Business Monitor International


South Korea Business Forecast Report

Published 26 March 2014

  • 49 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
South Korea Business Forecast Report

Core Views

  • While we remain relatively constructive on South Korea's economic growth in 2014, as we expect real GDP growth to accelerate to 3.0% from 2.8% in 2013, our forecasts are fairly below consensus. We highlight growing risks from Corporate Korea as an increasing number of chaebols, particularly within the construction sector, are succumbing to the prolonged slump in the domestic real estate sector. Additionally, a slowdown in China's economy, and the ensuing drag on the Korean economy, is very much on the cards

  • While the prescribed targets laid out in South Korea president Park Geun-hye's economic reform plan may appear overly ambitious, the proposed drive towards deregulation and support of the services sector, if realised, will provide the Korean economy with new pillars of economic growth and set the country on a more sustainable path of economic expansion. Also, the planned pullback the public sector's involvement in the economy will aid not just in growth of the private sector, but also help to improve the government's fiscal profile.

  • We are not particularly sanguine towards the Korean won's performance in 2014. We are forecasting the unit to average KRW1,120/US$ through 2014 before ending the year at KRW1,150/US$. Not only do we envision a weaker macro outlook in the coming year, but we also believe the strength in the currency is likely to reverse course as the relative attractiveness of other regional currencies that took a beating in the previous months start to gain traction once again.

  • South Korean president Park Geun-hye's push to increase the country's global free-trade agreement share is largely a positive for the country. An expansion in trade volumes and increased investment will provide strong support for Korean exporters, even as Seoul attempts to carve out a more consumption-driven economy. We believe that tighter economic relations between Northeast Asian countries would also help foster a more stable political environment.

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Ratings
7
Domestic Politics
8
Reunification Talk Falling On Deaf Ears
8
table: Political Overview
8
Long-Term Political Outlook
10
Constitutional Reform To Improve Governance-
10
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Ratings
13
Economic Activity
14
Investment Rebound, Trade Resilience To Support Growth Outlook
14
table: Economic Activity
14
Fiscal Policy
15
Government Debt Under Control Despite Surge
15
Table: Fiscal Policy
15
Monetary Policy
16
Credit Uptick To Prove Short Lived
16
table: Monetary Policy
17
FX Forecast
18
KRW: Recent Gains Raise Downside Risks
18
Chapter 3: 10-Year Forecast
21
The South Korean Economy To 2023
21
Robust Growth To 2023
21
table: Long-Term Macroeconomic Forecasts
21
Chapter 4: Business Environment
25
SWOT Analysis
25
BMI Business Environment Risk Ratings
25
Business Environment Outlook
26
Institutions
26
Table: BMI Business And Operation Risk Ratings
26
Table: BMI Legal Framework Rating
27
Tab le: Lab our Forc e Qua lit y
28
Infrastructure
29
TABLE: ASIA - ANNUAL FDI INFLOWS
29
Table: Trade And Investment Ratings
30
Market Orientation
31
Tab le: Top Export Destinati ons (USDmn)
32
Operational Risk
34
Chapter 5: Key Sectors
35
Defence
35
tab le: South Korea Defenc e Expenditur e, 2012-2018
36
Pharmaceuticals & Healthcare
39
tab le: Phar mac eutica l Sales, Hist orica l Data And Forecasts
41
TABLE : Healthcar e Expenditur e Trends , Hist orica l Data And Forecasts
42
Other Key Sectors
43
table: Oil & Gas Sector Key Indicators
43
table: Telecoms Sector Key Indicators
43
table: Infrastructure Sector Key Indicators
43
table: Food & Drink Sector Key Indicators
44
table: Autos Sector Key Indicators
44
tab le: Freight Key Indicat ors
44
Chapter 6: BMI Global Assumptions
45
Global Outlook
45
Emerging Market Deceleration
45
Table: Global Assumptions
45
Tab le: Developed Stat es, Real GDP Growt H, %
46
Tab le: BMI VE RSUS BLOOM BERG CONSENSUS REAL GDP GROWTH FORECASTS, %
46
Tab le: Emerging Mark ets , Real GDP Growth , %
47

The South Korea Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in South Korea and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of South Korea's economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of South Korea's economic and industry growth through end-2017.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise South Korea's country risks against regional peers using BMI's country comparative Risk Rankings system.
  • Evaluate external threats to doing business in South Korea, including currency volatility, the commodity price boom and protectionist policies.

The South Korea Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the South Korea economic policy-making and performance impact on corporate profitability over 2013-2017?

BMI provides our fully independent 5-year forecasts for South Korea through end-2017 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The South Korea Business Forecast Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2017 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for South Korea and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on South Korea, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in South Korea over the next 5-years?

BMI's South Korea country Risk Rankings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the South Korea Market - Political Strengths, Weaknesses, Opportunities and Threats facing South Korea.
  • Political Stability and Risk Assessment - BMI's Risk Rankings assess explicit short- and long-term risks to political stability; latest ankings, rankings and trends for South Korea's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark South Korea's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Rankings with SWOT Analysis - Business Environment Risk Rankings for South Korea, benchmarked against rankings for regional neighbours.

Country Competitiveness - Competitiveness of South Korea's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Rankings.

Key Sector Outlook

Which industry sectors in South Korea will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in South Korea's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2008-2012, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2013-2017, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express