South Korea is struggling to find an economic breakthrough to escape from a low-growth trap based on structural issues both at home and abroad weighing heavily on Asia’s fourth-largest economy.
China, Korea’s largest trading partner, is losing growth momentum, while an aging population and falling labor productivity are undermining South Korea’s growth potential, Yonhap reported.
Given that South Korea is a small, open economy with heavy dependence on trade, now is the time for Seoul to develop a new market to revitalize the sagging economy.
For South Korea, the launch of the ASEAN Economic Community at the end of last year is great news because it is expected to change the landscape for the global economy and bring huge opportunities for South Korean firms.
The AEC is an agreement among 10 ASEAN member nations to create a single market and production base by removing all barriers, including those on trade and investment.
Once the AEC is fully integrated, the ASEAN economy, with a combined GDP of $2.6 trillion, will be the seventh-largest in the world and the third-largest in Asia. By population, ASEAN is the third-largest market in the world with 625 million people.
Investment Destination
By maintaining its growth momentum, it is on track to be the world’s fourth-largest economy by 2050.
The partnership between ASEAN and South Korea has made remarkable progress since relations were established in 1989.
ASEAN has become Korea’s second-largest trading partner and an investment destination, and South Korea has become ASEAN’s fifth-largest trading partner and sixth-largest source of foreign direct investment.
Experts stressed that South Korea should step up efforts to gain a stronger foothold to reinvigorate the South Korean economy before the burgeoning market becomes too crowded.
“The launch of the AEC is an ongoing process. We expect to see meaningful change over time. If it materializes as scheduled, the region will emerge as a new market soon,” South Korean Ambassador to ASEAN Suh Jeong-in told The Korea Times.
