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PacNet #6 – Korea’s Political and Economic Outlook

For Korea, the year of 1999 was indeed a year of impressive recovery. The GDP growth for 1999 is estimated at 10.2% from a 6.5% contraction in 1998. The forecast for next year is 7.2%, according to the Bank of Korea. Industrial output surged in the last quarter of the same year. With exports reaching $144 billion, the current account surplus was recorded at $25 billion. Foreign direct investment was a record-high $15 billion in 1999. Together with a net inflow of $5 billion of portfolio investment on the Korean stock market and trade surplus, the foreign currency reserve reached $74 billion at the end of the year – another record. The stock market jumped, and the Korea Composite Stock Price Index reached 1028 at the end of December, up 75% on the year, with a total capitalization of $392 billion. The exchange rate stabilized and the unemployment rate has dropped.