The industrial structure of the Korean economy has also been completely transformed. The agricultural sector’s share of GNP declined from 37.0 percent in 1962 to 7.1 percent in 1993. The manufacturing sector’s share has increased from 14.4 percent to 27.1 percent in the same period. The service sector accounted for only 24.1 percent of GNP in 1962 but grew to 40.0 percent in 1993.

Korea’s merchandise trade volume increased from US$500 million in 1962 to US$166 billion in 1993. The nation continuously posted trade deficits until 1985 when its foreign debt reached US$46.8 billion, the fourth largest in the world. From 1986 to 1989, Korea recorded current account surpluses and its debt declined.

Trends of Major Economic Indicators

	Unit	‘62	‘70	‘80	‘85	‘90	‘92	‘93
GNP	US$ bil.	2.3	8.1	60.5	91.1	251.8	305.7	328.7
Per Capita GNP	US$	8.2	242	2,194	2,242	5,883	7,007	7,466
GNP Growth Rate	%	2.2	7.6	7.0	7.0	9.6	5.0	5.6
Domestic Savings	%	3.3	17.9	29.1	29.8	35.9	34.9	34.9
Ratio
Trade Volume	US$ bil.	0.5	2.8	39.8	61.4	134.9	158.4	166.0
Producer Price	%	9.4	9.2	38.9	0.9	4.2	2.2	1.5
Consumer Price	%	8.3	15.9	28.8	2.4	8.6	6.2	4.8

Inflation in Korea was one of the major economic problems in the 70s and early 80s, during which consumer prices rose at annual rates of 10-20 percent. Since 1982, Korea has managed to keep inflation down to a single digit. The ratio of domestic savings to GNP grew from 3.3 percent in 1962 to 34.9 percent in 1993.

Recent Challenges

Beginning in 1989, the Korean economy began experiencing slower growth, high inflation and a deterioration in the balance of payments. The GNP growth rate fell to 6.7 percent in 1989 from the 12 percent level of previous years. A slump in the growth of the manufacturing sector, from 18.8 percent in 1987 and 13.4 percent in 1988 to 13.7 percent in 1989, contributed largely to this decline in GNP growth rate. The export growth rate on a customs clearance basis, which was 36.2 percent in 1987 and 28.4 percent in 1988, fell to just 2.8 percent in 1989. Reflecting this fall in the export growth rate, the current account surplus lowered to around US$5.1 billion, a significant drop from the 1988 surplus of US$14.2 billion.