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South Korea
 

An independent kingdom for much of its long history, Korea was occupied by Japan beginning in 1905 following the Russo-Japanese War. In 1910, Tokyo formally annexed the entire Peninsula. Korea regained its independence following Japan's surrender to the US in 1945. After World War II, a democratic-based government (Republic of Korea, ROK) was set up in the southern half of the Korean Peninsula while a communist-style government was installed in the north (Democratic People's Republic of Korea, DPRK). During the Korean War (1950-53), US troops and UN forces fought alongside ROK soldiers to defend South Korea from a DPRK invasion supported by China and the Soviet Union. A 1953 armistice split the Peninsula along a demilitarized zone at about the 38th parallel. PARK Chung-hee took over leadership of the country in a 1961 coup. During his regime, from 1961 to 1979, South Korea achieved rapid economic growth, with per capita income rising to roughly 17 times the level of North Korea.

South Korea held its first free presidential election under a revised democratic constitution in 1987, with former ROK Army general ROH Tae-woo winning a close race. In 1993, KIM Young-sam (1993-98) became the first civilian president of South Korea's new democratic era. President KIM Dae-jung (1998-2003) won the Nobel Peace Prize in 2000 for his contributions to South Korean democracy and his "Sunshine" policy of engagement with North Korea. President PARK Geun-hye, daughter of former ROK President PARK Chung-hee, took office in February 2013 as South Korea's first female leader. In December 2016, the National Assembly passed an impeachment motion against President PARK over her alleged involvement in a corruption and influence-peddling scandal, immediately suspending her presidential authorities. The impeachment was upheld in March 2017, triggering an early presidential election in May 2017 won by MOON Jae-in. South Korea hosted the Winter Olympic and Paralympic Games in February 2018, in which North Korea also participated. Discord with North Korea has permeated inter-Korean relations for much of the past decade, highlighted by the North's attacks on a South Korean ship and island in 2010, the exchange of artillery fire across the DMZ in 2015, and multiple nuclear and missile tests in 2016 and 2017. North Korea’s participation in the Winter Olympics, dispatch of a senior delegation to Seoul, and the planned April 27 inter-Korean summit at Panmunjom – the first in 11 years and the first-ever to be held at the inter-Korean border – appear to have ushered in a temporary period of respite.

North Korea’s participation in the Winter Olympics, dispatch of a senior delegation to Seoul, and three inter-Korean summits in 2018 appear to have ushered in a temporary period of respite, buoyed by the historic US-North Korea summits in 2018 and 2019. Nevertheless, relations were stagnant into early 2022.

Source: The CIA World Factbook - South Korea



Your advisors at the Chamber of Commerce

Na Shi

+352423939364

Contact us: asia@cc.lu

Key indicators

Area
99,720 km2
Population
51,844,834 (2022 est.)
Government type
presidential republic
Languages
Korean, English (widely taught in elementary, junior high, and high school)
GDP
$ 1,798,533.92 (2021 est.)
Growth rate
4.0%
HDI
19
Capital
Seoul

Macroeconomic indicators

Growth has reached 2.7% in 2022 and the OECD is forecasting a 2.5% in 2023. Consumption is set to strengthen, though with a drag from high inflation. From early 2023, growth will pick up due to strong investment and exports, as current uncertainties are assumed to abate. Elevated household debt and housing prices, and stronger-than-expected interest rate increases pose downside risks to domestic demand. A potential shortage of rare gases sourced from Russia and Ukraine could weaken semiconductor exports. 

Monetary policy should aim to keep inflation expectations anchored. Fiscal support should be deployed in ways that avoid exacerbating ongoing price pressures, delivering maximum relief to the most vulnerable at a lower cost. Structural reforms should facilitate a reallocation of labour and capital to expanding sectors and address high social protection gaps. Measures are also needed to bolster the resilience of essential supply chains and energy security.

Thus, the recovery is set to continue as pandemic-era restrictions on contact-intensive services are shelved, despite the Russia-Ukraine war raising inflation and highlighting the need to increase supply chain resilience. 
Reducing dependence on fossil fuels can boost resilience but is also necessary to reach ambitious climate targets. 

Fiscal policy support will need to be scaled back and should focus on supporting people and business dynamism rather than firm survival. The productivity gap between small and large, highly productive companies is reflected in labour market dualities of income, job quality and social protection. Gaps in the social safety net largely follow the same fault lines, and a large share of elderly are left with very low retirement income. These inequalities spur fierce competition among young men and women to enter prestigious universities and good jobs and slows down youth’s labour market entry and family formation against a backdrop of a very low fertility rate.
 

Source: OECD / IMF

IMF Statistics:

 

Subject descriptor 2018 2019 2020 2021 2022

Gross domestic product, constant prices

Percent change

2.665

1.954

2.218

2.748

2.894

Gross domestic product, current prices

Percent change

(Billions)

1,720.489

1,629.532

1,626.553

1,702.137

1,789.961

Gross domestic product per capita, current prices

Percent change

(Units)

33,319.988

31,430.598

31,246.041

32,565.534

34,107.060

Inflation, average consumer prices

Percent change

1.476

0.461

0.891

1.400

1.800

Volume of imports of goods and services

Percent change

0.770

-0.669

2.307

3.966

4.081

Volume of exports of goods and services

Percent change

3.473

-0.655

3.244

3.448

3.595

Unemployment rate

Percent change

3.842

4.000

4.150

4.100

4.000

Current account balance

Percent change

(Billions)

76.409

52.797

46.409

49.506

51.454

Current account balance

Percent change

4.441

3.240

2.853

2.908

2.875
Estimates

Source: IMF Statistics

Relationships with Luxembourg

Existing conventions and agreements

Non double taxation agreement 

In order to promote international economic and financial relations in the interest of the Grand Duchy of Luxembourg, the Luxembourg government negotiates bilateral agreements for the avoidance of double taxation and prevent fiscal evasion with respect to Taxes on Income and on fortune with third countries.

  • Convention from 07.11.1984 (Memorial 1986, A No.47, p. 1451)
  • Effective as of 01.01.1984 (Memorial 1986, A No.47, p. 1451)
  • Protocol of Amendment from 29.05.2012 (Memorial, A No.144, p.1701)
  • Effective as of 04.09.2013 (Memorial, A No.144, p.1701)

Air Services agreement

None

Source: Administration des contributions directes

Further information

Foreign Trade

The Statec Foreign Trade statistics provide information on the trade of goods - by product and by country. This information is collected respectively through the INTRASTAT declaration and on the basis of customs documents.

You can see the statistics on the website of the Statec.

Contact points in South Korea

Embassy of the Grand Duchy of Luxembourg in South Korea

Ambassador with residence in Tokyo:

Mr Pierre FERRING

Luxembourg House 1F
8-9 Chiyoda-Ku Yonbancho
TOKYO 102-0081
Japan

Tel: +81 3 32 65 96 21
Fax: +81 3 32 65 96 24
E-Mail: tokyo.amb@mae.etat.lu

 

Honorary Consuls

Honorary Consul with jurisdiction over the Republic of Korea: 

Mr Young-Chul HONG

20F, Janggyo Bldg., 363,
Samil-daero, Jung-gu, Seoul
04541 Jongro-Ku Seoul
South Korea

Tel.: (+82) 2 316 61 01; (+82) 2 379 11 72
E-Mail: hoyc@kiswire.com / jimin@kiswire.com (assistant) 


Luxembourg Trade and Investment Office

Mrs Younhee Kim

Jangkyo Bldg 1102, 1
Jangkyo-Dong, Chung-Ku, Seoul
South Korea

Tel: +82 2 777 2552
Fax: +82 2 773 2574
E-Mail: info@luxembourg.or.kr

Source: Ministry of Foreign Affairs of Luxembourg

 

Country risk as defined by Office du Ducroire for South Korea

Ducroire is the only credit insurer covering open account deals in over 200 countries. A rating on a scale from 1 to 7 shows the intensity of the political risk. Category 1 comprises countries with the lowest political risk and category 7 countries with the highest. Macroeconomics experts also assess the repayment climate for all buyers in a country.

Link: ODL - South Korea

Luxembourg for Business market entry guide to South Korea: Market entry guides are brochure series published by the Ministry of the Economy and Foreign. The series focuses on worldwide markets, industries and business environments, providing comprehensive and in-depth analysis and guidelines. The brochures cover all aspects relating to a market entry including the economic, financial and legal frameworks. The brochures are a vast knowledge pool, compiled into a practice oriented document with many tips and important addresses.

Other useful links

Chamber of Commerce and the country

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