As if South Korea’s won doesn’t have enough to worry about, a stampede of local investors towards overseas assets is threatening further losses in Asia’s worst-performing currency.
Since 2010, South Korea has been facing a steady increase in Foreign Direct Investment outflows.
There has been a steady increase in investments in foreign stocks and bonds by regular investors. Large corporations have been investing overseas, contributing to FDI outflow, to develop new markets and build international division of labor in production. Besides, SMEs in South Korea have also joined the FDI outflows to escape high wages, high corporate tax rates and unfriendly business regulations in South Korea.
To make matters worse, South Korea's largest investor, the National Pension Service, plans to increase its investments in foreign stocks to 30% of assets by the end of 2023 compared to 25% of assets by end of 2022 under its previous plan.
Unfortunately, the ongoing trade war between China and the US and the slowing global growth is adding to the negative sentiments and worsening an already bad situation.
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South Korea's economy has been deteriorating for a while now and the only way to jumpstart it is to reunite with the north. A unified Korea will pose a direct threat to Japan and give it more bargaining power when dealing with major economies like China and the U.S.A.
A good suggestion and observation. A belligerent North Korea is harmful to the world at large and helpful to nobody including North Korea itself.
Yes, the Koreans are an industrious lot and a reunification would be good for both the countries.
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