McKinsey, who called Korea a "frog in a pot"... Advises "More companies like Samsung Electronics should emerge"

McKinsey's Rosy Outlook for Korea
"7th Largest Economy in the World by 2040"

Recently, McKinsey & Company (McKinsey), the world's No. 1 consulting firm, has attracted attention by presenting a 'rosy outlook' on Korea.

On the 11th, McKinsey published a report titled "Korea's Next S-Curve." The report stated, "Korea entered a low GDP growth rate of 3% in the 2010s, dropped to 2% in the 2020s, and fell out of the top 10 GDP rankings in 2022," adding that "this slowdown was influenced by three factors: labor, capital, and industrial competitiveness."

[Image source=Pixabay]

Nevertheless, McKinsey gave a positive evaluation by estimating Korea's GDP size in 2040 to be between $3.2 trillion and $3.4 trillion (approximately 4160 trillion to 4420 trillion KRW).

However, to achieve this, the number of companies with sales exceeding $100 billion must increase by more than five, and the productivity of small and medium-sized enterprises must roughly double. Last year, only three companies?Samsung Electronics, Hyundai Motor Company, and SK Inc.?surpassed $100 billion in sales.

Additionally, the number of companies with $10 billion in sales must increase from 54 to 74, adding 20 companies, and those with $1 billion in sales must grow from the current 418 to 518, an increase of 100 companies. The report also emphasized that companies must emerge in industries such as bio, artificial intelligence (AI), mobility, and semiconductors.

In particular, McKinsey advised that to increase GDP size, Korea must achieve an average annual economic growth rate in the 4% range by 2040. McKinsey noted, "Jumping to the 4% range is not easy," but added, "The U.S. growth rate rebounded from the 2% range during 1991?1995 to the 4% range during 1996?2000." Furthermore, "Germany's growth rate, which remained in the mid-1% range from 1991 to 2005, surged to around 4% between 2006 and 2011 due to labor reforms," it added.

Previously, in a report published in 2013, McKinsey likened the Korean economy to a "frog in a slowly heating pot." However, in this report, it suggested, "Now it is time for Korea to get out of the boiling water," recommending that "by adopting pillars of restructuring, transition, and nurturing, the country can develop a new S-curve and become one of the top 7 economies by 2040."