South Korea's Economic Future is Getting Brighter, According to Analysts

In December last year, South Korea's parliament impeached President Park Geun-hye on corruption charges. Ms. Park was at the center of a scandal that even touched the leadership of Samsung, the nation's largest corporation. For the next three months, Ms. Park desperately tried to cling on to power as huge crowds took to the streets in protest.

And as the leaders of government and business fell, so did Asia's fourth-largest economy. Economic analysts feared the worst. Relief finally came when Ms. Park was ousted and arrested in March. Shortly thereafter, presidential elections were scheduled for May. South Korea was now on the road to recovery.

The Economy Recovers

Today, the South Korean economy has made a comeback. Economic data shows that the mining, energy, and manufacturing sectors have already grown by 6.6 percent, the highest gain in four years. And after three straight months of negative growth, retail growth is up 3.2 percent.

However, the biggest growth has been in exports, which is the key driver of the economy. The global demand for electronics has pushed this crucial sector up 13.7 percent in March alone. To prop up this resurgence in the economy, the South Korean government has poured 30 percent of its annual budget into the first quarter alone.

The Growth of the World Economy and its Effect on South Korea

South Korea's economy is export-oriented, with exports accounting for 70 percent of its GDP. This dependency makes it susceptible to changes in the global economy. Thus, any growth in the world economy, such as the one being experienced currently, is good news to the country's trade sector.

However, the country has also made some major advancement in information technology, notably in the library sector. More and more are seeking an online library science degree nowadays. While many decide to opt for local institutions, many choose to follow an online library science program through institutions such as the University of Southern California, which has seen a surge of students from the region in the last few years.

The Sticking Points

Despite the recent upturn in the economy, analysts remain cautious about the future. First, the manufacturing sector is going through a slump. Because it accounts for 20 percent of all jobs, the unemployment rate is on the rise and now stands at 5 percent, the highest in seven years. Analysts expect to see more layoffs as the government restructures debt-ridden industries like steel and shipbuilding.

Second, the high household debt, which stands at just over US$1.1 trillion, is a threat to economic growth if interest rates rise.

Third, the US government, a major trade partner, has become more protectionist. Although South Korea signed a free trade deal with the Washington in 2012, the future of the deal is now in question.

Although the South Korean economy was negatively affected by recent political events, it is showing signs of recovery. Sectors such as mining, energy, manufacturing, retail, and exports are registering growth again. The growing world economy is also having an effect on export-oriented South Korea. Despite this growth, there are still a few areas of concern. A high unemployment rate, crippling household, and increasingly protectionist trade partners may reverse any gains the economy has made thus far.