Korea’s 2014 GDP growth projected at 3.5%

Korea’s economy for 2014 is expected to maintain its modest uptrend in accordance with the gradual improvement in global conditions and through implementing policies that aim to restore demand for Korean goods and boost supply-side supports. Despite gradual upturn in global growth, led by the US, a range of downside risks, such as tapering of asset purchases by the US Federal Reserve, the weakening yen, slowdown of the Chinese economy, falling of USD/KRW and rampant trade protectionism, will slow the pace of Korea’s export growth. Internally, turbulence is expected on the horizon. The effects of economic stimulus measure to buoy economic growth will likely to be offset by the deleveraging process of household debts, dampened investor sentiment and limited financing capability, all of which are projected to offset the effects of economic stimulus measure to buoy economic growth.

Consumer prices grows slow at 2.2%, a large current account surplus continues of US$76.6 billion and USD/KRW to mark a gradual fall (1,068 won/$ on annual average)

The upward pressure of public utility charges and base effect is forecast to send consumer prices in 2014 to slightly increase, comparable to the average rate at 1.3% in 2013, but its effects are limited at around 2.2 %, owing to fall of USD/KRW and the stabilizing trend of the international prices of raw materials. Korea’s current account balance is projected to continue posting a sizeable surplus of US$76.7 billion in 2014, attributable to a large goods balance surplus, which outweighs a small increase in services account deficit. USD/KRW is expected to show a gentle descend at 1,068 won as strong won factors, such as current account surplus are offset by strong-dollar factors following the US Fed’s tapering.

Amid delay in medical tourism development due to public debate over possible damage to its “publicness”, a ‘comprehensive, regulation-free medical tourism cluster’ is suggested as a viable policy alternative

In order to create more jobs and secure the growth engine, the service sector revitalization is crucial, and medical tourism is of prime importance in reinvigorating the sector. Considering its advance level of surgical skills and price competitiveness, Korea’s medical service sector poses great potential: its effect on production inducement is estimated to be 11.6 trillion won and 84,000 additional jobs by 2020. Regulations restricting the healthy cycle of supply and demand of medical services must be lifted immediately. However, taking into consideration an existing filibuster among some critics over possible damage to the medical service sector’s ‘publicness’ we suggest building of a ‘comprehensive, regulation-free medical tourism cluster’ as a viable policy alternative and an initial step forwards the deregulation of medical service sector.

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