National debts

Although existing evidence suggests that Korea’s fiscal debt is still manageable, the sizeable deficit and the
increasing trend in the debt to GDP ratio in recent years call for vigilance. Korea’s government debt increased quickly after the global crisis in 2009. It is expected to further increase in the coming years as a result of an aging population. Thus, it is crucial to establish policy frameworks that can secure fiscal consolidation in the long run
 The government’s response to the crisis was timely and aggressive, involving multi-dimensional support to the private sector and a supplementary budget of US$22.9 billion that was passed in April 2009. Policymakers spent US$40 billion to stabilize the Korean market.To avoid weakening private demand by exiting prematurely from easy fiscal policy, the government said it would continue to maintain an expansionary fiscal policy and front-load its budget during H2 2009 and 2010. Considerable stimulus spending created a fiscal deficit of 2.0% of GDP, while South Korea's debt to GDP ratio stood at 24.3% in 2010. Due to fiscal consolidation measures, including tax reforms, the IMF said in a November 2010 report that South Korea's debt-to-GDP ratio would ease from 32% in 2010 to 24% in 2015. The IMF also projected that South Korea's fiscal surplus would increase from 1.4% in 2010 to 2.6% in 2015.

The above table illustrates the economic statistics such as gross domestic product (GDP), government and private spending, inflation rates, interest rates, unemployment rates ,in South Korea.

 It is noticeable that South Korea’s government spending has increased from 186.4 to 227.5 in the year 2008 to 2012. Also the investment spending rise in a steady rate from 3.82.8 to 411.4. The evident increase in real GDP growth rate in the year 2010, 6.3%, primarily reflected positive contributions from Exports and investment that were partly offset by a negative contribution from federal government spending. However, in the 2011 the real GDP growth rate has dropped to 3.7% and the next year 2%.

The unemployment rate has been constant around 3%. The inflation rate has dropped from 4% in 2011 to 0.2% July 2013. As well as the Government Deficit has dropped from 3% to 1.3% in 2011. The consumption spending and government debt has been increasing since 2009.