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 economy continues to recover from a setback in the fourth quarter of last year, despite some real economic indicators fluctuating somewhat, including production, consumption and construction investment. Employment growth is slowing down and inflation remains low due to low international oil prices. The economy continued to add jobs in March but at a slower rate due to a high base effect (649,000 jobs added in March 2014). Permanent jobs led the increase and a total of 338,000 jobs were added year-on-year compared with 376,000 jobs a month ago. Consumer price inflation remained low in April, rising 0.4 percent year-on-year, due to low petroleum prices and a stable supply of agricultural products, while core inflation, which excludes oil and agricultural products and is more related to demand, rose 2.0 percent, staying in the two percent range. Mining and manufacturing production fell 0.4 percent month-on-month in March after a 2.3 percent increase in the previous month, but the index decreased at a slower rate quarter-on-quarter, falling 0.1 percent in the first quarter of 2015 compared with a 0.9 percent decline in the previous quarter. Service output and retail sales decreased in March following an increase in the previous month when the Lunar New Year pushed up demand, falling 0.4 percent and 0.6 percent, respectively. However, both indices improved quarter-on-quarter, each increasing 0.5 percent in the first quarter. Facility investment in March fell 3.9 percent from a 3.4 percent rise in the previous month due to weak transportation equipment investment, while construction completed dropped 6.8 percent after a 4.8 percent surge as both building construction and civil engineering works declined. However, the two indices will likely improve given a large increase in machinery and construction orders. The composite index of coincident indicators fell 0.2 points from the previous month in March, and the composite index of leading indicators increased 0.7 points, rising for four months in a row. Exports continued to decrease year-on-year in April, falling 8.1 percent from a year ago, as low international oil prices pushed down prices. The trade balance posted a surplus of US $8.49 billion. In April, the KOSPI went up due to increased foreign capital inflows, while market interest rates rose. The Korean won appreciated against the US dollar and the Japanese yen compared to the previous month. Both housing prices and Jeonse (lump-sum deposits with no monthly payments) prices continued to increase in April, rising 0.4 percent and 0.6 percent, respectively, while housing sales surged year-on-year by 29.2 percent to 120,000 transactions. Although uncertainties remain as the Japanese yen continues to be weak and the global economic recovery has yet to fully take root, the economy is likely to be positively influenced by low international oil prices and asset market recoveries, including housing and stock markets, which in turn lead to strong consumer and investor sentiment. The Korean government will continue to closely monitor internal and external economic trends, and at the same time will further improve the Korean economys resilience against external shocks. The government will continue to implement the Three-year Plan for Economic Innovation and 2015s economic policies in order to revitalize the economy and pursue structural reform. * For further details, please refer to the attached file

May 2015