COUNTRY ANALYSIS

India & South Korea

Country Analysis of India and South Korea

Table of contents

I)

Abstract

Chapter 1 - Introduction
Chapter 2 - Macro-Economic environment
1.
2.
3.
4.
5.
6.

Gross Domestic Product

Consumer Price Index
Whole Sale Price Index
Inflation
Policy Rates
Balance Of Payments
(i) Exports
(ii) Imports
7. Exchange Rate
8. Unemployment
9. Government Budget
10. Debt to GDP ratio
Chapter 3 - Country Analysis Of India
1. Overview
Key Findings
2. Gross Domestic Product
3. Consumer Price Index
4. Whole sale price Index
5. Inflation
6. Policy Rates
7. Balance Of Payments
(i) Exports
(ii) Imports
8. Exchange rate

9. Unemployment
10. Government Budget
11. Debt to GDP ratio
Chapter 4 - Country Analysis of South Korea
1. Overview
Key Findings
2. Gross Domestic Product
3. Consumer Price Index
4. Whole sale price Index
5. Inflation
6. Policy Rates
7. Balance Of Payments
(i) Exports
(ii) Imports
8. Exchange Rate
9. Unemployment
10. Government Budget
11. Debt to GDP ratio

Chapter 5 - Comparison & Analysis

Chapter 6 - Conclusion
Chapter 7 - Bibliography

ABSTRACT
This study aims to identify and analysis the macro-economic factors of two Asian superpowers
India and South Korea. This report focus on motivating factors of both the Asian economies .
South Korean firms have penetrated those sectors in India where other countries were investing
relatively less. The prime motivation for investing in India is the large size of market and low
wages in the host country. The study aims at analyzing key factors that affect the economy of a
developing country , some of these factors are GDP , Inflation , Interest Rates , Government

Budget etc. The overall analysis and comparison of both the economies helped us understand
factors that go into affecting an economy as whole(macro approach). The study gave us a
broader perspective of the history,current economic conditions and forecasts of two of the
biggest growing economies in the Asian continent India and South Korea.

CHAPTER-1
Introduction
Country Analysis is about analyzing a countrys overall environment which includes both
economic as well as the political environment. In country analysis we analyse about various
economic indicators of India and South Korea. Macro Economic Indicators are important factors
for a understanding a countrys growth and progress.This analysis gave us an insight about the

countrys economic condition and its progress which would help the investors and companies to
understand the Economys current condition and make strategic decisions for future perspective.

CHAPTER 2
Macro- Economic Environment
The conditions that exist in the economy as a whole, rather than in a particular sector or region.
In general, the macro environment includes trends in gross domestic product (GDP), inflation,
employment, spending, and monetary and fiscal policy. The macro environment is closely linked
to the general business cycle, as opposed to the performance of an individual business sector

2.1 Gross Domestic Product

Definition : Gross domestic product (GDP) is defined as an aggregate measure of production
equal to the sum of the gross values added of all resident institutional units engaged in
production.
Usage : GDP is to calculate the growth of the economy from year to year( YoY basis) . The
pattern of GDP growth is held to indicate the success or failure of economic policy.
Methods to calculate :

a) Expenditure Method
GDP (Y) is the sum of consumption (C), investment (I), government spending
(G) and net exports (X M).
Y = C + I + G + (X M)

b) Income Method
GDP = compensation of employees + gross operating surplus + gross mixed income+
taxes less subsidies on production and imports
GDP = COE + GOS + GMI + TP & M SP & M
2.2 Consumer Price Index
Definition
A consumer price index measures changes in the price level of a market basket of consumer
goods and services purchased by households.
Methods to calculate
Current item price = Base year price X Current CPI / Base year CPI

2.3 Wholesale Price Index

Definition
The Wholesale Price Index (WPI) is the price of a representative basket of wholesale goods.
Some countries (like India and The Philippines) use WPI changes as a central measure
of inflation.
Method to calculate
Monthly price indexes are compiled by calculating the simple arithmetic mean of three ten- day
sample prices in the month.

2.4 Inflation
Definition
Inflation is a sustained increase in the general price level of goods and services in
an economy over a period of time. When the general price level rises, each unit of currency buys
fewer goods and services. Consequently, inflation reflects a reduction in the purchasing
power per unit of money a loss of real value in the medium of exchange and unit of account
within the economy.A chief measure of price inflation is the inflation rate, the annualized
percentage change in a general price index over time.
Method to Calculate
The inflation rate is widely calculated by calculating the movement or change in a price index,
usually the consumer price index. The inflation rate is the percentage rate of change of a price
index over time.

2.5 Policy Rates

Definition
Monetary policy is the process by which monetary authority of a country, generally a central
bank controls the supply of money in the economy by its control over interest rates in order to
maintain price stability and achieve high economic growth. In India, the central monetary
authority is the Reserve Bank of India (RBI). It is so designed as to maintain the price stability in
the economy.
2.6 Balance Of Payments
Definition
A statement that summarizes an economys transactions with the rest of the world for a specified
time period. The balance of payments, also known as balance of international payments,
encompasses all transactions between a countrys residents and its nonresidents involving goods,
services and income ,financial claims on and liabilities to the rest of the world and transfers such
as gifts. The balance of payments classifies these transactions in two accounts the current
account and the capital account. The current account includes transactions in goods, services,
investment income and current transfers, while the capital account mainly includes transactions
in financial instruments.
(i)

Exports

A function of international trade whereby goods produced in one country are shipped to
another country for future sale or trade. The sale of such goods adds to the producing nation's
gross output. If used for trade, exports are exchanged for other products or services. Exports
are one of the oldest forms of economic transfer, and occur on a large scale between nations
that have fewer restrictions on trade, such as tariffs or subsidies.

(ii)

Imports

A good or service brought into one country from another. Along with exports, imports form
the backbone of international trade. The higher the value of imports entering a country,
compared to the value of exports, the more negative that country's balance of trade becomes.
2.7 Exchange Rate
Definition
The price of a nations currency in terms of another currency. An exchange rate thus has two
components, the domestic currency and a foreign currency, and can be quoted either directly or
indirectly. In a direct quotation, the price of a unit of foreign currency is expressed in terms of
the domestic currency. In an indirect quotation, the price of a unit of domestic currency is
expressed in terms of the foreign currency. An exchange rate that does not have the domestic
currency as one of the two currency components is known as a cross currency, or cross rate
2.8 Unemployment
Definition
Unemployment occurs when a person who is actively searching for employment is unable to find
work. Unemployment is often used as a measure of the health of the economy. The most
frequently cited measure of unemployment is the unemployment rate. This is the number of
unemployed persons divided by the number of people in the labor force.
2.9 Government Budget
Definition
A

government

budget

is

government

document

presenting

the

government's

proposed revenues and spending for a financial year that is often passed by the legislature,
approved by the chief executive or president and presented by the Finance Minister to the nation.
The budget is also known as the Annual Financial Statement of the country. This document
estimates the anticipated government revenues and government expenditures for the ensuing
(current) financial year.

2.10 Debt to GDP Ratio

Definition
The ratio of a country's national debt to its gross domestic product (GDP). By comparing what a
country owes to what it produces, the debt-to-GDP ratio indicates the country's ability to pay
back its debt. Often expressed as a percentage, the ratio can be interpreted as the number of years
needed to pay back debt if GDP is dedicated entirely to debt repayment.

CHAPTER - 3
Country Analysis Of India

3.1 ) Overview
India is the 10th largest in the world by nominal GDP and the 3rd largest by purchasing power
parity (PPP). IMF projects India's GDP to grow at 5.6% over 2014-15. Agriculture sector is the
largest employer in India's economy but contributes a declining share of its GDP. Its
manufacturing industry has held a constant share of its economic contribution, while the fastestgrowing part of the economy has been its services sector - which includes construction, telecom,
software and information technologies, infrastructure, tourism, education, health care, travel,
trade, banking and other components of its economy . India was the 19th-largest merchandise
and the 6th largest services exporter in the world in 2013 ,it imported a total of $616.7 billion
worth of merchandise and services in 2013, as the 12th-largest merchandise and 7th largest
services importer. India's economic growth slowed to 4.7% for the 201314 fiscal year, in
contrast to higher economic growth rates in 2000s. India is also one of the G-20 major
economies, a member of BRICS and a developing economy that is among the top 20 global
traders according to the WTO.

Key Findings
3.2) Gross Domestic Product

The overall GDP of India was worth 1876.80 billion US dollars in the year 2013. The
GDP value of India constitutes to about 3.03 percent of the world economy , which is a

significant amount .
GDP in India has gone through its highs and lows , at its peak it reached an all time high
of 1876.80 USD Billion in the year 2013 and a record low of 63.50 USD Billion in the
year 1970 , the track record of the Indian GDP from the early 1970s to the post 2000s

shows a gradual increase.

The Indian GDP has an average of 517.27 USD Billion during the years 1970 2013.

GDP growth India

25
20
15
10
5

19
99
20
00
20
01
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14

Forecast

GDP growth India

GDP in India has been forcasted to decrease to 1874.62 USD Billion in December of

2014 from 1876.80 USD Billion in December of 2013.

There has also been a prediction that in the year 2015, GDP is expected to increase to
1915.44 USD Billion as the new government has shown positive signs , well structured
economic reforms and policies , foreign investors and equity market growth will help the

Indian GDP
In the upcoming decades , GDP in India is projected to trend around 1946.80, 1940.81
and 1940.65 USD Billion in the years of 2020, 2030 and 2050 respectively.

3.3) Consumer Price Index

The figures show that in a matter of months the prices of consumer goods has gone up by
a huge margin. The CPI in India has an average of 125.20 Index Points from 2011 until

2014.
Consumer Price Index in India increased to 145.20 Index Points in October of 2014 from

145 Index Points in September of 2014.

But in the year 2014 it reached an all time high of 145.20 Index Points and a record low
of 105 Index Points in February of 2011

Inflation in India(%)
14
12
10
8
6
4
2

19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13

Forecast

Inflation in India(%)

The forecast on CPI in India is that there will be an increase to 146.35 Index Point from

145.20 Index Points

In 2015, CPI is expected to increase to 152.43 Index Points , this would mean that the

consumer goods would become more expensive than the current prices.
The long term predictions say that the Consumer Price Index in India is projected to
trend around 133.48, 144.57 and 154.39 Index Points in the years of 2020, 2030 and 2050
respectively.

3.4 ) Wholesale Price Index

The WPI in India has an average of 7.66 Percent from the years 1969 to 2014
Producer Prices are also known as wholesale prices there has been a huge increase of
1.77 percent in October of 2014 over the same month in the previous year in our country.
The increase in producer prices leads to increase in the prices of producer goods(not

consumer goods)
Historically , the WPI reached an all time high of 34.68 Percent in September of 1974
and a record low of -11.31 Percent in May of 1976.

India
150.00
100.00

India

50.00

SOURCE: WORLD BANK DATA

19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13

0.00

Forecast

WPI in India is expected to move up to 3.69 percent in December of 2014 from 1.77

percent in October of 2014 , this would make the producer goods prices move up.
For a brief period in the next year the prices of producer goods are likely to drop .In

2015, Producer Prices Change is expected to decrease to -0.96 percent.

In the long-term, Producer Prices Change in India is projected to trend around 0.01, 0.48
and 0.66 percent in the years of 2020, 2030 and 2050 respectively.

3.5 ) Inflation

High inflation rate results in an increase in all goods prices(Consumer and producer

goods) , in India the inflation is recorded at 5.52 percent in October of 2014.

The average Inflation Rate in India is 9.23 Percent from 2012 until 2014
It reached an all time high of 11.16 Percent in November of 2013 and a record low of
5.52 Percent in October of 2014

Forecast

In 2015, Inflation Rate is expected to decrease to 3.62 percent , this would mean a
positive sign for consumers as they would be able to buy goods and services at cheaper

rates
The future looks very bright for India as the rates are projected drop significantly for the
next few decades . Inflation Rate in India is projected to trend around 0.17, 0.36 and 0.61
Percent in the years of 2020, 2030 and 2050 respectively.

3.6 Policy Rate

The benchmark interest rate in India was last recorded at 8 percent.

The average interest rate in India has been 6.67 percent from 2000 until 2014
It reached an all time high of 14.50 percent in August of 2000 and a record low of 4.25
percent in April of 2009.

Forecast

December 2 might be the day when Raghuram Rajan might cut down the interest rate to
boost the Indian economy after the decrease in oil prices(OPEC).

Althrough there are some predictions that Interest Rate in India is expected to remain
unchanged at 8.00 percent in November of 2014 from 8.00 percent in October of 2014. In

2015, Interest Rate is expected to increase to 8.30 percent.

In the long-term, Interest Rate in India is projected to trend around 7.90, 7.45 and 6.55
percent in the years of 2020, 2030 and 2050 respectively. The decrease in Interest rate
would help the economy grow as it would lead to higher savings inreturn leading to
higher investments.

3.7 Balance Of Payments

Balance Of Trade constitutes both Exports and Imports

India recorded a trade deficit of 13350 USD Million in October of 2014. A trade deficit

means that Imports exceeded Exports , which is a worrisome sign.

Balance of Trade in India has an average of -1910.26 USD Million from 1957 until 2014
It reached an all time high of 258.90 USD Million in March of 1977 , when Indian
exports were at their highest and a record low of -20210.90 USD Million in October of
2012.

Forecast

In 2015, Balance of Trade is expected to decrease to -13423.38 USD Million.

The balance of trade is Balance of Trade in India is expected to decrease to -14102.06

USD Million in December of 2014 from -13350.00 USD Million in October of 2014.
In the long-term, Balance of Trade in India is projected to trend around -12966.90,
-12962.60 and -12962.59 USD Million in the years of 2020, 2030 and 2050 respectively.

3.8) Exchange Rate

The US Dollar has been a standard currency to measure other currencies.

The US Dollar increased to 62.05 Indian Rupee in November from 61.48 in October of

2014.
The Indian Rupee has an average of 33.26 from 1973 2014
It reached an all time high of 68.61 in September of 2013 and a record low of 7.19 in
March of 1973.

Forecast

The main focus of the Indian government is to revive the economy , the economic growth

will lead to increased power of the Indian currency .

Indian Rupee is expected to decrease to 61.80 in December of 2014 from 62.05 in

November of 2014.
In 2015, Indian Rupee is expected to decrease to 61.67 .
The future forecasts say that in the long-term, Indian Rupee is projected to trend around
56.97, 48.75 and 54.75 in the years of 2020, 2030 and 2050 respectively

3.9 Unemployment

Unemployment Rate in India decreased from 6.3 percent in 2011 to 5.2 percent in 2012.
The average Rate of unemployment in India is 7.8 Percent from 1985 until 2012,
recorded minimum of 5.2 Percent in 2012 and maximum value of 9.4 Percent in 2009,
this is the year in which many people lost job and recession took place.

unemployment rate India

5
4.5
4
3.5
3

unemployment rate India

2.5
2
1.5
1
0.5
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12

Forecast

There are positive signs coming up as the Modi government is keen on providing

employment to all using NREGA schemes .

Unemployment Rate in India is expected to decrease to 3.00 percent in December of

2014 from 5.20 percent in December of 2012.

In 2015, Unemployment Rate is expected to decrease to 3.81 percent. In the long-term,
Unemployment Rate in India is projected to trend around 3.51, 3.49 and 3.49 percent in
the years of 2020, 2030 and 2050 respectively.

2.10 Government Budget

A deficit means that the expenses have exceeded the revenue and a surplus means the

revenue has exceeded the expenses

Government Budget in India averaged -3.87 Percent of GDP from 1991 -2014, reaching
an all time high of -2.04 Percent of GDP in 1997 and a record low of -7.80 Percent of

GDP in 2009
India recorded a Government Budget deficit equal to 4.50 percent of the country's Gross
Domestic Product in the fiscal year 2013/2014.

Forecast

In 2015, Government Budget is expected to decrease to -4.80 percent of GDP. In 2015,

Government Budget is expected to decrease to -4.80 percent of GDP.

Government Budget in India is projected to trend around -4.87, -4.86 and -4.86 Percent of
GDP in the years of 2020, 2030 and 2050 respectively.

2.11 Debt to GDP Ratio

Debt to GDP ratio refers to debts(long term borrowings) divided by the GDP of a country.

India recorded Debt to GDP of 67.72 percent of the country's Gross

Domestic Product in the fiscal year 2013-2014.

Government Debt in India averaged 74 Percent of GDP from 2002 to

2014, reaching maximum value of 83 percent in 2007 and minimum
value of 66 Percent in 2012.

external debt stock total

400000000000
350000000000
300000000000
250000000000

external debt stock

total

200000000000
150000000000
100000000000
50000000000
19
99
20
01
20
03
20
05
20
07
20
09
20
11

Forecast

There are predictions that in 2015, Government Debt to GDP is expected to increase to

69.21 percent .
Government Debt to GDP in India is projected to trend around 70.84, 71.20 and 71.22
Percent in the years of 2020, 2030 and 2050 respectively.

CHAPTER 4
Country Analysis Of South Korea

4.1 Overview
South Korea is one of the world's wealthiest nations especially among the asian nations and is a
member of the G-20 major economies. It is a developed country, with a developed
market and high-income economy. South Korea is the only developed country so far to have
been included in the group of Next Eleven countries. South Korea had one of the world's fastest
growing economies from the early 1960s to the late 1990s, and South Korea is still one of the
fastest growing developed countries in the 2000s. South Korea has a market economy that
ranks 15th in the world by nominal GDP and 12th by purchasing power parity (PPP).
Korea up to well into the 1960s represented a truly backward economy based onsubsistence
agriculture. Its per capita income in 1961 was $82 (in 1960 prices), which was then below those
of Haiti, Ethiopia, Peru, Honduras, and Yemen and about 40% below Indias. In the immediate
post-Korean War period the country was an economic basket case. It relied on foreign aid for
sheer survival. Undisciplined capitalism during this period did very little for development. In
summary, Koreas past strategy for growth maximization led to serious structural distortions and

imbalances, as reflected by the syndromes of business concentration, stagnant productivity,

fragile corporate financial structure, corporate bankruptcies, and tenuous interindustry linkage.
The Korean states failure to reform flawed industrial and financial systems in preparation for
global economic integration turned out to be the major structural cause of the current crisis.
Key Findings
4.2 Gross Domestic Product

The GDP value of South Korea represents 2.10 percent of the world economy , which is a

significant percent compared to the size and population of the country .

GDP in South Korea has an average of 349.77 USD Billion from 1960 until 2013,
reaching an maximum of 1304.55 USD Billion in 2013 and a minimum of 2.36 USD

Billion in 1961
The Gross Domestic Product (GDP) in South Korea was worth 1304.55 billion US
dollars in 2013.

GDP growth South Korea

25
20
15

GDP growth South Korea

10
5

19
99
20
00
20
01
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14

Forecast

In 2015, GDP is expected to increase to 1371.99 USD Billion which would help South

Korea emerge as one of the leading asian nations

Their future looks very bright as the GDP in South Korea is projected to trend around
1385.95, 1386.01 and 1386.01 USD Billion in the years of 2020, 2030 and 2050
respectively.

4.3) Consumer Price Index

Consumer Price Index CPI in South Korea decreased to 109.10 Index Points in October
of 2014 from 109.40 Index Points in September of 2014 , which means that buying

consumer goods in South Korea has become cheaper.

Consumer Price Index CPI in South Korea averaged 48.32 Index Points from 1965 until
2014, reaching a maximum of 109.50 Index Points in August of 2014 and a minimum of
2.90 Index Points in February of 1965.

CPI South Korea (2010=100)

120
100
80

CPI South Korea (2010=100)

60
40
20

20
13

20
11

20
09

20
07

20
05

20
03

20
01

19
99

Forecast

In 2015, Consumer Price Index CPI is expected to increase to 110.22 Index Points which

would making the consumer goods prices increase.

In the future, Consumer Price Index CPI in South Korea is projected to trend around
115.47, 122.85 and 131.04 Index Points in the years of 2020, 2030 and 2050 respectively.

3.4 Wholesale Price Index

Producer Prices in South Korea decreased to 104.56 Index Points in October of 2014
from 105.19 Index Points in September of 2014, which means that the prices of producer

goods declined by almost 2 points.

Producer Prices in South Korea averaged 54.78 Index Points from 1965 until 2014,
reaching a maximum of 108.97 Index Points in April of 2012 and a minimum of 5.07
Index Points in January of 1965

S.korea
150.00
100.00

S.korea

50.00

19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13

0.00

Forecast

The future predictions say that Producer Prices in South Korea are expected to increase to

105.04 Index Points.

Producer Prices in South Korea is projected to trend around 103.38, 103.38 and 103.38
Index Points in the years of 2020, 2030 and 2050 respectively.

3.5 Inflation

The inflation rate in South Korea was recorded at 1.20 percent in October of 2014, their

inflation rate is extremely low compared to other countries in Asia

Inflation Rate in South Korea has an average of 7.83 Percent from 1966 until 2014,
reaching a maximum of 32.50 Percent in October of 1980 and a minimum of 0.20 Percent
in February of 1999.

Inflation in South Korea(%)

5
4.5
4
3.5
3

Inflation in South Korea(%)

2.5
2
1.5
1
0.5
20
13

20
11

20
09

20
07

20
05

20
03

20
01

19
99

Forecast

Increase in Inflation rate would mean that the prices of all goods and services go up
In 2015, Inflation Rate is expected to increase to 1.46 percent.
In the long run, Inflation Rate in South Korea is projected to trend around 1.42, 1.43 and
1.45 percent in the years of 2020, 2030 and 2050 respectively.

3.6 Policy Rate

The benchmark interest rate in South Korea was last recorded at 2 percent , the interest
rate are comparatively very low which has helped the economy progress faster than other

asian nations
Interest Rate in South Korea averaged 3.65 Percent from 1999 until 2014, reaching a
maximum of 5.25 Percent in October of 2000 and a minimum of 2 Percent in February of
2009.

lending rate

Forecast

20
13

20
11

20
09

20
07

20
05

20
03

lending rate

20
01

19
99

10
9
8
7
6
5
4
3
2
1
0

In 2015, Interest Rate is expected to increase to 2.10 percent which would mean that

interest rate would be up by .10 percent.

Interest Rate in South Korea is projected to trend around 2.35, 2.80 and 3.60 Percent in
the years of 2020, 2030 and 2050 respectively.

3.7 Balance Of Payments

Balance of trade comprises of Exports and Imports.
South Korea recorded a trade surplus of 7500 USD Million in October of 2014 , a trade
surplus means that their exports exceeded their imports which is always a positive sign.
Balance of Trade in South Korea has an average of 538.73 USD Million from 1966 -2014
It reached its max at 7500 USD Million in October of 2014 and lowest at -4043.45 USD
Million in January of 2008.

Current Account balance

100,000
0

current account balance korea

19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14

-100,000

Forecast

By the year 2015, Balance of Trade is expected to decrease to 5305.88 USD Million
In the long run , Balance of Trade in South Korea is projected to trend around 5049.84,
5050.88 and 5050.89 USD Million in the years of 2020, 2030 and 2050 respectively.

3.8 Exchange Rate

The US Dollar increased to 1102.50 South Korean Won in November from 1073.67 in
October of 2014 , the fact that the US dollar has increased means that the value of the

South Korean currency has depreciated.

he South Korean Won averaged 989.96 from 1981-2014.

Forecast

The positive side is that South Korean Won is expected to decrease to 1091.57 in

December of 2014 from 1102.50 in November of 2014.

By the year 2015, South Korean Won is expected to decrease to 1062 which would mean
that the value of the US Dollar is likely to depreciated in the next year.

3.9 Unemployment

The countrys unemployment rate which measures the percentage of total population that
is unemployed and actively seeking for employment decreased from 4.9 percent in the

year 2010 to 3.5 percent in the year 2014.

The Unemployment rate in South Korea averaged at the rate of 3.5 percent from 2001 to

2010 approximately.
Unemployment rate was maximum in the year 1999 it reached 7.1 percent and recorded
minimum rate of 2.9 percent in the year 2013.

Forecast

In 2015, Unemployment Rate is expected to increase to 3.86 percent.

In the long run, Unemployment Rate in South Korea is projected to trend around 3.81,
3.81 and 3.81 percent in the years of 2020, 2030 and 2050 respectively.

3.10 Government Budget

The data reported that South Korea recorded a Government deficit budget equal to 1.50

percent of countrys Gross Domestic product in 2013.

Government budget of South Korea recorded a maximum of 3.47 percent of GDP in

2007 and minimum of -4.7 percent of GDP in 2009.

Government Budget averaged -0.18 percent from 2000 until 2013.

Forecast

By the year 2015, Government Budget is expected to increase to -0.40 percent of GDP.
Government Budget in South Korea is projected to trend around -0.17, -0.14 and -0.14
Percent of GDP in the years of 2020, 2030 and 2050 respectively.

3.11 Debt to GDP Ratio

This information is mostly used by investors to understand a countrys ability to make

future payment of debts

According to the data, the country recorded the highest Debt to GDP ratio of 34.80

percent in the year 2013 and recorded a minimum percent of 7.99 in the year 1996.
The Debt to GDP ratio averaged 20.66 percent from the year 1995 to 2013.

Forecast

The predictions say that by 2015, Government Debt to GDP is expected to decrease to

32.60 percent.
Government Debt to GDP in South Korea is projected to lay around 31.68, 31.58 and
31.58 Percent in the years of 2020, 2030 and 2050 respectively.

CHAPTER 5
Comparison & Analysis
Balance Of Trade
Balance of trade has been in favor of Korea but India is catching up. Even though the growth in
the bilateral trade betwen Korea and India is fast, the trade intensity for the India has ben below
optimum while the oposite is true about Korea. Whereas Korean exports manufactured items
such as electronic gods, machinery, transport equipments, iron and steel. Plastic and organic
chemicals and they constitute almost two-third of Korean exports, Indian export items are largely
dominated by raw materials and primary gods such as cotton yarn fabrics and made-ups,
petroleum products, oil meals, ores and minerals, iron ore and primary and semifinished iron &
steel

Mutual Investments - Samsung, Hyundai and LG, POSCO from Korea and Tata,

Mahindra from India

Apart from big Korean companies there are more than 100 smal and medium size Korean

companies who are active in India.

The bilateral trade data show that whereas India recorded surplus in trade in services,
Korea had surplus in merchandise trade. Acording to one estimate, in the service sector,
Korea in transportation services and India in IT and software services have gained
consistent comparative advantage.

Comparative analysis
Inflation:

14
12
10
8
6

Inflation in India(%)
Inflation in South Korea(%)

4
2

19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13

The graph shows that average inflation of india was more in 1998 than south korea. It undergoes
many fluctuations during these years. Now in 2014 the average inflation rate is 6.93 ans of South
Korea is 1.44
Exchange Rate:

official exchange rate

1400
1200
1000
official exchange rate

800

India

600

South Korea

400
200
0
1980 2000 2020
Years

There is no comparison in an exchange rate of South Korea and India, it is around 30 times the
india exchange rate.

This graph shows the

fluctuations from 30
nov 2013 to 30 nov
2014.
Real
rates:

interest

Real interest rates

2050
2040
2030
2020
years 2010
2000

south korea
india
year

1990
1980
1970
1 2 3 4 5 6 7 8 9 101112131415

The interest rate in the both economy are quite stable and nearly equal. Higher Interest rate
reduces the purchasing power of consumers. Its shows that both the countries have nearly same
interest rate.The interest rate of south korea reached maximum in the year 2010-2012.
GDP:
6.00
5.00
4.00
3.00

South Korea

2.00

INDIA( IN TRILLION
USD)

1.00

19
99
20
01
20
03
20
05
20
07
20
09
20
11
20
13

0.00

The gdp of south korea was very high in 1999 as compare to India and after that the gdp growth
declines and has steady growth in corresponding years from 2000.But growth of South korea is
comparitivly higher than India.

 GDP Deflator:
120.00
100.00
80.00
60.00

GDP DEFLATOR INDIA

40.00

GDP DEFLATOR
SOUTH KOREA

20.00

19
99
20
01
20
03
20
05
20
07
20
09
20
11
20
13

0.00

GDP Deflator in India is steadily increasing in South Korea at higher rate when compared to that
of India.GDP Deflator reached all time high approximately 104 in the year 2014.
Imports:
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0

19
99
20
01
20
03
20
05
20
07
20
09
20
11
20
13

0.0

Korea Imports of
goods and services
(% of GDP)
India Imports of goods
and services (% of
GDP)

Imports goods and services of India and South Korea are comparable. For india the importing
percentage increases from 13% to 30% and for South Korea it is 48% to 80%.
Imports growth:
50.0
40.0
30.0
20.0
10.0
0.0

Korea Imports of
goods and services
(annual % growth)
India Imports of goods
and services (annual
% growth)

-10.0

19
99
20
01
20
03
20
05
20
07
20
09
20
11
20
13

-20.0

In India each year import rate is growing steadily and it reached maximum at 2005 with and it is
negative in 2009. Its shows that it has been decreased and india is importing less goods.
Exports:

90.00
80.00
70.00
60.00
50.00
40.00
30.00

korea

20.00

India

10.00
20
13

20
10

20
07

20
04

20
01

In
di
ca
to
rN

am

0.00

Exports of goods and services of India and South Korea are comparable. For india the export
percentage increases from 10% to 25% and for South Korea it is 40% to 80%. South Korea
Export rate is drastically increasing.
WPI:

S.korea
India

19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13

140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00

Indian annual wholesale price inflation was recorded at 1.77 percent in

October, slowing further from a 2.38 percent increase in September. It is the
lowest rate since October of 2009, mainly due to a fall in prices of food and
petrol. Wholesale price index (2005 = 100) in South Korea was last measured
at 122.11 in 2011, according to the World Bank.

 Lending interest rate:

Lending interest rate in %

14.00
12.00
10.00

South korea

8.00
interest rate

India

6.00
4.00
2.00
20
11

20
08

20
05

20
02

19
99

0.00

Bank Lending Rate in South Korea decreased to 4 percent in October of 2014

from 4.14 percent in September of 2014. Bank Lending Rate in South Korea
reached an all time high of 7.9 percent in January of 2008 and a record low of
4 percent in October of 2014. Bank Lending Rate in South Korea is reported
by the The Bank of Korea.India reached a high value of 13 percent in the
year 2008.

 CPI:

CONSUMER PRICE INDEX

300.00
250.00

CPI

200.00

South Korea

150.00

India

100.00
50.00

19
99
20
01
20
03
20
05
20
07
20
09
20
11
20
13

0.00

To understand about rising prices we will analyse how much is the consumer
price index in given period when compared to previous period.CPI helps us to
understand household purchase for consumption. Consumer Price Index CPI
in India increased to 145.20 Index Points in October. Consumer Price Index
CPI in India averaged 125.20 Index Points from 2011 until 2014, reaching an
all time high of 145.20.South Korea CPI increased to 250 Index points in the
year 2014.
Export value index:

export value index

1200.00
1000.00

EPI

800.00

South Korea

600.00

India

400.00
200.00

19
99
20
01
20
03
20
05
20
07
20
09
20
11

0.00

Export value of india was nearly equal to South Korea in 1999 to 2001.The
export value index for india is increased steadily with respect to korea .
Import value index:

import value index

350
300
250
India

200
IVI 150

South Korea

100
50
0
1998 2000 2002 2004 2006 2008 2010 2012 2014
Axis Title

CHAPTER 6

Conclusion
India is an economy which is growing at an rate of 5.3 % , it is likely to grow even further due to
the economic reforms , fall in the inflation rate and a predicted interest rate cut (February-Pre
Budget) by the Reserve Bank Of India.India is a great playing field for the foreign investors as
the equity market is expected to grow in the next financial year . With slowdown of the Japanese
and European economy and slow moving Chinese economy , the most attractive economy at the
moment is India . As there is a huge scope for improvement in infrastructure, technology and
manufacturing.
South Korea on the other hand , has grown astronomically over the years considering the fact
that its size,population and history is not as old as India.South Korean economy as a has
progressed faster than the Indian economy when compared historically . The future predictions
say that the economy is likely to continue the uptrend as the country is still unexplored by the
foreign players and the fact that is a low population compared to the Indian population gives it a
greater advantage as there are more job opportunities in the nation.

Chapter 7

Bibliography
http://www.investopedia.com/
data.worldbank.org
http://www.exportimportstatistics.com/

http://www.tradingeconomics.com/india/indicators
http://www.tradingeconomics.com/south-korea/indicators
http://www.eia.gov/countries/cab.cfm?fips=KS
http://www.eia.gov/countries/country-data.cfm?fips=ks
http://www.eulerhermes.com/mediacenter/Lists/mediacenter-documents/Country-Report-SouthKorea.pdf

Working papers
http://fsi.stanford.edu/sites/default/files/South_Korea_Global_Economy_in_Transition.pdf

http://www.nber.org/papers/w12901.pdf
http://finmin.nic.in/workingpaper/EGES_impact_indiatrade_policyissue.pdf
http://www.nber.org/papers/w16757.pdf