The Peninsula

Economic Growth Since the Financial Crisis: Korea and the BRICs

By Troy Stangarone

Economic analysts are always trying to predict the next hot economy and coin a popular phrase to back up their claim. Perhaps one of the most successful was Goldman Sachs, which famously coined the term BRICs in 2001 to draw attention to the long-term economic potential of Brazil, Russia, China, and India among the emerging economies. Since 2001, the term has become part of the economic lexicon and even morphed into a loose political grouping which South Africa joined with the idea of playing the “s” in the grouping.

While Korea is more economically advanced than all of these economies, it might have been a logical answer for the “k” in brick and still makes for an interesting economic comparison. Not because these countries economic profiles are innately similar, but rather as a benchmark for how Korea has performed, especially since the Global Financial Crisis.

Korea also makes for an interesting comparison with the BRICs as it is an economy that they ideally want to emulate. As a recent article for Foreign Affairs, The Backwater That Boomed, notes Korea has grown at an average of 7 percent a year for the last half century and become a wealthy, technologically advanced nation, as well as one of Foreign Affairs “Six Markets to Watch.” In contrast, two of the BRICs — India and Brazil — recently made the latest, less flattering economic catch phrase, the Fragile Five. This latest phrase denotes countries that face an overreliance on foreign direct investment to drive growth at a time when investors are pulling funds out of developing economies as the Federal Reserve begins to taper the latest round of quantitative easing.

GDP Growth Rates for Korea and the BRICS since 2009

All data from World Bank except for 2013. 2013 data from IMF estimate or as reported in Yonhap News and Russia Today.

So, how have Korea and the BRICs performed over the last five years? Overall, China and India have had the strongest growth. However, India has begun to slow in recent years and is in need of further economic reforms. China’s economy has also slowed to a lesser extent as it begins to transition towards greater domestic consumption.

When the crisis hit the global economy in 2009, Korea, along with China and India, was able to avoid a recession. In contrast, Russia’s economy contracted by 7.8 percent and Brazil had a small recession. In the years since, Korea’s economic growth has surpassed Brazil in three out of the four years and Russia in two, including 2013 when it outperformed both.

While China and India have grown at significant rates in recent years, Korea has consistently grown at rates comparable to Russia and Brazil in this new post-crisis era. In the weeks ahead we will continue to look at how these five economies have performed over the last five years.

Troy Stangarone is the Senior Director for Congressional Affairs and Trade at the Korea Economic Institute of America. The views expressed here are his own.

Photo from jonasginter’s photostream on flickr Creative Commons.