Who is the new South Korean President -- More FDI
December 20, 2007
Who is the new President in South Korea, and how will he affect your investments? On Wednesday, South Korea elected Lee Myung-bak, who will become President in February. Former Mayor of Seoul, Mr. Lee will focus on attracting more foreign direct invesment (FDI) into South Korea's already robust economy. He also intends to increase public spending and decrease taxes. However, this will add to South Korea's public debt, which is already 25% of GDP.
Mr. Lee promised to pursue more free trade agreements (FTA's), similar to the one signed in June with the U.S. Although this agreement was negotiated in April, it hasn't been approved by the U.S. Congress, who insisted that stronger labor and environmental amendments be put in place.
What the new South Korean President means to you:
South Korea is already the third largest economy in Asia. Mr. Lee's emphasis on additional FTA's means a renewed emphasis on bilateral agreements with China, Japan and other members of ASEAN. If Congress continues to balk at approving the FTA, then it could put the U.S. economy at a further disadvantage. Trade with South Korea in 2006 was $75 billion, and could increase to $100 billion within a few years if the agreement were approved.
Background on South Korea (2006)
Democratic government successfullly manages a solid economy based on consumer electronics, automotive and agriculture.
- 49 billion people, (smaller than Italy but larger than Spain)
- GDP - $1.196 trillion, larger than Canada
- GDP growth rate - 5%
- GDP per capita - $24,500 (better than Greece)
- Unemployment rate - 3.3%
- Inflation - 2.2%
Action steps:
Check with your financial planner to make sure your emerging markets funds include South Korean companies.
Related Articles:
S. Korea / U.S. trade agreement signed, 7/11/07
FTA boosts South Korean economy, 4/4/07
ASEAN economic summit, 6/16/07
Inflation targeting,5/23/07
North Korea nuclear test, 10/11/06
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