Economic Bulletin | KDI 경제교육·정보센터

Economic Trends

The Green Book: Current Economic Trends

Overview The Korean economy has stayed on its recovery path backed by strong exports, but production and investment are slowing down, and uncertainties are increasing amid trade conflicts between the US and China. The economy added 106,000 jobs year-on-year in June led by the service sector. Job markets remained weak due to the struggling manufacturing sector. However, young adult unemployment fell (10.4% 9.0%, down 1.4%p, y-o-y). Consumer prices rose 1.5 percent year-on-year in July. Consumer prices have been stable (up 1.5% up 1.5%, y-o-y, compared with a month ago) due to low service prices although meat prices and natural gas prices rose. All industry production declined in June (up 0.2% down 0.7%, m-o-m) as mining and manufacturing production fell (up 1.2% down 0.6, m-o-m) due to weak automobiles and chemical products. However, service output improved (down 0.2% up 0.2%, m-o-m) backed by strong wholesale retail and healthcare social welfare services. Retail sales rose in June (down 1.1% up 0.6%, m-o-m) as the sales of semi-durable goods and nondurable goods improved. Durable goods sales declined. Facility investment continued to fall in June (down 3.0% down 5.9%, m-o-m) as machinery investment declined. Construction completed went down (down 2.7% down 4.8%, m-o-m), both building construction and civil engineering works being weak. In June, the cyclical indicator of the coincident composite index fell 0.2 points to 99.4, and the cyclical indicator of the leading composite index fell 0.1 points to 100.0. Exports rose 6.2 percent year-on-year in July, exceeding US $50 billion for the fifth month in a row, backed by strong petroleum products, steel and semiconductors. In July KOSPI fell amid increasing worries over trade conflicts between the US and China, despite BOKs decision to hold interest rates steady and expectations for strong US corporate earnings. The dollar-won exchange rate rose due to a strong dollar, and government bond yields on short- and mid-term debts went up. Housing prices continued to fall in July (down 0.02% down 0.02%, m-o-m) due to the houses outside the Seoul metropolitan area, and Jeonse (lump-sum deposits with no monthly payments) prices remained stable across the country (down 0.25% down 0.21%, m-o-m). The economy is expected to continue to recover given improving global economies, strong exports and the governments supplementary budget spending, but job markets are weak and external risks linger, such as US-China trade conflicts, Feds rate hikes and high oil prices. The government will strengthen its risk management, and will work to help boost the economy through increased fiscal spending and individual consumption tax cuts, as well as help create jobs by promoting growth through innovation. * For further details, please refer to the attached file

Aug 2018