The Curious Economist | South Korea’s economy is outperforming all other OECD members. Here’s why.

According to the latest research on the economic impact of Covid-19, the OECD has announced that the South Korean economy is likely to “only” shrink by -0.8% this year.

Whilst all negative GDP growth is bad, the use of the word “only” is a result of the far greater decline which is predicted for the other 36 OECD member countries.

The average across the board for 2020 stands at a much larger -7.6% decrease in real GDP, with many economies forecasted to face double-digit declines this year.

Source: OECD

So what is it about South Korea and their handling of the virus which has protected their economy from the devastation seen elsewhere?

Jim O’Neil, who was once chief economist at Goldman Sachs, attributes the success of South Korea to their commitment to technological development and embracing of world trade.

For many years, South Korea has not only been a leader in the development and sale of new technology, they’ve also been proactively implementing it throughout their economy and wider society. This has led to a technology rich country which has been able to harness the power of modern innovations to limit the spread of Covid-19 and crack down on localised flare ups with speed and efficiency. This allowed the economy to keep ticking over during lockdown, and also resulted in a much faster return to normality once lockdown measures were lifted.

The country’s commitment to world trade is evident from their monthly trade data which they release before any other economy in the world. Although world trade has taken a big hit during Covid-19, South Korea’s highly advanced trade networks and supply chains have enabled them to quickly rebound, with export data showing strong signs of improvement in July.

There are undoubtedly many other reasons for the economic success of South Korea, and the data speaks for itself. Going forwards, other advanced economies would do well by studying the Korean economy and implementing similar strategies where appropriate.