Korea's healthcare spending to rise by 9.4% in 2020

A surge of demand in medical products and a growing senior population will boost spending.

Korea’s healthcare expenditure is tipped to grow by 9.4% in 2020 in part due to robust demand of medical products over the virus outbreak, the rising senior population in the country and a slowdown of GDP growth, said a Fitch Solutions report.

The South Korean government’s efforts to prevent transmission of the virus has prompted the establishment of huge education programmes, increased distribution of medical masks and other implementation of public works.

The country also has one of the fastest ageing populations in the region, with the proportion of those aged 65 years old above expected to rise from 13% in 2015 to 20% by 2025.

In particular, the growing incidence of chronic conditions amongst a population with a strong bias towards branded drugs suggested that future patients will require costlier prescriptions and longer treatments than in the past. Similarly, higher healthcare spending will be required for a range of diagnostic tests, rehabilitation, and similar facilities and treatments.

The country's macroeconomic outlook will similarly drive healthcare spending. Fitch has revised down its forecast for South Korea’s 2020 real GDP growth to 1.7%, from 2.2% and marking a slowdown from 2.0% in 2019.

This is expected to be caused by the slowdown of domestic consumption and investment due to the coronavirus outbreak. Additionally, tourism arrivals are sighted to decline severely, as other countries around the world continue to impose restrictions on their citizens travelling to South Korea.