Economic Bulletin | KDI 경제교육·정보센터

Economic Trends

The Green Book: Current Economic Trends

Overview The Korean economy has seen domestic demand weaken and production slow due to a halt in sales of Samsungs Note 7 smartphones and as consumption boosted by last months unusually hot weather slowed. The economy added fewer jobs in September than the previous month (387,000 267,000, y-o-y) due to weather-related factors and as job growth in the manufacturing sector continued to decelerate. Consumer prices rose at a slightly faster rate in October compared with the previous month (up 1.2% up 1.3%, y-o-y) despite a drop in agricultural product prices, as electricity rates that were temporarily lowered in July, August and September returned to normal levels and oil product prices fell at a slower rate. Mining and manufacturing production rose 0.3 percent month-on-month in September as production in the auto industry improved. Service output fell 0.6 percent month-on-month in September due to weak wholesale retail and transportation services. Retail sales fell 4.5 percent month-on-month in September due to weak home electronics, mobile phones and food, as sales of the Galaxy Note 7 have been halted, agricultural product prices rose and consumption boosted by seasonal factors, such as unsually hot weather and the Chuseok holiday, has slowed. Facility investment fell 2.1 percent month-on-month due to a base effect related to a large investment in the semiconductor industry in the previous month. Construction completed fell 4.7 percent after rising for four consecutive months. In September, the cyclical indicator of the coincident composite index fell 0.3 points as retail sales and the value of construction completed decreased. The cyclical indicator of the leading composite index rose 0.2 points due to an increase in the value of construction orders received. Exports fell at a slower pace in October (down 5.9% down 3.2%, y-o-y), as exports of vessels improved. Stock prices fell and both the dollar-won exchange rate and Treasury bond yields rose in October as global investors risk appetite decreased due to expectations for the Feds interest rate hike and uncertainty surrounding the US presidential election. Housing prices increased at a faster rate than the previous month in October (up 0.08% 0.17%, m-o-m) and Jeonse (lump-sum deposits with no monthly payments) prices also rose at a faster rate (up 0.08% up 0.14%, m-o-m) because of rising apartment prices in the Gangnam district due to reconstruction plans as well as strong seasonal demand. Although domestic demand is expected to improve in October due to a low base effect and the governments consumption-boosting policies, such as the Korea Sales Festa, there is growing uncertainty related to the US presidential election, Brexit and weak economic sentiment. 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 swiftly implement the supplementary budget and 10 trillion won worth of fiscal stimulus measures, and work to support consumption, investment and exports. * For further details, please refer to the attached file

Nov 2016