Economic Bulletin | KDI 경제교육·정보센터

KDI 경제교육·정보센터

Economic Information and Education Center

발행물

Economic Trends

The Green Book: Current Economic Trends

Overview The Korean economy has been recovering from a slowdown in the second quarter as consumption, investment and employment are improving, but mining and manufacturing production decreased due to weak exports and inflation remains low. The economy added 326,000 jobs year-on-year in July, led by the manufacturing sector. On a month-on-month basis, job growth accelerated from 21,000 to 122,000. Consumer price inflation in August remained in the less than 1 percent range year-on-year at 0.7 percent as petroleum product prices fell and stable supplies of agricultural products due to favorable weather conditions pushed down prices. Core inflation, which excludes oil and agricultural products and is more related to demand, was recorded at 2.1 percent, staying in the two percent range. Mining and manufacturing production declined in July compared with the previous month from a 2.5 percent increase to a 0.5 percent fall, as companies cut the production of electronic parts due to too much inventory. Both overseas and domestic shipments increased for two consecutive months. Service output and retail sales rebounded in July from the previous months slump, recovering from the aftermath of the MERS outbreak, as the indices rose 1.7 and 1.9 percent, respectively. Facility investment rose for the second consecutive month in July, up 1.3 percent month-on-month, as investment in both machinery and transportation equipment increased. Construction completed increased for the third month in a row, up 0.8 percent month-on-month, backed by strong building construction. The cyclical indicator of the coincident composite index rose 0.2 points in July from the previous month, while the cyclical indicator of the leading composite index stayed unchanged. Exports fell 14.7 percent year-on-year in August partly due to temporary factors such as fewer days worked and the Tianjin explosions as well as low oil prices and delayed deliveries of drillship. Stock market volatility increased in August due to concerns about Chinas stock markets, the yuan depreciation and uncertainties regarding the Feds rate hike. The Korean won depreciated against both the US dollar and Japanese yen. Both housing prices and Jeonse (lump-sum deposits with no monthly payments) prices continued to increase month-on-month in August, each rising 0.3 percent. Consumption has been recovering from the aftermath of the MERS outbreak, but both the consumer and corporate sentiments have yet to fully pick up, and external uncertainties as to the Feds rate hikes and Chinas stock market volatility are posing risks. The government will continue to work on stimulating consumption, in particular early implementing the supplementary budget and expanding the Korea Grand Sale, a nationwide shopping promotion event, while accelerating the reform of the four areas of the public, education, labor and financial sectors. The government will closely monitor internal and external economic developments and their impact on domestic financial markets, in particular regarding the concerns over the Chinese economy and the Feds rate hikes, and will be prepared to make appropriate responses if necessary. * For further details, please refer to the attached file

Sep 2015