Economic Bulletin | KDI 경제교육·정보센터

Economic Trends

The Green Book: Current Economic Trends

Overview Although the Korean economy has seen domestic demand improve as consumption and investment both increased somewhat, the economy has yet to gain recovery momentum as exports and production have slowed due to strikes in the automobile industry. The economy added more jobs in August than the previous month (298,000 387,000, y-o-y) led by the agriculture, forestry fisheries sector and the construction sector. Jobs continued to decline in the manufacturing sector. Consumer prices rose at a faster rate in September compared with the previous month (up 0.4% up 1.2%, y-o-y), as agricultural, livestock fishery product prices rose and prices for petroleum products fell at a slower rate. Mining and manufacturing production fell 2.4 percent month-on-month in August due to strikes in the automobile industry. Service output rose 0.7 percent month-on-month in August, after falling 0.3 percent in July, due to strong wholesale retail and an increase in real estate transactions. Retail sales increased 2.0 percent month-on-month in August backed by strong sales of durable goods, such as home appliances and mobile phones, and nondurable goods, such as food. A government program aimed at encouraging purchases of energy efficient home appliances and the release of new mobile phone models, as well as extremely hot weather, boosted retail sales. Facility investment rebounded in August, up 14.0 percent month-on-month, due to large investments in the semiconductor industry and a low base effect. Construction completed rose 3.2 percent month-on-month backed by private sector residential housing construction and public sector spending on infrastructure projects. In August, the cyclical indicator of the coincident composite index rose 0.2 points month-on-month as the value of construction completed improved and imports increased. The cyclical indicator of the leading composite index rose 0.3 points due to an increase in the value of construction orders received. Exports fell 5.9 percent year-on-year in September due to strikes in the automobile industry, a recall of mobile phones and fewer days worked. Stock prices rose and both the dollar-won exchange rate and Treasury yields fell in September as the Feds decision on September 22 to leave interest rates unchanged eased uncertainty in financial markets. Housing prices increased at a faster rate than the previous month in September (up 0.07% up 0.08%, m-o-m) due to robust demand for apartments scheduled for reconstruction, while Jeonse (lump-sum deposits with no monthly payments) prices remained stable (up 0.08% up 0.08%, m-o-m) due to increasing supply. Economic recovery could be limited if strikes in some industries are prolonged amid rising internal and external uncertainties, including the enforcement of a new anti-graft law and the Feds rate hike. The government will closely monitor domestic and global economic developments as well as examine the possible impact of internal and external uncertainties on domestic financial markets. The government will work to improve the rate of budget execution and implement additional fiscal stimulus measures as planned, including the expansion of local government supplementary budgets, while renewing efforts to support consumption, investment and exports. * For further details, please refer to the attached file

Oct 2016