South Korea is facing a triple challenge

Few countries have transformed themselves as dramatically as South Korea has over the last half-century.

- Lee Jong-Wha

A poor, authoritarian country with annual per capita income of less than US$400 (13,000 baht) has become a vibrant and prosperous democracy, with direct presidential elections, peaceful transfers of power, and a per capita income of more than $33,000.

But South Korea lately has been grappling with slowing economic momentum, rising political instability and an increasingly fragile security environment. Can the country transform itself again and meet these new challenges?

Begin with the economy. After decades of rapid GDP growth — averaging over 7% in the 1970s-1990s — the economy has slowed, growing by 2-3% in recent years. The growth rate is expected to fall further, to 1%, over the next decade.

A key reason for this is demographic decline, with South Korea's fertility rate having dropped to just 0.75the world's lowest. Its population is shrinking and ageing fast.

It does not help that China is becoming increasingly competitive in sectors that South Korea once dominated, such as shipbuilding, steel, smartphones and, increasingly, semiconductors.