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Strategic Action To Save Korea Is Urgently Needed: India's Moment
While the country has demonstrated remarkable resilience in overcoming past challenges, the convergence of multiple crises now poses a serious threat to its future stability, prosperity and its Democratic credentials.
If urgent action is not taken, South Korea risks a potential collapse – which could have far-reaching consequences, destabilizing the entire region.
Multitude of crisesOne of the most pressing social issues South Korea faces today is its declining birth rate, which is among the lowest in the world. The country's total fertility rate dropped to an alarming 0.72 in 2023, far below the replacement rate of 2.1. The reasons for this trend include the high cost of living, career insecurity, intense work culture and gender inequality in childcare responsibilities.
Despite government incentives such as cash allowances for newborns and increased parental leave policies, the downward trend has not reversed, threatening long-term societal stability.
Along with the low birth rate, South Korea continues to grapple with one of the highest suicide rates among developed nations. According to the OECD, South Korea has the highest suicide rate among its member states. Factors contributing to this crisis include extreme academic pressure, workplace stress, social isolation and mental health stigma.
While the government has made efforts to improve mental health support, more comprehensive reforms are required to address the root causes of stress and depression in Korean society.
Compounding South Korea's social crisis is its rapid transition into an aging society. By 2050, nearly 40% of the population is expected to be 65 or older, leading to a shrinking workforce and an increasing burden on social welfare systems. The pension system faces immense pressure, while the healthcare sector will require significant reforms to accommodate the growing elderly population.
Although the government has attempted to address these challenges through increased immigration and automation in industries, the obstacles remain formidable. The combined impact of these demographic shifts is profound, affecting nearly every aspect of daily life in South Korea.
South Korea's economic growth has slowed in recent years. From being one of the fastest-growing economies in the world, its GDP growth rate has declined to around 2% annually. Structural challenges such as an overreliance on large conglomerates (chaebols), stagnating domestic consumption and the aging workforce limit its ability to sustain long-term growth.
South Korea's trade surplus, a traditional source of strength, has been eroding due to stiff competition from China and protectionist policies from the United States. China, once a major export destination, is now a formidable competitor in sectors such as semiconductors, shipbuilding and electric vehicles.
Additionally, the US Inflation Reduction Act and other protectionist measures have forced South Korean companies to rethink their global supply chain strategies.
Moreover, South Korea's household debt-to-GDP ratio is one of the highest in the world, exceeding 100%. Real estate speculation, fueled by low-interest rates in the past, has led to excessive borrowing. As interest rates rise to combat inflation, many households are struggling to service their debt, increasing financial instability in the economy. The economy is steadily nearing a critical tipping point.
South Korea's political landscape has also become deeply polarized, with sharp ideological divisions between conservative and progressive factions. Recent elections have been marked by intense partisan conflict, hampering effective governance and policy implementation. This polarization has also led to frequent legislative gridlocks, making it difficult to pass crucial economic and social reforms.
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