South Korea is one of the biggest winners of the AI boom. The country is home to Samsung Electronics and SK Hynix, the two largest manufacturers of memory chips, and chip workers are seeing bonuses of around $400,000. The KOSPI, Korea's benchmark index, is up almost 60% for the year so far.
But a Goldman Sachs report finds that wealth is not reaching ordinary households. Even as chip demand drives exports and factory investment higher, retail sales remain close to 2019 levels. Goldman calls it a 'K-shaped cycle': corporate balance sheets thrive while private consumption stays soft.
The numbers come first. South Korea reported a fertility rate of 0.8 births per woman last year, far below the 2.1 rate needed to keep population levels stable, and well under the U.S. rate of 1.6. Twenty percent of the population is now over 65. The United Nations projects Korea's dependency ratio will rise 1.5 percentage points a year over the next decade, the fastest pace among the 70 economies Goldman analyzed — faster even than Japan's most intense aging period from 2000 to 2015.
Unlike retirees in Japan, Taiwan or the United States, older Koreans do not draw down savings. Goldman found Koreans in their sixties retain 37% of their income, and those in their seventies save at rates similar to Koreans in their forties. More than 60% of Korean household net worth sits in non-financial assets like real estate, the highest share among the advanced economies Goldman studied. Korean households' financial assets total just 100% of 2024 GDP — the lowest in Goldman's sample, versus five times GDP in Taiwan, another chip-boom winner.
That leaves retirees asset-rich but cash-poor. Goldman notes that fewer than one-fourth of elderly households with retirement savings could cover living costs from financial assets alone, and reverse mortgages cover just 1.8% of homeowners over 75 — a reluctance Goldman attributes partly to a desire to leave assets to heirs. Among major economies, a one-point rise in the dependency ratio cuts consumption growth by roughly 3 basis points a year; in Korea the hit runs 10 to 17 basis points, and Goldman's modeling suggests aging could shave up to 25 basis points off annual consumption growth over the next decade.
Seoul's answer has been to spend taxpayer money on the birth rate: a 'marriage support grant' of up to 1 million won ($725) and an additional 20 million won ($14,500) per newborn, alongside local matchmaking events with cash rewards. Birth rates have ticked up slightly, but any children born today will not enter the workforce for two decades.
The episode is a case study in the limits of the administrative state. Seoul can subsidize weddings and cash bonuses for births, but no grant program rewires a fertility rate or unlocks the trillions in Korean real estate sitting idle on retirees' balance sheets. Goldman's own prescription — freeing elderly homeowners to convert housing equity into spendable capital — is a market fix, not a bureaucratic one.
Capital rewards clear rules, and Korea's chipmakers have gotten them: exports are booming, margins are wide, and the KOSPI has answered. What the country lacks is a financial system flexible enough to let ordinary households, not just corporations, put that capital to work.
