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Korea-U.S. Economic Relations in 2005
Published May 25, 2011
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Korea’s economy in the year 2005 demonstrated that it is picking up significant positive momentum, although the full-year performance in 2005 showed mixed results. Korea’s real gross domestic product (GDP) grew 4 percent in 2005, and there are clear indications that economic recovery, specifically in terms of GDP, is in sight for 2006. In the third quarter of 2005, GDP year-on-year growth was 4.5 percent—the first growth above 4 percent since the third quarter of 2004. Furthermore, growth in the fourth quarter was 5.2 percent, which exceeded forecasts and extended the rising trend. Forecasts for 2006 indicate that growth should remain at approximately 5 percent. Korea’s strong and growing export sector is a major force behind the positive economic outlook for 2006. Exports in 2005 grew 12.0 percent, the third consecutive year of double-digit growth. Even more encouraging was the fact that for the first time in three years both exports and consumption grew. Korea’s key exports of semiconductors, automobiles, wireless communications equipment, steel, and shipbuilding experienced impressive growth. The significant growth in Korea’s export sector is even more notable in light of the high oil prices of 2005 and the strong won. The strong export growth fortunately offset the impact of increased imports. Thus, Korea showed a $23.2 billion trade surplus for the year. Although economic forecasts remain positive, consumer spending in Korea still remained relatively weak. Other factors slowing Korea’s economic growth in 2005 included the lack of growth engines, delays in restructuring efforts in certain vulnerable sectors, and inadequate investment resources. The socioeconomic divide between income classes also remains a concern for Korea’s economy.

Korea’s real gross domestic product (GDP) grew 4

percent in 2005, and there are clear indications that

economic recovery, specifically in terms of GDP, is

in sight for 2006. In the third quarter of 2005, GDP

year-on-year growth was 4.5 percent—the first

growth above 4 percent since the third quarter of

2004. Furthermore, growth in the fourth quarter was

5.2 percent, which exceeded forecasts and extended

the rising trend. Forecasts for 2006 indicate that

growth should remain at approximately 5 percent.

Korea’s strong and growing export sector is a major

force behind the positive economic outlook for 2006.

Exports in 2005 grew 12.0 percent, the third consecutive

year of double-digit growth. Even more encouraging

was the fact that for the first time in three

years both exports and consumption grew. Korea’s

key exports of semiconductors, automobiles, wireless

communications equipment, steel, and shipbuilding

experienced impressive growth. The significant

growth in Korea’s export sector is even more notable

in light of the high oil prices of 2005 and the strong

won. The strong export growth fortunately offset the

impact of increased imports. Thus, Korea showed a

$23.2 billion trade surplus for the year.

Although economic forecasts remain positive, consumer

spending in Korea still remained relatively weak.

Other factors slowing Korea’s economic growth in

2005 included the lack of growth engines, delays in

restructuring efforts in certain vulnerable sectors, and

inadequate investment resources. The socioeconomic

divide between income classes also remains a concern

for Korea’s economy.



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