#emergin

[kriminal-e]

Jiuzhaigou Tibetan

[casuallyversed-blog]

Bloomberg's Top 20 Emerging Markets : 2 / South Korea

Bloomberg Data:

Projected GDP Growth 2013-2017 : 22.9%

Inflation Rate : 2.9%

Gov. debt as a % of GDP : 27.3

Ease of doing business : ranked 8

Total score : 67.4

…And in second place comes South Korea!

Some say the best period for emerging economies is when the global economy starts to pick up. So basically now. South Korea, like any other emerging economy, can benefit from that - but they can specifically gain from the fact that, historically, they are top performer during times of economic expansion. 

South Korea joins a small list of countries that managed to avert the global recession. They expect to see a 3% growth increase in 2013 up from 2.2% in 2012. A 3% growth rate would mirror the target expected over in the US, however whether the Americans will achieve that is another question. 

There are 2 big differences between South Korea and other countries such as the US or other European ones. Unemployment is one of the lowest in the world, at around 3%. This reflects their buzzing and thriving economy, and this can't be matched around Europe or the States. South Korea are also very financially stable. Public spending equates to only around 30% of GDP, and they even have an ever growing current account surplus.

Companies here are also secure and stable, with little leverage required for them to exist. This means they are not at risk/exposed to a government debt crisis, unlike the above mentioned, if a similar crisis were to occur. Since late July last year stocks have risen by 12%. Hyundai and Samsung are just two companies that made a great name for themselves overseas as well as domestically, and highlight South Korea's expertise in mass manufacturing and technology. 

Having already seen a great deal of FDI they could also soon see much more, as the country is very close to being classified as a 'Developed' nation as opposed to an 'Emerging Economy'. 

Business ties with China are strong here too. If investors are looking to invest in China, they should consider South Korea too. Growth in China would require them to invest in more raw materials. South Korea supplies goods like steel (for automobiles) to semi-condutors(for high end electronics), to China.  Investing in South Korea taps into the benefits from investing in China. 

However issues such as the weak yen will continue to hurt South Korea exports, and with it expected to remain weak a long term strategy needs to be drawn up by South Korean policy makers. In addition, whilst tension remains between South Korea and North Korea, foreign and domestic investment may well be postponed too.

Sources: Bloomberg, Seeking alpha