoul's most serious economic and social crisis since
the end of the Korean War. To return the economy to a healthy growth trajectory, the government
is attempting to reform the financial and corporate sectors, as well as to create more flexibility in
labor markets. Analysts now predict that the South Korean economy might resume growth in the last
quarter of 1999. South Korea's economic crisis, in turn, is having both short and long term
consequences for U.S. economic interests. Short term, the United States is experiencing a rising
trade deficit with South Korea, as well as increased conflict on a number of sectoral trade issues.
Longer term, however, the reforms that Seoul is implementing have the potential to make it a much
more open, important, and stable trade partner. This report will be updated periodically. A related
CRS report is Korea: U.S.-South Korean Relations Issues for Congress , CRS Issue
Brief 98045.
