Economic Bulletin | KDI 경제교육·정보센터

Economic Trends

The Green Book: Current Economic Trends

Overview Production and investment improved somewhat from the previous months fall, while domestic demand,consumption in particular, continued to increase. The economy added jobs at a faster rate year-on-year in December 2015, from 285,000 jobs in the previous month to 495,000 jobs, as domestic demand continued to improve and the agricultural, forestry, fishery and construction sectors, which slowed down due to unfavorable weather conditions, picked up. Consumer price inflation rose at a slower rate year-on-year in January 2016, from 1.3 percent in the previous month to 0.8 percent, due to the low natural gas utilities prices and as the impact of high cigarette prices has diminished. Mining and manufacturing production, despite weak exports, rebounded in December from a 2.1 percent fall to a 1.3 percent rise, as regular maintenance in oil refineries had been completed. In December, service output stayed unchanged month-on-month and retail sales slightly fell due to a high base effect, down 0.1 percent. Year-on-year, the two indexes improved 3.0 percent and 3.5 percent, respectively. Facility investment rose for the first time in three months in December, improving significantly from a 5.4 percent drop in the previous month to a 6.1 percent rise, backed by strong transportation equipment. Construction completed soared from a 0.7 percent decline to a 7.1 percent increase, led by civil engineering works. Both the cyclical indicator of the coincident composite index and the cyclical indicator of the leading composite index declined in December, down 0.1 points and 0.5 points, respectively. Exports continued to fall in January, down 18.5 percent year-on-year, amid low international oil prices and due to temporary factors, such as fewer days worked (down 1day) and weak vessel exports, which usually fluctuate monthly. In January, stock prices fell amid Chinas financial market instability, and bond yields dropped due to growing demand for safe assets. 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 in January, but at a slower pace, rising 0.04 percent and 0.14 percent month-on-month, respectively. The Korean economy has to deal with rising external uncertainties, such as Chinas slowdown and financial market volatility, the Feds rate increase, falling oil prices and North Korean risks. In order to maintain the recovery momentum gathered backed by strong domestic consumption, the government has increased its first quarter spending by more than 21 trillion won through the frontloading of public sector spending, and has extended the sales tax cut for vehicles. The government will closely monitor internal and external economic developments as well as examine uncertainties and their possible impact on domestic financial markets, and will be prepared to make appropriate responses if necessary. * For further details, please refer to the attached file

Feb 2016