The Green Book: Current Economic Trends | Economic Bulletin

KDI 경제교육·정보센터

Economic Information and Education Center

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Economic Trends

The Green Book: Current Economic Trends

Jun 2016

Trends.pdf

Overview

Production and exports continued to struggle due to weak global recovery while domestic demand stayed positive backed by the strong service sector.

The economy added fewer jobs in April than the previous month (300,000 → 252,000, y-o-y) as the number of daily jobs decreased due to the election day, a national holiday.

Consumer price inflation slowed in May to 0.8 percent compared with 1.0 percent in the previous month, due to stable agricultural product prices and a cut in natural gas rates.

Mining and manufacturing production fell 1.3 percent month-on-month in April as automobiles and other transportation equipment declined due to weak exports.

Service output grew for the third consecutive month in April, up 0.5 percent month-on-month, while retail sales, which grew 4.3 percent in the previous month, inched down 0.5 percent due to a high base effect.

Facility investment rose 3.4 percent month-on-month in April, rising for the second month in a row, backed by strong machinery and transportation equipment. Construction completed fell for the first time in five months, down 6.7 percent, due to a high base effect from the previous month (up 7.0%).

In April, the cyclical indicator of the coincident composite index stayed unchanged, and the cyclical indicator of the leading composite index rose 0.2 points.

Exports continued to fall in May, but at a slower rate compared with the previous month (down 11.2% → 6.0%, y-o-y) partly due to more days worked.

In May, stock prices slightly declined, and market interest rates fell in line with the expectations of the Bank of Korea’s key interest rate cut. The Korean won weakened against both the US dollar and the Japanese yen amid the strong dollar.

Both housing prices and Jeonse (lump-sum deposits with no monthly payments) prices stayed stable month-on-month in May (0.02% → 0.03% and 0.13% → 0.11%, respectively).

Domestic demand has been recovering backed by improving consumption. However, business confidence as well as household confidence has yet to pick up, and uncertainties over the timing of the Fed’s rate hike and Brexit are posing risks.

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.

To help the economy build up recovery momentum, the government will draw up the economic policies for the second half of 2016, focusing on stimulating the private sector to boost exports and investment.

* For further details, please refer to the attached file