Economic Implications for South Korea of the Current Transformation in the Middle East

Abstract

In this article, I focus on the impacts on South Korea of the current transformation in the Middle East. South Korea is the world’s fifth-largest importer of oil, importing 98 percent of its oil for domestic use, 80 percent of which comes from the Middle East. Korea is a major exporter of automobiles, automobile parts, and consumer electronics to the Middle East and North Africa region, and the amount of exports has been steadily rising for the past 20 years. The Middle East is also Korea’s largest engineering, procurement, and construction market overseas, and, in turn, Korea is one of the top contractors there. Given such economic ties, how is the “Arab Spring” affecting the Korean economy? I first examine the close relationship between Korea and the Middle East and then analyze the short-term influences since January 2011. Then I attempt to forecast the longer-term consequences.