Economic Bulletin | KDI 경제교육·정보센터

KDI 경제교육·정보센터

Economic Information and Education Center

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Economic Trends

The Green Book: Current Economic Trends

Overview The Korean economy swiftly recovered from the second half of 2005. In the first half of 2006, the economic growth was gradually stabilizing in tandem with potential. Despite deteriorating external conditions, the economy realized a solid growth of 5.7 percent year on year with prices being stable, including a consumer prices increase of 2.4 percent. However, due to high oil prices, the current account balance was reduced to a deficit of US$270 million with the balance nearing zero. Employment maintained trend growth with an increase of 307,000. However, it fell slightly short of the initial forecast. Production activity in both manufacturing and services took an upturn posting 11 percent and 5.7 percent growth each in the first half, albeit slight moderation of services in June. With respect to expenditure, private consumption was on a solid upward track growing 4.6 percent in the first half. Improvement in facility investment and exports was strengthened with 7.3 percent and 13.9 percent growth respectively. However, construction investment recorded a negative growth of 1.9 percent, which was more sluggish than expected. It was attributable to the sluggish public sector due to base effect and ongoing contraction in the industry cycle. Amid continued downside risks from international oil prices and the global economy, a possibility of slower-than-expected real economy in July cannot be ruled out due to temporary factors such as autoworkers strikes and heavy rain. Temporary factors are expected to be redressed gradually with the government policy efforts. In view of the recent economic trend, the economy overall is estimated to have continued growth in tandem with potential despite external uncertainties. However, the recent economic sentiment was weak in stark contrast to the robust real economic indicators. The government will cope with the economic conditions by fine-tuning policies by sector and maintaining macroeconomic policy stance, while closely monitoring the external conditions and their influence on the domestic economy. * For further details, please refer to the attached file

Aug 2006