Economic Bulletin | KDI 경제교육·정보센터

Economic Trends

The Green Book: Current Economic Trends

Overview The Korean economy has seen inflation remain stable, with economic indicators such as service output and investment improving. However, employment growth has been slowing down, while production and consumption continue to fall. Taking into account the Lunar New Year effect, major indicators of the real economy, including production, consumption and investment, have been sluggish in the first two months of 2012. In February, the economy added 201,000 jobs year-on-year, down from 322,000 in the previous month, while the employment and unemployment rates remain weak. Consumer price inflation stayed stable in the 1.0 percent range in March, falling to 1.3 percent from the previous months 1.4 percent, as agricultural product prices fell due to improving weather conditions and personal service prices declined due to the expansion of childcare subsidies. Mining and manufacturing production fell 0.8 percent month-on-month in February due to weakness in the semiconductor sector, while service output increased by 1.7 percent led by real estate renting. Meanwhile, the average month-on-month growth rate for mining and manufacturing production in January and February was 0.1 percent, which was low compared to 2.9 percent posted in the fourth quarter of 2012. The average monthly growth rate for service output in the first two months of the year was also 0.1 percent, nearly on par with the fourth quarter of 2012, when the average growth rate was 0.0 percent. Despite an increase in durable and semi-durable goods sales, retail sales in February fell 0.1 percent from the previous month due to a decrease in nondurable goods sales. In January and February, retail sales declined by an average of 1.6 percent, whereas in the fourth quarter of the previous year retail sales had increased by an average of 0.4 percent. Facility investment in February rose 6.5 percent month-on-month due to strong machinery and transportation equipment investment. However, facility investment declined by an average of 1.8 percent in January and February, while it had grown 0.8 percent in the fourth quarter of 2012. Construction investment went up 7.0 percent, led by an improvement in building construction and civil engineering works. The January-February average growth rate was 5.2 percent, posting an improvement from 1.4 percent in the fourth quarter of the previous year. Exports rose 0.4 percent year-on-year in March, thanks to the strong performance of IT-related items including mobile phones and semiconductors. The trade balance remained in the black at US$3.36 billion. The cyclical indicator of the coincident composite index rose 0.1 point percent month-on-month in February, and the leading composite index fell 0.1 point. In March, both the stock prices and the won fell, as geopolitical risks related to North Korea escalated, uncertainties over the eurozone spread, and foreign investors became net sellers of Korean stocks. The decline in housing prices slowed from 0.2 percent to 0.1 percent in March, while the upward trend in rental prices accelerated from 0.3 percent to 0.5 percent. Uncertainties linger both at home and abroad due to fiscal anxiety in the US, slow economic recovery in Europe and risks concerning North Korea. Meanwhile, the domestic economy remains stagnant due to weak consumption and sluggish investment. The Korean government will closely watch the global and domestic economic situations, and reinforce policy responses by aggressively managing macroeconomic policies. At the same time, the government will focus on securing the lives of the low- and middle-income classes through job creation and by stabilizing the prices of necessities, while continuing to adopt policies to improve the health of the economy. * For further details, please refer to the attached file

Apr 2013