Why Korea: Consumer Staples: A New Growth Engine

Editor’s Note: This is the first in a series of posts intended to introduce South Korea as an investment destination from Korean Investment Management, a leading asset manager in South Korea.   Following the financial crisis, the global economy has faced a “general glut”. Specifically, there is an oversupply in manufacturing due to excess capacity and soft global demand, which has resulted in poor conditions for corporate investments. Accordingly, consumer spending has replaced investments as the core growth driver in most countries. Similar to the US and Europe, China and Korea had traditionally relied on manufacturing but now have to focus on fostering domestic consumer spending. In major developed markets (DMs), consumer spending accounts for 60-70% of GDP. In Korea, private consumption accounts for less than 50% of GDP, lower than the major DMs, but this weighting is expected to rise gradually.   Before the financial crisis, Korea’s economic growth was traditionally driven by export-orientated manufacturing sectors, including home appliances, automotive, shipbuilding, steel and chemicals. And, investments were primarily...

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