Plagued with high youth unemployment, growing social welfare liabilities, old-age poverty and a rapidly declining birth rate, South Korea today faces multiple challenges. Relations with China and Japan have been uncertain, yet the South Korean economy is the world's 11th largest and a dramatic rapprochement between North and South Korea promises – but does not guarantee – to replace decades of hostility.

Foes or friends in the North?

South Korea is today, by any measure, one of the world's star performers. Its top companies, such as Samsung, LG and Hyundai, make products the world wants. South Korea is now possibly the most wired nation on earth. The talented younger generation has created such a dynamic pop culture that hallyu (the Korean Wave) has swept the globe.

The single anachronism in South Korea’s progress, however, remains its fractious relations with North Korea. The North successfully tested nuclear bombs in underground detonations, first in 2006, again in 2009 and 2013, twice in 2016 and once again in 2017. In parallel, North Korea busily built and tested ICBMs that it claims can reach the USA.

Possibly the single most significant international event in this fractious timeline – though at the time of writing the final effects of this were yet to be fully ascertained – was the aggressive stance of US President Donald Trump to Kim Jong-un's belligerent rhetoric, often delivered in soundbite tweets from his Twitter account. For a while in 2018 it seemed as though brinkmanship from both sides may lead to war, but there were already signs from Kim's conciliatory New Year speech of the same year that he was seeking a rapprochement with South Korea.

North Korea sent teams to the Winter Olympics in Pyeongchang and in April Kim met with South Korean President Moon Jae-in and signed the Panmunjom Declaration aiming towards a full peace treaty between the two countries. This paved the way for Donald Trump and Kim Jong-un's high-profile Singapore summit in June 2018 to sign a joint statement, with the US agreeing to security guarantees for North Korea in return for the denuclearisation of the Korean peninsula. Where this will eventually lead is unknown, but the steps were unprecedented.

Rocky Relations

The supposed lack of a sincere apology for Japan's past actions in Korea is not the only issue the Republic of Korea (ROK) has with its neighbour across the East Sea. Japan calls this same body of water the Sea of Japan and lays claim to a group of islets it calls Takeshima (‘Bamboo Island’) and which Koreans term Dokdo (‘Solitary Island’); the islet cluster is called Liancourt Rocks internationally. The rocks are closer to Korean territory than Japanese and only house two permanent inhabitants (Koreans). They have been squabbled over for decades as a point of pride as much as for their rich fishing grounds and possible reserves of natural gas.

Even though territorial disputes are also a small part of the diplomatic dance between South Korea and China, relations between the two are generally rosier than they are between Korea and Japan. However, the deployment of US-made THAAD (Terminal High Altitude Area Defense) anti-ballistic missile system in South Korea in 2017 created a rapid frosting of relations with Beijing, which feared the system’s radar capabilities could be used against it. As China is South Korea’s largest trading partner, the effects of this souring of relations hit South Korea’s economy hard, including tourism (with a big drop-off in Chinese visitors) and manufacturing. At the time of writing, the 2018 détente between South Korea and North Korea was set to reshape the entire strategic nature of South Korea–North Korea–China-US relations, potentially for the better: watch this space.

Low Birth Rate Blues

With South Korea recording its lowest ever birth rate in 2017 (exceeding even Japan’s notoriously low birth rate) – and the lowest fertility rate recorded in South Korea for females, at 1.05 children born to women of child-bearing age – the nation faces a demographic time-bomb.

Young people are postponing marriage until later and having fewer children within marriage. With only 357,700 babies being born in 2017– the first time the number has fallen below 400,000 – the country is not producing nearly enough babies to stop its population from dropping (women need to be having 2.1 babies each to keep the population stable). South Korea is consequently ageing faster than any other developed nation and now has more elderly people than young. The effects of this greying of the population are enormous, ranging from mushrooming healthcare costs to decreasing productivity, huge poverty among the elderly, a growing burden on the young and increased suicide among older people (often, tragically, as they wish to avoid heaping pressure on their children).

Impeachment & Replacement

After revelations of corrupt links between former president Park Geun-hye – South Korea’s first female leader – and Choi Soon-sil, a woman with no official position who embezzled vast amounts of money through her friendship with Park, the president was impeached in March 2017, and arrested, tried and finally imprisoned in 2018. The impeachment process was accompanied by huge demonstrations against Park known as the Candlelight Revolution, matched in later stages by equally large counter-protests in support of the beleaguered president, dividing the nation. Park Geun-hye was provisionally replaced as president by former Justice Minister Hwang Kyo-ahn until the election of Moon Jae-in in May 2017.