Question

Make a macro analysis on the Republic of Korea ( South Korea) by answering each of the following points:

Main description (type of government, type and size of economy)

GDP and GDP growth

GDP components

Balance of payments. Deficit or surplus?. X and M: main products, main destinies/origins

General productivity. In which products/services is higher?

Comparative / Absolutes advantages (which products/services)

Capital flows (inflows/outflows, foreign investments)

Unemployment (%, type: structural or frictional? Why?)

Inflation (%, causes?)

Financial system: financial markets, banking system (main players and characteristics of the domestic credit market)

Tax structure (main taxes: type, characteristics and %)

Monetary policy: main description and characteristics (expansionary/contractive, interest rates level, main instruments)

Fiscal policy: main description and characteristics. Fiscal deficit or surplus?

Exchange rate policy: main description (regime) and characteristics

Macro effects of Covid on the country (GDP growth, unemployment, inflation/deflation, fiscal)

Answer 1

Type of government in South Korea- In South Koreathere is centralized democratic republic with exxecutive , legislative and judiciary branch. President is the highest authority in the nation with relative independent chief executive.

Size of economy- South Korean economy is the 12th largest economy in the world. Nominal GDP of south Korea is $1.63 Trillion and GDP growth rate is 7.3% in South Korea in end of 2019.

Balance of payment of South Korea- Current account is a part of balance of payment which includes exports and imports of goods and services, unilateral transfers. Fortunately, Current account has always been in surplus from the 1997.

Exports and imports of South Asia- Trading partners of South Korea are United States, China , Hong Kong , United Kingdom and Saudi Arabia. South Asia had total export of 347873181.80 in thousands of US Dollar and South Asia had total import of 695882673.02 in thousands of US Dollar. Cars , refined petroleum, passenger and cargo ships are the major exports of South Korea. Total value of exports and imports of South Korea is 83% of GDP.

Unemployment rate in South Korea- In 2018 , unemployment was reached to highest in South Korea Which was 4.4%. and reached to 4.8% in April 2019. Frictional, seasonal and structural unemployment exist in South Korea.

Inflation -Average inflation in South Korea is 0.38% of previous year. South Korea inflation fell to zero (0.4)for first time in September 2019. the reason behind is decrease in demand due to trade war and decrease in global tech cycle.

Monetary policy and fiscal policy _ Expansionary fiscal policy and monetary policy is applied in the south Korea to increase the demand of goods and services and to save them from pessimism outlook to increase output and reduce the unemployment.

Tax structure- The tax rate in South Korea is 10% on first KRW 200 million of taxable income , 20% on taxable income over KRW 200 million up to KRW 20 billion ,25% on tax income over KRW 300 million

Due to covid 19 there is recession due to less output and high unemployment and demand by consumers are less therefore inflation is less GDP growth is declined.