South Korea is closer to the center of the world’s industrial gravity than much of the rich world, insulating it from the more inflation and supply-side shocks that currently affect much of the world.

However, long-term prospects for the country do not appear positive. A declining population and already high levels of household indebtedness mean that the country risks Japan-style stagnation.

Recent projectionsfrom the Korea Economic Research Institute (KERI) indicate that the country will run large deficits under the new Yoon administration. Large at least by the standard of countries that do not have a reserve currency (see IMF