Is South Korea Turning Japanese?
Many are worrying that South Korea is headed for the kind of protracted deflation and stagnation that characterized Japan’s two so-called “lost decades.” While the two countries face many of the same problems, South Korea has a distinct advantage: it can learn from Japan what not to do.
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SEOUL – South Korea’s recent economic performance has been disappointing. After 40 years of astonishing 7.9% annual GDP growth, the average growth rate dropped to 4.1% in 2000-2010, and has stood at a mere 3% since 2011. This has many wondering whether South Korea is headed for the kind of protracted deflation and stagnation that characterized Japan’s so-called “lost decades,” from which it is just beginning to emerge.