Asia Minute: South Korea’s Shrinking Population

Jan 5, 2021

The coronavirus pandemic continues to have a broad impact around the world, and not only with illness, death and economic disruption. The virus is showing up as one reason for a declining birthrate in some locations — including South Korea. But that's not the whole story.

 

South Korea’s population shrank for the first time last year, and government officials say the coronavirus played a role.

It’s not just the virus, birth rates have fallen to record lows every year in South Korea since 2016. And the population is aging — nearly a quarter of the country is 60 or older.

That points to a long-term economic decline, but in the shorter term, a growing number of economists say South Korea may recover sooner than many other advanced economies.

The Bank of Korea expects growth of 3% this year; the Ministry of Economy and Finance and Moody’s both expect slightly faster growth. The Korea Times quotes a Moody executive as saying, “we see Korea returning to its 2019 levels of real GDP before all other G-20 advanced economies.”

That includes the United States, the Eurozone, Japan, Canada and Australia.

One reason for the optimism is Korea’s relative success in dealing with the virus, but the country is also benefitting from its strength in technology. Adjustments to pandemic disruptions have boosted demand for Korean products from semiconductors to consumer electronics and even healthcare products.

Investors have been paying attention, South Korea’s main KOSPI index closed the first trading day of the new year at a record high.