Although the Korean economy was affected by the global economic crisis in 2009, it has recovered very fast. Korea was the world’s 13th largest economy in 2009 with a gross domestic product of $1.36 trillion on a purchasing power parity basis. Per capita GDP in Korea was $28,100 in 2009.
Korea is the fifth largest market for U.S. agricultural products. After Korea’s record high $24 billion in total agricultural imports in 2008, and also a record high of about $6.9 billion from the United States, Korea’s agricultural imports from both the world and United States decreased significantly because of the global economic crisis.
U.S. pork exports of about $215 million per year to South Korea are expected to reach $870 million if the Korea- U.S. free-trade agreement were to be implemented. President Obama will be meeting this week with South Korea officials to discuss the free-trade agreement, which is currently languishing in Congress.
The trade agreement concluded in early 2007 is expected to deepen the longstanding alliance between the United States and Korea, and it will reduce Korean import tariffs on many U.S. agricultural products. The FTA is expected to create more opportunities for U.S. exporters than any agreement since NAFTA.
In 2010, total imports of agricultural products from both the world and United States are forecast to nearly recover the 2008 levels. Although actual growth of Korea’s export-oriented economy will depend on external conditions, it is clear that Korea will remain one of the top markets for U.S. food and agricultural products in the foreseeable future. In part, demand for U.S. products is driven by Korean consumer trends which are converging with consumer trends in other developed economies including the United States.
Korean consumers place value on high quality, low cost, health and convenience in the course of making food purchasing decisions. Increasing affluence, more women in the workforce, and a well-traveled younger generation seeking goods with an international flavor are promoting the rise of convenience stores, bulk retail outlets and western-style family restaurants. Demand for products, such as pork, beef, coffee, wine, sauce preparations, nuts, dairy products, and confectionery items is growing and the domestic processing industry lacks the capacity to supply these items.
Korea has a very high population density. Seoul, the nation’s capital, has grown into a global metropolis. Currently over 24 million people live in Seoul and the surrounding metropolitan area - Incheon and Kyunggi Province. Altogether, the Seoul metropolitan area accounts for almost 50 percent of the total population.
This concentration of population in the Seoul metropolitan area along with an efficient distribution system allows suppliers to realize promotional benefits from their efforts very quickly.