South Korea’s economy grew 2.8% in 2018 and is forecast to expand at similar levels over the next five years. The government was elected on policies focused on enhancing productivity, increasing public sector employment, and social-spending to support growth. But aggressive hikes to minimum wages (16% rise in 2018 and a further 11% in 2019) could curb employment growth as businesses scale back on hiring in response to higher wages. This will be particularly hard on small businesses who may not be able to afford higher wages. Construction investment—the key driver of growth since 2015—is slowing, but stronger global demand for Korean exports should offset this.
In 2017, South Korea’s Per Capita GDP was US$32,000, a 7% increase from the year prior. This figure is expected to approach US$39,000 by 2023, driven by targeted fiscal stimulus aimed at reducing income inequality.