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Flood of warnings on ‘Peak Korea’

Posted February. 03, 2025 09:09,   

Updated February. 03, 2025 09:26

한국어

If we were to assign a defining phrase to each era of Korea’s history, the 1960s might be best described as the era of "overcoming the period of famine (borigogae)," as it was the first time in Korean history that the nation resolved its fundamental issues of food security. The 1980s could be labeled "democratization achieved," while the 2000s might be called "the honor student of the IT revolution," reflecting how Korea successfully democratized and emerged as a global leader in the information technology sector, producing world-renowned tech companies.

But what about the 2020s? How will future Koreans, 50 years from now, describe this decade? Although we are not even halfway through the 2020s, the outlook doesn’t seem promising. The working-age population will soon begin to decline. The potential growth rate has dropped to the one percent range. Young people lament that they might be the first generation to be poorer than their parents. No Korean companies are leading the artificial intelligence (AI) revolution. Perhaps future generations will look back and define the 2020s as "the beginning of decline."

Such concerns are not mere speculation. Recently, the Federation of Korean Industries surveyed 111 economics and business professors, asking whether they agreed with the notion of "Peak Korea"—a term first used in Japan, implying that Korea has reached its peak and is now on the decline. Seven out of ten respondents agreed. If even a majority of professors share this view, it suggests that signs of Korea’s decline are already apparent.

The causes of Korea’s decline and possible responses are like an "open-book test"—the problems and solutions are already laid out before us. In the survey, professors identified three major causes of Korea’s downturn: The demographic cliff caused by low birth rates and an aging population (41.8%), Lack of new growth drivers (34.5%), and Labor market rigidity (10.8%). Another factor could be the rise of China, which has diminished the competitiveness of Korea’s existing industries. A director at a leading electronics company told a journalist, "Right now, Korea’s industries—including electric vehicles, semiconductors, and automobiles—are all facing a ‘chasm’ (a period of temporary stagnation). China is catching up, and we have no clear strategy to respond."

If we are going to overhaul the system, perhaps we should also rethink our economic paradigm. The first step to preventing "the beginning of decline" is to come together and strategize on how to foster the industries of the future.