economic bulletin (vol.32 no.4, april 2010)
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The Green Book: Current Economic Trends
Overview 3
1. Global economy 4
2. Private consumption 8
3. Facility investment 12
4. Construction investment 14
5. Exports and imports 16
6. Mining and manufacturing production 18
7. Service sector activity 20
8. Employment 22
9. Financial markets 26
9.1 Stock market9.2 Exchange rate9.3 Bond market9.4 Money supply & money market
10. Balance of payments 30
11. Prices and international commodity prices 32
11.1 Prices11.2 International oil and commodity prices
12. Real estate market 36
12.1 Housing market12.2 Land market
13. Composite indices of business cycle indicators 40
Policy IssuesNew national accounting system to take hold in three years 42
Economic News Briefing 45
Statistical Appendices 51
Republic of Korea
Economic Bulletin
Vol. 32 | No. 4
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Economic Bulletin 3
The Korean economy continued a recovery track, as major economic indicators such asproduction, domestic demand, exports, and employment showed steady improvement amidstabilizing prices.
Mining and manufacturing production in February rose 3.6 percent month-on-month and19.1 percent year-on-year, thanks to robust exports and domestic demand. Service outputimproved 3.1 percent month-on-month and 7.1 percent year-on-year in line with an increasein educational services and information & communication services.
Consumer goods sales increased 1.8 percent month-on-month and 12.9 percent year-on-yearin February, as the lunar new year holidays and corporate incentive payment positivelyaffected sales of durable and non-durable goods.
In February facilities investment, led by machinery investment, grew both month-on-monthand year-on-year by 7.8 percent and 18.0 percent, respectively. Construction completed fellboth month-on-month and year-on-year by 3.9 percent and 2.4 percent, respectively, due to
poor performance in building construction and civil engineering works.
The total number of workers hired in February gained 125,000 year-on-year, led by anemployment increase in the manufacturing and service sectors. The employment rate( seasonally adjusted ) posted 58.3 percent, adding 0.1 percentage point month-on-month,while the unemployment rate (seasonally adjusted) landed at 4.4 percent, shedding 0.4percentage points.
Exports jumped 35.1 percent year-on-year in March, helped by the recovering globaleconomy. Imports, backed by a hike in raw materials and capital goods, soared 48.4 percentyear-on-year.
The consumer price increase in March stabilized at 2.3 percent, as manufactured goodsprices and service fees remained steady while prices of petroleum, agriculture, livestock andfishery products went up.
In March, the financial market saw stock prices increase and foreign exchange rates fall,backed by foreign investors net buying of domestic stocks amid easing concerns over theGreek fiscal crisis and rising expectations of global economic recovery.
To sum up, although the Korean economy stays on an upward track amid the globaleconomy steadily recovering, external uncertainties still exist from fiscal difficulties in someEuropean countries, discord between the US and China over trade imbalance, and risingprices of raw materials including oil and steel.
The Korean government, to achieve a secure economic recovery, will hold on to currentpolicies, while renewing its efforts to create jobs and support the working class. On the other
hand, the government will examine more closely any possible risks at home and abroad, andsteadily work towards improving Koreas economic structure, with on-going corporaterestructuring among others.
The Green BookCurrent Economic Trends
Overview
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4 April 2010
1. Global economy
The global economy has been recovering moderately, as consumption, production, and
employment improved in the US, China, and Asian developing countries. However, recovery
of the eurozone economy is still slow, due to growing concerns about Europes fiscal deficit
amid Portugals sovereign credit rating cut on March 24 and Icelands on March 31.
US real GDP grew 5.6 percent (annualized q-o-q, final ) in the fourth quarter of 2009, while
consumption and employment increased from the beginning of 2010. The economic recovery
clearly took hold as industrial production and retail sales expanded in February from the
previous month and the ISM manufacturing index hit a six-year high of 59.6.
The US housing market was negatively affected in February by the cold wave and the Feds
MBS (Mortgage-Backed Security) purchase expiration on March 31, as existing and new
home sales fell month-on-month by 0.6 percent and 2.2 percent, respectively.
Job markets improved in March, as the unemployment rate stayed flat at 9.7 percent and
non-farm payroll increase reached an all-time high of 162,000 since March 2007.
The Federal Reserve announced in the Federal Open Market Committee (FOMC) on March 16
that the Fed would maintain the target range for the federal funds rate at zero to 0.25percent, and close all the remaining special liquidity facilities, excluding TALF (Term Asset-
Backed Securities Loan Facility) scheduled to end on June 30.
US
(Percentage change from previous period)
Annual Q3 Annual Q1 Q2 Q3 Q4 Jan Feb
Real GDP1
- Personal consumption expenditure
- Corporate fixed investment
- Construction investment for housing
Industrial production
Retail sales
New home sales
New non-farm payroll employment(thousand) 2
Consumer prices (y-o-y, %)
2008 2009 2010
1. Annualized rate (%)
2. Monthly average
Source: US Department of Commerce
0.4
-0.2
1.6
-22.9
-1.8
-0.8
-37.4
-302
3.8
-5.4
-3.1
-19.5
-23.2
-3.4
-6.8
-15.0
-652
1.5
-2.4
-0.6
-17.9
-20.4
-9.8
-6.0
-22.8
-395
-0.3
-6.4
0.6
-39.2
-38.2
-5.2
-1.3
-13.5
-753
-0.2
-0.7
-0.9
-9.6
-23.3
-2.7
-0.1
9.9
-477
-0.9
2.2
2.8
-5.9
18.9
1.6
1.6
9.2
-261
-1.6
5.6
1.6
5.3
3.8
1.6
1.8
-8.9
-90
1.5
-
-
-
-
0.9
0.1
-8.7
14
2.6
-
-
-
-
0.1
0.3
-2.2
-14
2.1
Unemployment rate (%)
10.1 (Oct 2009) 10.0 (Nov) 10.0 (Dec) 9.7 (Jan 2010) 9.7 (Feb) 9.7 (Mar)
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Economic Bulletin 5
US federal funds rate and consumer prices
Source: US Federal Reserve Board & Department of Labor
US non-farm payroll employment (m-o-m change)
Source: US Department of Labor
US GDP (q-o-q, annualized rate)
Source: US Department of Commerce1-1
1-2
1-3
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6 April 2010
As the Chinese economy saw domestic demand continue to increase and exports growsubstantially, the consequent increase in liquidity fueled concerns about hikes in real estateand consumer prices. The Chinese government announced in the National PeoplesCongress on March 5 that it would maintain its proactive fiscal policy and moderately easymonetary policy, thereby expanding domestic demand.
Japans economy grew 0.9 percent quarter-on-quarter in the fourth quarter of 2009, stayingon a slightly upward track, as exports and domestic consumption improved. Theunemployment rate remained unchanged at 4.9 percent in February, showing signs ofstabilizing job markets, while consumer prices continued to decline.
Eurozones economic recovery was delayed by continuing low employment which reached
10.0 percent in February, amid uncertainties still existing including Portugals sovereigncredit rating cut. Greece sovereign debt concerns were relieved to some extent, as Europeanleaders agreed to provide a joint Europe-IMF bailout to Greece at the EU summit held onMarch 25-26.
China
Japan
(Percentage change from same period in previous year)
Real GDP
Fixed asset investment (accumulated)
Retail sales
Industrial production
Exports
Consumer prices
Producer prices
2008 2009 2010
Annual
9.0
26.1
21.6
12.9
17.2
5.9
6.9
Q4
6.8
26.1
20.6
6.4
4.1
2.5
2.5
Annual
8.7
30.5
15.5
11.0
-15.9
-0.7
-5.4
Q1
6.2
28.6
14.9
5.1
-19.7
-0.6
-4.6
Q2
7.9
33.6
15.0
9.2
-23.5
-1.5
-7.2
Q3
9.1
33.3
15.4
12.4
-20.7
-1.3
-7.7
Q4
10.7
30.5
16.9
18.0
0.2
0.7
-2.1
Jan
-
-
-
-
21.0
1.5
4.3
Feb1
-
26.6
17.9
20.7
45.7
2.7
5.4
Source: China National Bureau of Statistics
1. January-February average for fixed asset investment, retail sales and industrial production
Eurozone
Source: Eurostat
Real GDP
Industrial production
Retail sales
Exports (y-o-y, %)
Consumer prices (y-o-y, %)
2008 2009 2010
(Percentage change from previous period)
Annual
0.8
-1.8
-0.2
3.7
3.3
Q4
-1.9
-6.0
-1.5
-4.9
2.3
Annual
-4.0
-14.7
-2.8
-18.1
0.3
Q1
-2.5
-7.4
-1.0
-21.1
1.0
Q2
-0.1
-2.7
-0.3
-23.2
0.2
Q3
0.4
0.7
-0.2
-19.3
-0.4
Q4
0.1
1.9
0.0
-8.3
0.4
Jan
-
1.5
-0.2
4.6
1.0
Feb
-
-
-
-
0.9
Source: Japan's Statistics Bureau and Statistics Centre
Real GDP
Industrial and mining production
Retail sales (y-o-y, %)
Exports (y-o-y, %)
Consumer prices (y-o-y, %)
2008 2009 2010
(Percentage change from previous period)
Annual
-0.7
-3.4
0.3
-3.5
1.4
Q4
-2.7
-11.3
-1.5
-23.1
1.0
Annual
-5.2
-22.3
-2.2
-33.1
-1.4
Q1
-3.6
-22.1
-3.9
-46.9
-0.1
Q2
1.5
8.3
-0.9
-38.5
-1.0
Q3
-0.1
7.4
-3.4
-34.4
-2.2
Q4
0.9
4.5
-0.7
-8.0
-2.0
Jan
-
2.7
2.3
40.9
-1.3
Feb
-
-0.9
4.2
45.3
-1.1
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Economic Bulletin 7
Eurozone GDP growth and industrial production
Source: Eurostat
Japans GDP growth
Source: Cabinet Office & Ministry of Economy, Trade and Industry, Japan
Chinas GDP and fixed asset investment
Source: National Bureau of Statistics of China1-4
1-5
1-6
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8 April 2010
2. Private consumptionPrivate consumption ( preliminary GDP) in the fourth quarter of 2009 increased 0.4 percentquarter-on-quarter and 5.8 percent year-on-year.
Consumer goods sales in February 2010 was up 1.8 percent month-on-month, due to brisksales of durable and non-durable goods, while jumping 12.9 percent year-on-year.
On a month-on-month basis, both durable goods sales such as home appliances andcomputer & communications devices and non-durable goods sales such as vehicle fuelsexpanded 3.4 percent and 2.0 percent, respectively, whereas semi-durable goods sales fell1.4 percent.
On a year-on-year basis, consumer goods sales picked up due to a low base effect from thesame period of the previous year and in particular, an increase in durable goods sales suchas automobiles.
Sales at department stores continued an upward march for the tenth consecutive monththanks to the lunar new year holidays, while those at large discounters reboundedsubstantially.
(Percentage change from same period in previous year)
Consumer goods sales
(Seasonally adjusted)2
- Durable goods3
Automobiles
- Semi-durable goods4
- Non-durable goods5
1. Preliminary
2. Percentage change from previous period
3. Durable goods: Automobiles, electronic appliances, furniture, telecommunications devices, etc.
4. Semi-durable goods: Clothing, footwear, etc.
5. Non-durable goods: Food, medicine, cosmetics, fuel, tobaccos, etc.
Source: Statistics Korea
2008 2009 2010
Annual
1.1
-
1.6
-3.5
-3.0
1.4
Q4
-4.2
-3.6
-9.6
-21.0
-10.7
0.2
Annual
2.6
-
8.1
21.8
0.3
1.2
Q1
-4.7
1.0
-11.9
-20.6
-1.5
-1.4
Q2
1.5
5.1
5.7
20.1
-0.6
0.5
Q3
2.8
0.3
7.9
24.1
-0.7
1.9
Q4
10.8
4.1
33.9
76.9
3.4
4.1
Dec
12.7
1.2
45.8
92.0
7.2
1.5
Jan 1
6.8
-1.3
39.7
73.0
4.7
-5.2
Feb1
12.9
1.8
21.3
34.6
3.1
12.4
(Percentage change from same period in previous year)
Annual Q4 Annual Q1 Q2 Q3 Q4 Dec Jan1 Feb1
- Department stores
- Large discounters
- Specialized retailers2
2008 2009 2010
1. Preliminary
2. Specialized retailers are defined as stores carrying a few (1 to 3) specialized items.
Source: Statistics Korea
1.2
2.5
-1.8
-4.3
-1.0
-8.2
3.3
-2.0
2.9
-0.8
-4.4
-6.6
0.4
-2.9
2.6
4.2
-3.4
3.5
9.1
3.2
12.6
14.7
5.4
14.1
6.5
-9.3
10.7
17.3
27.9
7.7
(Percentage change from same period in previous year)
Private consumption2
(Seasonally adjusted)3
2007 2008 20091
1. Preliminary 2. National accounts 3. Percentage change from previous period
Source: The Bank of Korea
Annual
5.1
-
Annual
1.3
-
Q3
1.8
0.1
Q4
-3.6
-4.5
Annual
0.2
-
Q1
-4.4
0.3
Q2
-1.0
3.3
Q3
0.7
1.7
Q4
5.8
0.4
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Economic Bulletin 9
Consumer goods sales
Source: Statistics Korea (industrial activity trend)
Private consumption
Source: The Bank of Korea (national accounts)2-1
2-2
2-3 Consumer goods sales by type
Source: Statistics Korea (industrial activity trend)
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10 April 2010
Consumer goods sales in March, while increasing year-on-year, is projected to slow downfrom a month earlier, given low estimates of advanced indicators such as retailers sales,bad weather conditions and a high base effect from the previous month.
Domestic credit card spending was up 19.1 percent year-on-year, slightly decelerating fromthe previous month.
Sales at department stores and large discounters fell sharply due to a drop in bargain saledays.
Domestic sales of Korean automobiles remained brisk, despite the expiration of the taxbreak for new car purchases at the end of 2009, while gasoline sales continued to rise for asecond consecutive month in March.
Despite temporary seasonal adjustment, private consumption is expected to continue to
increase, backed by a recently improving employment trend, stabilizing consumer prices andfinancial markets, and growing consumer sentiment.
Value of credit card use (y-o-y, %)
9.4 (Oct 2009) 18.3 (Nov) 20.0 (Dec) 20.2 (Jan 2010) 21.2 (Feb) 19.1 (Mar)
Department store sales (y-o-y, %)
11.4 (Oct 2009) 6.4 (Nov) 12.5 (Dec) 4.8 (Jan 2010) 15.2 (Feb) 4.1 (Mar)
Discount store sales (y-o-y, %)4.5 (Oct 2009) -2.8 (Nov) 3.9 (Dec) -13.4 (Jan 2010) 30.8 (Feb) 1.1 (Mar)
Domestic sales of Korean automobiles (y-o-y, %)
23.8 (Oct 2009) 83.6 (Nov) 79.9 (Dec) 61.7 (Jan 2010) 21.3 (Feb) 29.6 (Mar)
Domestic sales of gasoline (y-o-y, %)
20.7 (Oct 2009) -3.0 (Nov) -4.5 (Dec) -0.6 (Jan 2010) 8.3 (Feb) 6.9 (Mar)
Source: Ministry of Knowledge Economy
The Credit Finance Association
Korea Automobile Manufacturers Association
Korea National Oil Corporation
Ministry of Strategy and Finance (for February data)
Number of workers hired (y-o-y, ten thousand)
1.0 (Oct 2009) -1.0 (Nov) -1.6 (Dec) 0.5 (Jan 2010) 12.5 (Feb)
Consumer prices (y-o-y, %)
2.4 (Nov 2009) 2.8 (Dec) 3.1 (Jan 2010) 2.7 (Feb) 2.3 (Mar)
KOSPI (month-end)
1,556 (Nov 2009) 1,683 (Dec) 1,602 (Jan 2010) 1,595 (Feb) 1,693 (Mar)
Won/dollar exchange rate (month-end)
1,167 (Nov 2009) 1,168 (Dec) 1,157 (Jan 2010) 1,158 (Feb) 1,131 (Mar)
Consumer Sentiment Index(CSI, base=100)
117 (Oct 2009) 113 (Nov) 113 (Dec) 113 (Jan 2010) 111 (Feb) 110 (Mar)
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Economic Bulletin 11
Department store and discount store sales (current value)
Source: Ministry of Knowledge Economy (monthly retail sales)2-4
2-5
2-6 Consumer sentiment index
Source: The Bank of Korea
Domestic automobile sales
Source: Korea Automobile Manufacturers Association (monthly automobile industry trend)
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12 April 2010
3. Facility investment
Facility investment (preliminary GDP ) in the fourth quarter of 2009 posted a quarter-on-
quarter increase of 5.3 percent, and a year-on-year gain of 13.3 percent.
Facility investment in February 2010 rose 7.8 percent month-on-month and 18.0 percent
year-on-year on the back of an increase in machinery investments including those in semi-conductor equipment.
Facility investment in March is expected to continue an upward trend, given improving
corporate investment confidence amid the economic recovery, growing machinery imports,and high pressure on facilities investment adjustment.
(Percentage change from same period in previous year)
Facility investment2
(Seasonally adjusted)3
- Machinery
- Transportation equipment
1. Preliminary 2. National accounts 3. Percentage change from previous period
Source: The Bank of Korea
2007 2008 20091
Annual
9.3
-
9.2
9.6
Annual
-1.0
-
-1.8
1.8
Q1
2.8
0.4
-0.9
17.5
Q2
2.0
1.2
0.9
5.9
Q3
5.3
-1.0
8.0
-3.8
Q4
-13.3
-13.9
-14.4
-9.8
Annual
-9.1
-
-13.0
4.7
Q1
-23.1
-10.5
-23.2
-22.6
Q2
-17.3
9.0
-21.5
-2.9
Q3
-7.0
10.8
-14.8
22.9
Q4
13.3
5.3
10.0
24.2
(Percentage change from same period in previous year)
Facility investment
(Seasonally adjusted)2
- Machinery
- Transportation equipment
Domestic machinery orders
- Public
- Private
- Machinery imports
Facility investmentadjustment pressure3
1. Preliminary
2. Percentage change from previous period
3. Production growth rate minus production capacity growth rate in the manufacturing sector (%p)
Sources: Statistics Korea & The Korea International Trade Association
2007 2008 2009 2010
Annual
8.2
-
7.5
11.3
20.6
-11.4
24.5
22.1
1.7
Annual
-3.0
-
-4.2
2.1
-13.8
5.0
-15.5
6.4
-1.7
Annual1
-8.0
-
-12.9
12.0
-11.8
61.7
-19.9
-16.6
-4.0
Q1
-17.9
-10.2
-22.1
0.1
-35.5
150.8
-44.8
-27.9
-19.1
Q2
-12.9
5.6
-18.9
11.8
-17.7
29.9
-22.3
-27.4
-8.9
Q3
-10.0
2.4
-17.0
20.0
3.4
280.2
-16.0
-15.9
1.2
Q4
10.2
13.9
8.8
15.5
20.0
-27.2
35.2
-7.2
12.8
Dec
21.1
5.9
19.5
27.4
21.2
-44.5
52.4
24.7
31.5
Jan 1
19.4
-10.6
13.5
43.2
11.2
-27.1
17.8
34.2
34.4
Feb1
18.0
7.8
25.7
-5.5
-3.1
-79.4
30.9
33.6
15.0
Source: The Bank of Korea
Nov Dec Jan Feb Mar Apr
Business survey indices (base=100) for 96 98 103 101 103 104manufacturing facility investment projections
2009 2010
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Economic Bulletin 13
Machinery orders and estimated facility investment (3-month average)
Source: Statistics Korea (industrial activity trend)
Machinery imports
Source: Korea International Trade Association (KITA)
Facility investment by type
Source: The Bank of Korea (national accounts)3-1
3-2
3-3
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14 April 2010
4. Construction investment
Construction investment (preliminary GDP) in the fourth quarter of 2009 rose 5.0 percent
year-on-year, while falling 0.1 percent quarter-on-quarter.
Construction completed (constant value ) in February fell 3.9 percent month-on-month, and
2.4 percent year-on-year, due to a high base effect in building construction from the
previous month and weak performance in civil engineering works, affected by the
completion of large-scale private plant construction. By construction category, building
construction completed dropped 3.9 percent year-on-year, while civil engineering works
completed down 0.5 percent.
Construction investment in March is expected to be negatively affected by sluggish building
construction due to a rise in unsold houses and a lack of sales confidence, despite
increasing public investment in civil engineering works.
(Percentage change from same period in previous year)
Construction investment2
(Seasonally adjusted)3
- Building construction
- Civil engineering works
1. Preliminary
2. National accounts
3. Percentage change from previous period
Source: The Bank of Korea
2007 2008 20091
Annual
1.4
-
-0.0
3.8
Annual
-2.8
-
-4.6
-0.2
Q1
-2.5
-4.2
-1.0
-5.1
Q2
-0.5
-0.4
-0.8
-0.2
Q3
0.4
0.7
0.2
0.8
Q4
-7.7
-3.3
-14.8
1.6
Annual
4.4
-
-1.8
13.3
Q1
2.8
5.9
-9.6
26.1
Q2
5.1
1.8
-2.4
15.7
Q3
4.4
-0.7
1.2
9.7
Q4
5.0
-0.1
2.5
7.5
(Percentage change from same period in previous year)
Construction completed(constant value)(Seasonally adjusted)2
- Building construction
- Civil engineering works
Construction orders (current value)
- Public
- Private
Building permit Area
1. Preliminary
2. Percentage change from previous period
Source: Statistics Korea & The Ministry of Land, Transport and Maritime Affairs
2007 2008 2009 2010
Annual
3.4-
3.2
4.6
23.6
40.3
16.5
13.3
Annual
-8.1-
-10.3
2.2
-7.6
10.0
-14.3
-20.1
Annual1
1.7-
-6.5
-5.7
3.0
60.9
-21.9
-12.9
Q1
-5.49.4
-15.5
13.4
-12.0
33.1
-37.3
-31.6
Q2
4.53.5
-6.5
25.9
-1.1
182.9
-60.2
-32.7
Q3
1.8-5.3
-5.1
15.4
7.6
78.9
-14.3
-4.6
Q4 1
5.0-1.3
0.7
11.4
11.6
11.6
17.3
13.1
Dec1
12.70.8
7.4
19.3
-19.6
-33.9
-9.6
42.7
Jan 1
3.57.8
4.6
2.1
17.1
-14.7
49.4
33.3
Feb1
-2.4-3.9
-3.9
-0.5
-6.7
-23.5
4.7
42.3
Source: The Construction and Economy Research Institute of Korea
Nov Dec Jan Feb Mar
Business survey indices (base=100) for 90.1 83.6 74.8 91.4 88.9construction projections
2009 2010
-
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Economic Bulletin 15
Leading indicators of construction investment
Source: Statistics Korea (construction orders)
Ministry of Land, Transport and Maritime Affairs (building construction permit area)
Construction completed and housing construction
Source: Statistics Korea (construction completed)
Kookmin Bank (housing construction)
Construction investment
Source: The Bank of Korea (national accounts)4-1
4-2
4-3
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5. Exports and imports
Exports in March rose 35.1 percent year-on-year to US$37.69 billion.
Exports grew at a faster pace from the previous months 30.5 percent, as major export
markets such as the US and China continued to recover. Average daily exports fell to
US$1.57 billion from the previous months US$1.62 billion, whereas those excluding vessels
rose from the previous months US$1.37 billion to US$1.43 billion.
By export category, semiconductors (up 123.8%) and automobiles (up 62.5% ) soared, and
by regional category, exports to China (up 51.4%) and ASEAN (up 47.6%) jumped.
Imports in March jumped 48.4 percent year-on-year to US$35.49 billion. Non-ferrous metals
(up 82.3% ), crude oil (up 81.5%) and petroleum products (up 41.4%) posted a significant
increase, due to the recovering economy and a price rise in raw materials. Average dailyimports edged down from the previous months US$1.52 billion to US$1.48 billion. Imports
of capital goods, raw materials and consumer goods expanded greatly year-on-year.
The trade balance in March posted a surplus of US$2.19 billion, widening a surplus from the
previous month.
Raw materials (y-o-y, %)
-39.3 (Q3, 2009) -2.3 (Q4); 25.5 (Jan 2010) 42.7 (Feb) 51.1 (Mar)
Capital goods (y-o-y, %)
-13.7 (Q3, 2009) 8.2 (Q4); 30.1 (Jan 2010) 30.0 (Feb) 49.1 (Mar)
Consumer goods (y-o-y, %)-20.9 (Q3, 2009) 4.6 (Q4); 21.3 (Jan 2010) 30.3 (Feb) 32.5 (Mar)
(US$ billion)
Exports
(y-o-y, %)
Average daily exports
Imports
(y-o-y, %)
Average daily imports
2009 2010
Annual
363.53
-13.9
1.30
323.09
-25.8
1.16
Q1
74.42
-25.2
1.10
71.42
-32.7
1.06
Q2
90.36
-21.1
1.30
73.97
-35.6
1.06
Q3
94.78
-17.6
1.32
84.85
-31.0
1.18
Q4
103.97
11.7
1.49
92.85
1.4
1.33
Mar
27.89
-22.5
1.16
23.92
-35.5
1.00
Q1
101.64
36.6
1.52
98.01
37.2
1.46
Jan
30.82
45.8
1.37
31.45
26.3
1.40
Feb
33.14
30.5
1.62
31.06
37.5
1.52
Mar
37.69
35.1
1.57
35.49
48.4
1.48
Source: Korea Customs Service
(US$ billion)
Trade Balance
2009 2010
Annual
40.45
Q1
3.0
Q2
16.39
Q3
9.94
Q4
11.12
Mar
3.97
Q1
3.64
Jan
-0.64
Feb
2.08
Mar
2.19
Source: Korea Customs Service
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Imports (customs clearance basis)
Source: Korea Customs Service & Ministry of Knowledge Economy (export and import trend)
Trade balance
Source: Korea Customs Service & Ministry of Knowledge Economy (export and import trend)
Exports (customs clearance basis)
Source: Korea Customs Service & Ministry of Knowledge Economy (export and import trend)
5-1
5-2
5-3
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6. Mining and manufacturing production
Mining and manufacturing production increased 3.6 percent month-on-month in February,
the largest since September 2009, while rising 19.1 percent year-on-year.
By business category, semiconductors and parts (up 10.9%), and automobiles (up 10.5%)grew month-on-month, while audio visual communication equipment (down 7.4% ) and
miscellaneous transportation equipment (down 5.9%) fell.
Shipments, led by domestic consumption and exports, continued to improve, posting a 14.3
percent increase year-on-year, while inventory rose 4.7 percent, picking up for the first time
in 14 months since January 2009.
By business category, the shipments of semiconductors and parts (up 41.5%), and
automobiles (up 32.4% ) increased year-on-year, while those of leather and shoes (down
15.9%) declined. The inventories of semiconductors and parts (up 42.1%), and automobiles
(up 10.8%) rose year-on-year, while those of apparels and fur (down 34.6%), and primary
metals (down 4.7%) fell.
The average operation ratio of the manufacturing sector rose 1.6 percentage points from the
previous month, landing at 80.5 percent, the highest level since April 2008.
Mining and manufacturing production in March is projected to be affected by growing
exports and inventories, led by semiconductors and parts, and automobiles, while the
month-on-month increase is expected to be limited due to a high base effect from the
previous month, which saw a significant increase.
Production (q-o-q, m-o-m)
(y-o-y)
- Manufacturing
ICT 3
Automobiles
Shipment
- Domestic demand
- Exports
Inventory4
Average operation ratio (%)
Production capacity
1. Preliminary
2. Including mining, manufacturing, electricity and gas industry
3. Information and Communication Technology4. End-period
Source: Statistics Korea
(Percentage change from same period in previous year)
Mining andmanufacturingactivity2
Manufacturingactivity
2009 20102008
Annual
-
3.4
3.4
3.4
9.1
2.6
-0.4
7.2
7.1
77.5
5.1
Annual
-
-0.8
-0.9
7.8
-6.8
-1.7
-1.8
-1.7
-8.0
74.6
3.1
Q3
6.9
4.3
4.4
13.2
15.8
2.1
3.4
0.4
-14.2
78.8
3.2
Q4
1.3
16.2
16.8
46.3
14.7
12.8
12.3
13.3
-8.0
78.4
4.0
Feb
1.8
18.1
18.8
-14.9
-20.0
15.5
13.9
17.5
-14.6
78.2
3.9
Dec
2.4
34.2
36.0
89.3
58.8
26.2
26.3
26.1
-8.0
79.6
4.5
Jan 1
0.0
36.9
38.9
63.3
83.0
32.0
30.6
34.0
-3.7
78.9
4.5
Feb1
3.6
19.1
19.8
39.8
32.5
14.3
12.6
24.8
4.7
80.5
4.8
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Economic Bulletin 19
Average manufacturing operation ratio
Source: Statistics Korea (industrial activity trend)
6-1
6-2
6-3
Industrial production
Source: Statistics Korea (industrial activity trend)
Inventory
Source: Statistics Korea (industrial activity trend)
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7. Service sector activity
Service activity in February 2010 increased 3.1 percent from a month earlier on the back of
robust educational services and information & communication services.
By business category, educational services (up 24.1% ), information & communication
services (up 6.9%) and professional, scientific & technical services (up 6.3%) led the month-
on-month increase in service activity.
On the other hand, finance & insurance services fell 3.1 percent from the previous month.
Service activity in March is expected to continue the year-on-year growth considering
retailers sales, credit card spending and consumer sentiment. The month-on-month change
in service output, however, is likely to be significantly affected by a high base effect.
(Percentage change from same period in previous year)
Annual Q4 Annual Q1 Q2 Q3 Q4 Dec Jan1 Feb 1
Service activity index
- Wholesale & retail
- Transportation services
- Hotels & restaurants
- Information & communication services
- Financial & insurance services
- Real estate & renting
- Professional, scientific & technical activities
- Business services
- Educational services
- Healthcare & social w elfare services
- Entertainment, cultural & sports services
- Membership organizations
- Sewerage & waste management
Weight2008 2009
100
22.0
9.0
7.8
8.4
15.3
6.3
4.8
2.9
10.8
6.0
2.9
3.8
0.4
3.6
1.3
4.3
0.7
3.3
9.7
-2.1
2.0
4.4
1.7
8.7
2.2
0.1
5.8
0.0
-4.7
-3.2
-3.0
-0.8
4.5
-7.5
0.9
0.0
7.4
8.7
3.3
-1.0
4.0
2.0
-0.4
-6.6
-1.5
0.7
8.0
5.3
1.0
-3.0
2.8
10.4
-0.5
-2.4
3.7
-0.3
-4.8
-12.7
-2.6
-1.4
6.9
-4.2
-1.7
-4.9
9.4
8.9
1.4
-3.8
0.1
2.4
-2.2
-10.0
-0.6
1.6
10.3
-2.2
3.8
-6.2
16.5
8.9
0.7
-4.8
9.0
1.9
0.3
-4.8
-2.5
1.4
9.0
6.7
0.0
-0.8
-3.7
10.4
0.0
-1.4
6.0
3.7
5.4
1.4
-0.2
1.8
5.7
21.3
2.0
0.0
-9.6
13.2
-3.8
2.4
-0.2
7.1
9.1
13.9
-0.9
2.9
3.8
11.0
4.8
6.4
14.1
11.6
-6.2
0.0
3.7
7.2
8.9
4.8
3.6
2.4
7.7
25.2
8.7
1.2
-3.3
14.9
2.6
9.1
0.3
4.3
5.5
11.6
3.0
-1.3
9.3
8.3
-0.4
2.7
-12.1
11.4
3.4
0.6
5.4
1. PreliminarySource: Statistics Korea
2010
Value of credit card use (y-o-y, %)
18.3 (Nov 2009) 20.0 (Dec) 20.2 (Jan 2010) 21.2 (Feb) 19.1 (Mar)
Consumer sentiment index (base=100)
117 (Oct 2009) 113 (Nov) 113 (Dec) 113 (Jan 2010) 111 (Feb) 110 (Mar)
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Economic Bulletin 21
February 2010 service industry by business
Source: Statistics Korea (service industry activity trend)
7-1
7-2
7-3
Totali
ndex
Who
lesale
&retail
Tran
sportatio
n
Hotels
&re
staurants
Information
&comm
unica
tions
Real
estate
&renting
Professional,s
cientifi
c&
technic
alservi
ces
Busin
essfacilit
ymanag
ement&
busin
esssupport
service
s
Education
alservi
ces
Healthc
are&
socialw
elfar
e
servi
ces
Ente
rtainm
ent,
cultu
ral&
sports
servi
ces
Membe
rship
organiz
ation
s,repair
&
othe
rpersonals
ervic
es
Sewe
rage
,waste
mana
geme
nt,mate
rials
recovery&
remedia
tiona
ctivities
Finan
cial&
insuran
ceservi
ces
Service industry
Source: Statistics Korea (service industry activity trend)
Wholesale and retail sales
Source: Statistics Korea (service industry activity trend)
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8. Employment
The number of workers on payroll in February 2010 increased by 125,000 from a year earlier,
while the employment rate fell by 0.4 percentage points year-on-year to 56.6 percent. In
seasonally adjusted terms, the number of employed rose by 79,000 from the previous
month and the employment rate was up 0.1 percentage point month-on-month.
By industry, employment in manufacturing (up 45,000) and services (up 310,000) climbed
while that in construction (down 87,000) and agriculture, forestry & fishery (down 143,000)
declined. Hiring in manufacturing increased for two consecutive months helped by overall
increases in exports and manufacturing output of semiconductors and automobiles. The
service sector hired more workers amid domestic demand recovery and elevated
consumption.
By status of workers, wage workers increased by 329,000 led by a surge of 593,000 in
regular workers, although the number of daily workers plunged by 239,000. Non-wage
workers including self-employed workers (down 70,000), however, plummeted by 204,000from a year earlier.
By gender, male workers (up 116,000) rose at a faster pace than female workers (up 9,000).
Number of employed (million)
Employment rate (%)
(seasonally adjusted)
Employment growth (y-o-y, thousand)(Excluding agriculture, forestry & fishery)
- Manufacturing
- Construction
- Services
- Agriculture, forestry & fishery
- Wage workers
Regular workers
Temporary workers
Daily workers
- Non-wage workers
Self-employed workers
- Male
- Female
- 15 to 29
- 30 to 39
- 40 to 49
- 50 to 59
- 60 or more
2009 20102008
Annual
23.58
59.5
59.5
145
182
-52
-37
263
-37
236
386
-93
-57
-92
-79
96
48
-119
-26
64
207
18
Q3
23.75
59.9
59.5
141
179
-52
-40
262
-38
208
347
-83
-56
-66
-76
92
49
-114
-36
92
169
30
Q4
23.64
59.4
59.2
54
46
-103
-41
187
8
137
316
-94
-85
-83
-95
43
12
-166
-92
56
206
50
Annual
23.51
58.6
58.6
-72
-34
-126
-91
186
-38
247
383
22
-158
-319
-259
31
-103
-127
-173
-24
198
54
Q1
22.90
57.4
58.8
-146
-160
-163
-43
47
14
73
318
-136
-108
-220
-197
-23
-124
-212
-159
8
193
23
Feb
22.74
57.0
58.8
-142
-148
-176
-17
45
6
117
390
-193
-80
-259
-256
-34
-85
-196
-167
25
183
13
Q2
23.74
59.3
58.6
-134
-109
-151
-113
155
-25
175
313
-5
-133
-309
-286
24
-158
-99
-213
-27
156
49
Q3
23.75
59.1
58.7
-1
24
-143
-103
269
-25
356
386
125
-155
-357
-276
34
-34
-123
-169
-30
211
109
Q4
23.63
58.7
58.5
-6
110
-49
-107
264
-116
413
492
186
-264
-424
-307
89
-94
-77
-149
-46
230
37
Feb
22.87
56.6
58.3
125
268
45
-87
310
-143
329
593
-24
-239
-204
-70
116
9
-16
-37
-39
255
-39
Jan
22.87
56.6
58.2
5
165
29
-81
213
-160
244
609
-121
-244
-240
-113
91
-9
14
-81
-56
233
-105
Source: Statistics Korea
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Economic Bulletin 23
Share of employed by industry
Source: Statistics Korea (employment trend)
8-1
8-2
8-3 Share of employed by status of workers
Source: Statistics Korea (employment trend)
Number of employed and employment growth
Source: Statistics Korea (employment trend)
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The number of unemployed in February 2010 climbed by 244,000 year-on-year to record1,169,000 and the unemployment rate rose by 1.0 percentage point to 4.9 percent from ayear earlier. When seasonally adjusted, the number of jobless people fell 119,000 from theprevious month to 1,076,000 while the unemployment rate dropped 0.4 percentage pointsmonth-on-month to 4.4 percent.
The number of jobseekers increased as an economic recovery and public work projectsboosted expectations over an improvement in the labor market, which led to the number ofunemployed persons and the unemployment rate to remain high in February as did in January.
By gender, the number of female workers who became jobless (up 143,000) increased at afaster pace than that of male workers who became jobless (up 101,000) in February.
By age, the jobless surged among youths aged 15 to 29 (up 61,000) and seniors aged 60 orover (up 98,000).
The economically inactive population in February was up 151,000 from a year earlier to post16,380,000. Meanwhile, the labor force participation rate was up 0.2 percentage points year-on-year to 59.5 percent. When seasonally adjusted, the economically inactive populationrose 74,000 month-on-month to 15,770,000 while the labor force participation rate fell 0.1percentage point to 61.0 percent from a month earlier.
Workers quitting jobs due to childcare & housework (up 86,000 ) and old age (up 196,000)surged while those who quit due to reasons such as rest, time-off, and leisure (down189,000) significantly decreased.
Number of unemployed (thousand)
Unemployment growth (y-o-y, thousand)
- Male
- Female
Unemployment rate (%)
(Seasonally adjusted)
- Youth aged 15 to 29
- Middle school graduate or under
- High school graduate
- College, univ. graduate or over
2009 20102008
Annual
769
-14
-12
-1
3.2
3.2
7.2
2.2
3.8
3.0
Q3
752
-5
1
-6
3.1
3.2
6.9
2.1
3.8
2.9
Q4
757
24
25
-1
3.1
3.2
7.0
2.1
3.8
2.9
Annual
889
119
80
40
3.6
3.6
8.1
2.5
4.4
3.5
Feb
924
106
72
34
3.9
3.5
8.7
2.9
4.5
3.8
Q1
908
107
83
24
3.8
3.5
8.6
2.9
4.5
3.6
Q2
943
176
116
60
3.8
3.9
8.0
2.6
4.6
3.7
Q3
886
134
95
39
3.6
3.7
8.1
2.2
4.6
3.3
Q4
817
60
25
36
3.3
3.5
7.6
2.3
4.0
3.2
Feb
1,169
244
101
143
4.9
4.4
10.0
4.9
5.1
4.6
Jan
1,216
368
154
214
5.0
4.8
9.3
7.1
5.2
3.8
Source: Statistics Korea
Economically inactive population (million)
Labor force participation rate (%)
Growth in economically inactive
population (y-o-y, thousand)
- Engaged in family duties
- Retired
- Rest
2009 20102008
Annual
15.25
61.5
297
123
76
31
Q3
15.15
61.8
289
134
104
-27
Q4
15.37
61.3
372
112
59
99
Annual
15.70
60.6
447
188
88
123
Feb
16.23
59.3
509
261
76
124
Q1
16.09
59.7
514
209
52
162
Q2
15.35
61.7
445
173
102
112
Q3
15.53
61.3
374
119
105
94
Q4
15.83
60.7
456
250
92
123
Feb
16.38
59.5
151
86
196
-189
Jan
16.31
59.6
150
190
190
-231
Source: Statistics Korea
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Economic Bulletin 25
Unemployment rate and youth unemployment rate
Source: Statistics Korea (employment trend)
8-4
8-5
8-6 Economically active population
Source: Statistics Korea (employment trend)
Employment rate
Source: Statistics Korea (employment trend)
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9. Financial market
9.1 Stock market
The Korean stock market in March rallied on the back of eased concerns over fiscal woes inGreece and expectations of an economic recovery.
Optimism grew as public debt problems engulfing Greece could be resolved, thanks to a
successful issuance of Treasury bonds by the Greek government and an agreement by EU
leaders on a bailout plan combining bilateral loans and money from the IMF for a standby aid
package for Greece.
The stock market stayed on an upward trend despite a fall in leading indicators and the
sinking of the naval patrol ship Cheonan. Improved economic indicators in the US labor
market and commitments to maintain expansionary monetary policies in the US, China and
Japan fueled the market rally.
The foreign investors maintained the net-buying position, which pushed up the monthly net-
purchasing of shares to the second largest amount ever.
9.2 Exchange rate
The won/dollar exchange rate as of end-March fell 28.7 won from 1,160.0 won at the end of
February to wrap up the month at 1,131.3 won.
The wons value against the dollar appreciated as an agreement on the EU-IMF bailout plan
for Greece eased credit concerns in the eurozone while foreign investors continued net-
buying of Korean shares which amounted to around 5.6 trillion won during the month.
The won/yen exchange rate fell 85.4 won month-on-month to 1,213.6 won as of end-March
as the yen depreciated with eased concerns on sovereign debt woes in eurozone countries.
Feb 2010 Mar 2010 Change1 Feb 2010 Mar 2010 Change1
Stock price index
Market capitalization
Average daily trade value
Foreign stock ownership
1. Change from the end of the previous month
1. Appreciation from the end of the previous year (%); the exchange rate is based on the closing price at 3:00 p.m., local time.
(End-period)
Dec Dec Dec Dec Feb Mar Change1
Won/Dollar 929.8 936.1 1,259.5 1,164.5 1,160.0 1,131.3 2.54
Won/100Yen 783.4 828.6 1,396.8 1,264.5 1,299.0 1,213.6 7.04
2006 2007 2008 2009 2010
KOSPI KOSDAQ
(End-period, point, trillion won)
1,594.6
844.1
4.0
32.1
1,692.9
903.9
4.3
32.5
+98.3 (+6.2%)
+59.9 (+7.1%)
+0.3 (+7.5%)
+0.4 (+1.2%)
507.3
87.7
2.3
7.5
515.7
90.0
2.3
7.6
+8.7 (+1.7%)
+2.3 (+2.6%)
0.0 (0.0%)
+0.1 (+1.3%)
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Economic Bulletin 27
9-1
9-2
9-3 Recent foreign exchange rate
Foreign exchange rate (month-end)
Stock prices
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9.3 Bond market
Treasury bond yields were down in March as leading economic indicators shifted to a fall
while the newly appointed governor of the Bank of Korea was expected to maintain
expansionary monetary policies. The yields had plunged until mid March as the policy rate
was expected to remain low, before edging up toward the end of the month due to profittaking and concerns over exit strategy.
9.4 Money supply & money market
The M2 (monthly average) in January 2010 expanded 8.8 percent from a year earlier
excluding cash management accounts (CMAs), which were included in M2 since July 2009.
The year-on-year M2 growth remained at the same level of 8.8 percent compared to the
previous month despite reduced private credit and decreased money supply in the overseas
sector, as the government borrowed 3 trillion won on January 26 from the Bank of Korea.
In February 2010, bank deposits continued to rise as asset management company (AMC)
deposits shifted to an increase.
Bank deposits sustained an upward trend as depositors perceived deposit rates favorable
and efforts to lower the loan-deposit ratio by banks continued. AMC deposits reversed
course to a surge thanks to a massive inflow of funds from banks and the government.
Dec Dec Dec Dec Jan Feb Mar Change1
Call rate (1 day) 4.60 5.02 3.02 2.01 2.00 2.01 2.00 -1
CD (91 days) 4.86 5.82 3.93 2.88 2.88 2.88 2.78 -10
Treasury bonds (3 yrs) 4.92 5.74 3.41 4.44 4.27 4.10 3.89 -21
Corporate bonds (3 yrs) 5.29 6.77 7.72 5.56 5.39 5.24 4.89 -35
Treasury bonds (5 yrs) 5.00 5.78 3.77 4.98 4.82 4.62 4.52 -10
(End-period, %)
1. Basis point changes in March 2010 from the previous month
20102009200820072006
Bank deposits
AMC deposits
(Monthly change, end-period, trillion won)
1. Balance at end February 2010, trillion won
2008 2009 2010
Annual
104.3
63.0
Feb
9.9
13.9
Annual
54.8
-27.7
Feb
23.1
11.4
Dec
-8.3
-11.1
Jan
15.7
-5.0
Feb
16.9
9.7
Feb1
1,040
336
M1+2
M2
Lf3
(Percentage change from same period in previous year, average)
1. Balance at end January 2010, trillion won
2. M1 excluding corporate MMFs and individual MMFs while including CMAs
3. Liquidity aggregates of financial institutions (mostly identical with M3)
4. Balance at end December 2009, trillion won
2009 2010
Annual
-1.8
14.3
11.9
2008
Q1
-12.4
13.3
11.6
Q2
-0.1
15.3
12.8
Annual
16.3
10.1
Upper7
Q3
2.1
14.7
12.1
Q4
5.0
13.8
11.2
Q1
10.8
11.5
8.8
Q2
17.6
10.1
7.3
Q3
18.9
9.5
7.5
Q4
17.8
9.3
7.4
Jan
15.1
8.8
Upper7
Jan 1
381
1,566
2,0074
Dec
16.4
8.8
Upper7
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Total money supply
Source: The Bank of Korea
Interest rates
Source: The Bank of Korea9-4
9-5
9-6 Share of deposits by financial sector (M3 as of year-end)
Source: The Bank of Korea
* Retail finance: Mutual savings banks & National Credit Union Federation of Korea, Others: Investment banks, post office savings, etc.
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10. Balance of payments
Koreas current account shifted to a surplus of US$160 million in February 2010.
The goods account surplus increased moderately to post US$1.53 billion from the previous
months US$1.38 billion as the trade account turned to a positive territory.
As the travel account deficit declined with the end of winter vacation, the service account
reduced the deficit to US$1.78 billion from US$2.16 billion of the previous month.
The income account surplus expanded to record US$570 million from US$470 million a
month earlier as an increase in the interest account surplus exceeded a decrease in the
dividend account surplus.
The current transfer account deficit narrowed to US$160 million from the previous months
US$310 million with decreased outward remittance.
The capital and financial account in February 2010 posted a net inflow of US$250 million.
The direct investment account decreased the net outflow to register US$760 million from the
previous months US$1.68 billion mainly due to decreasing outbound foreign direct
investment (FDI).
The portfolio investment account increased the net inflow to record US$3.13 billion fromUS$150 million a month earlier on the back of overseas bond issuances and a net inflow of
foreign investment fund into the Korean bond market.
The net inflow in the financial derivatives account expanded to post US$250 million from
US$50 million in the previous month as profits from overseas financial derivative
transactions increased.
The other investment account turned to a deficit of US$2.32 billion from the previous
months surplus of US$6.02 billion as financial institutions lending increased while
borrowing plunged.
The current account is likely to record a surplus of around US$1.0 to 1.5 billion in March as
the goods account surplus expanded despite higher dividend payments.
Capital & financial account balance (US$ billion)
-1.40 (Q1 2009) 8.68 (Q2) 14.40 (Q3) 4.77 (Q4) 4.47 (Jan 2010) 0.25 (Feb)
Current account
- Goods balance
- Service balance
- Income balance
- Current transfers
(US$ billion)
2009 20102008
Annual
-5.78
5.67
-16.67
5.90
-0.67
Annual
42.67
56.13
-17.20
4.55
-0.81
Q1
8.62
8.31
-1.93
0.92
1.31
Q2
13.10
17.58
-4.17
0.29
-0.60
Q3
10.40
14.70
-5.33
1.69
-0.66
Q4
10.56
15.54
-5.77
1.65
-0.86
Jan-Feb
-0.47
2.91
-3.94
1.03
-0.47
Jan
-0.63
1.38
-2.16
0.47
-0.31
Feb
0.16
1.53
-1.78
0.57
-0.16
Source: The Bank of Korea
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Capital & financial account balance
Source: The Bank of Korea (balance of payments trend)
Travel balance
Source: The Bank of Korea (balance of payments trend)
Current account balance
Source: The Bank of Korea (balance of payments trend)10-1
10-2
10-3
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11. Prices and international commodity prices
11.1 Prices
Consumer prices in March increased 2.3 percent year-on-year while posting 0.3 percent growthfrom the previous month.
Core consumer prices, which exclude the prices of oil and agricultural products, rose by 1.5percent year-on-year. Consumer prices for basic necessities, a barometer of perceivedconsumer prices, were up 2.9 percent compared to the same month of the previous year.
Prices of agricultural, livestock and fishery products as well as oil products showedstrength, while other industrial products prices and service charges were stabilized. Pricesof agricultural, livestock and fishery products maintained the upward track as bad weatherconditions led to a drop in vegetable production.
Prices of agricultural, livestock & fishery products in Mar 2010 (m-o-m, %)Chinese cabbage (54.4), unripe hot pepper (32.9), green pepper (55.0), cucumber (13.2), mandarin orange
(10.9), pork (-3.7), spinach (-33.5), Korean beef (-2.1)
Although higher international oil prices pushed up oil product prices, prices of other industrialproducts stabilized with a mere 0.4 percent increase month-on-month.
Prices of Dubai crude (US$/barrel)67.7 (Sep 2009) 73.2 (Oct) 77.7 (Nov) 75.5 (Dec) 76.8 (Jan 2010) 73.6 (Feb) -77.3 (Mar)
Public utility charges edged down 0.3 percent from the previous month as most public utilitycharges remained unchanged while SK Telecom, Koreas biggest mobile telephone operator,started to charge voice calls by each second in March, slashing mobile call charges.
Personal service charges significantly slowed its upward trend compared to the ordinary Marchlevel with relatively stabilizing education service charges affected by universities efforts to
freeze tuition fees.
Price increases of personal service charges in Mar 2010 (m-o-m, %)1.4 (2006) 1.6 (2007) 1.9 (2008) 0.7 (2009) 0.5 (2010)
Consumer price inflation in major sectors
Publicutility
Industrialproducts
Oilproducts
TotalAgricultural,
livestock & fisheryproducts
Housingrents
Personalservices
Month-on-Month (%)
Contribution (%p)
Year-on-Year (%)
Contribution (%p)
0.3
0.35
2.3
2.31
1.6
0.14
4.0
0.35
0.3
0.13
3.0
0.93
1.8
0.11
10.9
0.60
0.2
0.02
1.4
0.15
-0.3
-0.04
1.3
0.22
0.5
0.18
2.3
0.76
Source: Statistics Korea
Consumer price inflation
Source: Statistics Korea
2009
Month-on-Month (%)
Year-on-Year (%)
Core consumer prices (y-o-y)
(m-o-m)
Consumer prices for basicnecessities (y-o-y)
Mar
0.7
3.9
4.5
0.4
3.1
Apr
0.3
3.6
4.2
0.2
3.0
May
0.0
2.7
3.9
0.2
1.8
Jun
-0.1
2.0
3.5
0.1
0.5
Jul
0.4
1.6
3.2
0.2
0.4
Aug
0.4
2.2
3.1
0.1
1.3
Sep
0.1
2.2
2.7
0.1
1.7
Oct
-0.3
2.0
2.6
0.1
1.5
Nov
0.2
2.4
2.5
0.2
2.3
Dec
0.4
2.8
2.2
0.1
3.3
Jan
0.4
3.1
2.1
0.1
3.8
Feb
0.4
2.7
1.9
0.2
3.4
Mar
0.3
2.3
1.5
0.1
2.9
2010
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Contribution to consumer price inflation
Source: Statistics Korea (consumer price trend)
Prices
Source: Statistics Korea (consumer prices, core inflation) & The Bank of Korea (producer prices)11-1
11-2
11-3
Consumer price inflation
Source: Statistics Korea (consumer price trend)
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11.2. International oil and commodity prices
International oil prices in March increased month-on-month as Europes financial woe eased
and expectations of an economic recovery boosted confidence with a gradual improvement in
manufacturing index. In particular, the Institute for Supply Management (ISM)s index on
manufacturing in the US jumped 3.1 points to 59.6 in March, the highest level since July 2004.
In the domestic market, both gasoline and diesel prices rose month-on-month as internaional
oil prices and international oil product prices went up.
Prices of overall non-ferrous metals in March climbed from a month earlier with the
expectations of an economic recovery. In particular, nickel prices soared due to strikes in
major nickel mines and expanded demand for stainless steel.
International prices of grain including corn and raw sugar fell from the previous month as
robust grain productions in South America boosted the grain harvest outlook for this year.
Prices of non-ferrous metals and grain in Mar 2010 (m-o-m, %)
Corn (1.0), wheat (-1.3), raw sugar (-27.1), soybean (1.5), bronze (9.0), aluminum (7.6), nickel (18.2), zinc (6.0), lead
(2.7), tin (7.4)
(Won/liter, period average)
Annual Annual Annual Sep Oct Nov Dec Jan Feb Mar
Gasoline prices 1,526 1,692 1,601 1,681 1,627 1,655 1,646 1,661 1,664 1,691
Diesel prices 1,273 1,614 1,397 1,453 1,409 1,452 1,441 1,450 1,443 1,469
2007 2008 2009 2010
Source: Korea National Oil Corporation
Record high oil prices (spot prices, US$/barrel)
Dubai crude: 141 (Jul 4, 2008), Brent crude: 145 (Jul 3, 2008), WTI crude: 146 (Jul 14, 2008)
(US$/barrel, period average)
Dubai crude
Brent crude
WTI crude
2007 2008 2009 2010
Annual
68.4
72.8
72.3
Annual
94.3
97.5
99.9
Annual
61.9
61.7
61.9
Sep
67.7
67.5
69.4
Oct
73.2
72.8
75.8
Nov
77.7
76.7
78.1
Dec
75.5
74.5
74.5
Jan
76.8
76.4
78.3
Feb
73.6
73.9
76.5
Mar
77.3
79.0
81.3
Source: KOREAPDS
(Period average)Reuters index*
Annual Annual Annual Sep Oct Nov Dec Jan Feb Mar
2,400 2,536 2,079 2,147 2,197 2,243 2,294 2,343 2,290 2,269
2009 201020082007
* A weighted average index of 17 major commodities
Source: KOREAPDS
Reuters index*
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International oil prices
Source: Korea National Oil Corporation11-4
11-5
11-6 International commodity prices
Source: Bloomberg (CRB) & The Bank of Korea (Reuters index)* CRB demonstrates futures price index of 21 commodities listed on the US Commodity Transaction Market, including beans and other crops, crude oil and jewelry.
International oil prices (Dubai crude) and import prices
Source: Korea National Oil Corporation & Korea Customs Service
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12. Real estate market
12.1 Housing market
In March, nationwide apartment sales prices increased at a slower pace of 0.3 percent from
0.4 percent a month earlier.
While apartment sales prices in Seoul including Gangnam decelerated its growing pace to0.0 percent from 0.3 percent and 0.4 percent, respectively, prices remained steady inGyeonggi province (down 0.1%) and Incheon (down 0.0%).
Meanwhile, apartment sales prices in areas excluding the Seoul metropolitan areacontinued to increase led by some metropolitan cities such as Busan (up 1.5%) and Daejeon(up 0.7%) without enough apartments put up for sale.
The increase in rental prices slightly slowed to 0.8 percent from the previous months 0.9percent. In Seoul (up 0.7%), Gangnam decelerated the growing pace from 1.2 percent to 0.5
percent, while rental prices in Gangbuk accelerated the increase from 0.7 percent to 0.9percent with expanded demand during the spring moving season.
Apartment sales transactions in February 2010 edged up from 61,974 a month earlier to post66,500. The transactions were up 11.1 percent from a year earlier and 1.5 percent comparedwith the monthly average recorded in the same month for the past 3 years.
Source: Korea Land Corporation
(Monthly average, thousand)Apartment sales transactions
Nationwide
2007 2008 2009 2010
Annual
84
Annual
74
Feb
70
Annual
77
Jan
49
Feb
60
Mar
79
Apr
76
May
72
Jun
81
Jul
91
Aug
81
Sep
90
Oct
87
Nov
82
Dec
82
Jan
62
Feb
67
(Percentage change from previous period)Nationwide apartment sales prices
Nationwide
Seoul
Gangnam2
Gangbuk3
Seoul metropolitan area
5 metropolitan cities
1. Weekly trends 2. Upscale area of Southern Seoul 3. Northern Seoul Source: Kookmin Bank
2006 2007 2008 2009 2010
Annual
13.8
24.1
27.6
19.0
24.6
2.1
Annual
2.1
3.6
0.5
8.3
4.0
-0.6
Annual
2.3
3.2
-1.9
9.4
2.9
1.0
Annual
1.6
2.6
3.9
0.9
0.7
2.8
Q1
-1.2
-1.3
-1.1
-1.7
-1.8
-0.7
Q2
0.4
1.0
1.7
0.2
0.5
0.3
Q3
1.5
2.6
3.1
2.0
1.8
1.3
Q4
0.9
0.3
0.2
0.4
0.2
1.9
Jan
0.1
0.1
0.2
0.0
0.0
0.4
Feb
0.4
0.3
0.4
0.1
0.1
0.8
Mar
0.3
0.0
0.0
0.0
0.0
0.7
Mar11
0.1
0.0
0.0
0.0
0.0
0.2
Mar81
0.1
0.0
0.0
0.0
0.0
0.2
Mar151
0.1
0.0
0.0
0.0
0.0
0.1
Mar221
0.1
0.0
0.0
-0.1
0.0
0.2
Mar291
0.1
0.0
0.0
-0.1
0.0
0.2
(Percentage change from previous period)Nationwide apartment rental prices
Nationwide
Seoul
Gangnam2
Gangbuk3
Seoul metropolitan area
5 metropolitan cities
1. Weekly trends 2. Upscale area of Southern Seoul 3. Northern Seoul Source: Kookmin Bank
2006 2007 2008 2009 2010
Annual
7.6
11.5
11.3
11.8
11.7
3.0
Annual
1.9
2.2
0.5
4.6
2.1
1.1
Annual
0.8
-1.8
-3.6
0.5
-0.4
1.6
Annual
4.5
8.1
10.4
5.4
5.6
3.9
Q1
-1.3
-0.8
-0.1
-1.6
-1.8
-0.9
Q2
0.9
1.8
2.4
1.0
1.4
0.4
Q3
2.8
4.7
5.1
4.2
4.1
1.9
Q4
2.0
2.3
2.7
1.9
1.8
2.6
Jan
0.4
0.6
0.9
0.1
0.3
0.7
Feb
0.9
1.0
1.2
0.7
0.7
1.4
Mar
0.8
0.7
0.5
0.9
0.7
1.0
Mar11
0.2
0.2
0.1
0.2
0.2
0.2
Mar81
0.2
0.2
0.1
0.2
0.2
0.3
Mar151
0.2
0.1
0.1
0.2
0.2
0.2
Mar221
0.2
0.2
0.2
0.2
0.2
0.2
Mar291
0.2
0.1
0.1
0.2
0.2
0.3
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Apartment prices by region
Source: Kookmin Bank (national housing price trend)
Weekly apartment sales prices and monthly transaction volume
Source: Kookmin Bank (weekly APT price trend) & Korea Land Corporation (monthly land trade trend)
Real estate prices
Source: Kookmin Bank (national housing price trend)12-1
12-2
12-3
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12.2 Land market
Continuing the moderate recovery pace, nationwide land prices in February 2010 rose 0.23
percent, slightly decelerating from the previous months 0.25 percent. Land prices in
February were 2.7 percent lower than the pre-crisis peak reached in October 2008.
In the Seoul metropolitan area (up 0.29%), land prices in Incheon (up 0.33%) and Gyeonggi
province (up 0.32%) saw a robust increase.
Meanwhile, land price increases in areas excluding the Seoul metropolitan area slowed to
0.13 percent from 0.14 percent of the previous month.
Nationwide land transactions in February recorded 168,000 land lots, down 1.3 percent from
the previous month, which is equivalent to 91.3 percent of the monthly average (184,000) in
the same month of the past 5 years.
Nationwide land transactions decreased in terms of land lots led by Ulsan (down 22.5%),
South Jeolla province (down 11.3%) and Gyeonggi province (down 11.1%).
Land price increases in Seoul metropolitan area (m-o-m, %)
0.36 (Nov 2009) 0.38 (Dec) 0.31 (Jan 2010) 0.29 (Feb)
Land price increases in areas excluding Seoul metropolitan area (m-o-m, %)
0.21 (Nov 2009) 0.26 (Dec) 0.14 (Jan 2010) 0.13 (Feb)
(Percentage change from previous period)Land prices by region
Nationwide
Seoul
Gyeonggi
Incheon
2007 2008 2009 2010
Annual
3.88
5.88
4.22
4.86
Q4
1.15
1.90
1.14
1.13
Annual
-0.31
-1.00
-0.26
1.37
Q1
1.23
1.83
1.28
1.36
Q2
1.46
2.17
1.57
1.67
Q3
1.18
1.59
1.28
2.01
Q4
-4.08
-6.34
-4.28
-3.57
Annual
0.96
1.40
1.22
1.99
Q1
-1.20
-1.38
-1.62
-1.39
Q2
0.35
0.68
0.37
0.53
Q3
0.88
1.30
1.13
1.16
Q4
0.94
0.81
1.36
1.70
Annual
0.25
0.25
0.35
0.45
Jan
0.25
0.25
0.35
0.45
Feb
0.23
0.26
0.32
0.33Source: Korea Land Corporation
(Monthly average, land lot, thousand)Land sales transactions
Nationwide
Seoul
Gyeonggi
Incheon
2007 2008 2009 2010
Annual
208
33
49
13
Annual
208
26
45
13
Annual
203
22
46
10
Jan
134
13
26
7
Feb
164
15
34
7
Mar
207
20
41
9
Apr
207
24
48
10
May
192
22
45
9
Jun
215
27
49
10
Jul
222
26
50
11
Aug
206
25
48
10
Sep
226
28
56
13
Oct
212
25
52
14
Feb
168
17
34
7
Jan
170
16
39
6
Nov
207
19
48
11
Dec
241
21
58
12
Source: Korea Land Corporation
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Land trade volume
Source: Korea Land Corporation (land trade trend)
12-4
12-5
12-6
Land and consumer prices since 1970s
Source: Korea Land Corporation (land prices) & Statistics Korea (consumer prices)
Land prices by region
Source: Korea Land Corporation (land price trend)
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13. Composite indices of business cycle indicators
The cyclical indicator of coincident composite index increased 0.7 points month-on-month in
February 2010, continuing the upward trend.
All components of the coincident composite index including the value of construction
completed, the domestic shipment index and the mining and manufacturing production
index increased.
The year-on-year leading composite index went down 1.0 percentage point from the
previous month, continuing the downward trend for two consecutive months.
Three components of the index including the ratio of job openings to job seekers and the
capital goods imports increased, while the other six components such as the value of
construction orders received and the indicator of inventory cycle were down.
Components of coincident composite index in Feb 2010 (m-o-m)
Value of construction completed (1.4%), domestic shipment index (0.6%), mining & manufacturing production
index (1.9%), volume of imports (1.2%), manufacturing operation ratio index (1.0%), service activity index
(1.5%), wholesale & retail sales index (1.5%), number of non-farm payroll employment (0.1%)
Components of the leading composite index in Feb 2010 (m-o-m)
Indicator of inventory cycle (-4.5%p), ratio of job openings to job seekers (5.6%p), value of machinery orders
received (-7.1%), volume of capital goods imports (4.7%), composite stock price index (-1.0%), liquidity in the
financial institutions (0.3%), spreads between long & short term interest rates (0.0%p), net terms of trade
index (-0.3%), consumer expectations index (-2.8p), value of construction orders received (-14.9%)
Coincident composite index (m-o-m, %)
Cyclical indicator of coincident composite index
(m-o-m, p)
Leading composite index (m-o-m, %)
12 month smoothed changein leading composite index (%)
(m-o-m, %p)1. Preliminary
2009 2010
1. Preliminary
Aug
0.8
98.7
0.4
0.9
8.6
1.2
Sep
0.7
98.9
0.2
0.6
9.6
0.8
Oct
0.4
98.9
0.0
0.6
10.3
0.7
Nov1
0.5
99.0
0.1
1.1
11.3
1.0
Dec1
0.4
98.9
-0.1
0.7
11.6
0.3
Jan1
0.8
99.3
0.4
0.3
11.3
-0.3
Feb1
1.2
100.0
0.7
-0.2
10.3
-1.0
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Coincident and leading composite indices
Source: Statistics Korea
13-1
13-2
13-3
Cyclical indicator of coincident composite index
Source: Statistics Korea
Leading composite index
Source: Statistics Korea
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Background
The Ministry of Strategy and Finance adopted the accrual basis accounting and double-entry
bookkeeping system to all sectors of national finance in fiscal year 2009. The rationales
behind the adoption were 1) to effectively manage national assets and reflect them innational accounting, 2) to clearly show net national assets to help citizens understand the
countrys current fiscal situation, 3) to promote more responsible budget spending through
project specific cost analyses, 4) to use various financial analysis methods of the new
accounting system in making fiscal decisions and responding to fiscal situation changes, and
5) to raise transparency and management competence of the governments financial
activities through double-entry bookkeeping.
What has been done to adopt the new system
The Ministry of Strategy and Finance has enacted and amended laws and regulations on the
National Accounting Act as belows:
- Enacting Enforcement Decree of the National Accounting Act on March 8, 2009
- Enacting National Accounting Standards on March 19, 2009, which aimed at providing
accounting standards needed for accrual basis accounting and double-entry bookkeeping
methods to be applied to national financial activities
New National Accounting System to Take Hold in Three Years
Policy Issues
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Economic Bulletin 43
- Setting up specific accounting working rules such as loan accounting working rules and
accumulating cost working rules on May 11, 2009
- Developing 12 guidelines for accounting practices between June and December 2009, three
for financial statements and nine for specific accounts such as government moneyaccounts, transactions excluding tax revenue and expenditure, and fund accounts
- Amending identified cost methods applied to government asset accounting based on the
National Accounting Act, which used to be independent of the National Accounting Act
- Adopting resolution on the amendment of National Accounting Standards at the 6th
National Accounting Standard Board on November 11, 2009, through which the basis for
reflecting national properties at their current economic value was founded
An electronic link between budget and accounting has been set in the Digital Budget and
Accounting System (dBrain). Government agencies which do not use the dBrain system have
developed agency-specific tools connecting their budgets and accountings.
Field examination of national assets such as national properties, commodities, and state
claims, which started in November 2008, has been completed, as two final field
investigations confirmed the reliability of the examination. Eight social infrastructures such
as roads, railroads, ports, dams, airports, waterworks, and river and fishing port facilities
have been under field examination since the second half of 2009, the result of which will be
reflected in the government financial statements.
The opening statement of financial position based on the 2008 national assets and liabilities
report began drawing up. The statement will be a foundation for determining basic prices for
accrual basis accounting.
The government offered online trainings as well as off-the-job trainings to 1,800 government
officials in charge of financial settlement and dBrain users.
What will be achieved in three years to fully implement the system
To fully reflect the value of social infrastructures in national accounting, field examinations
of the social infrastructures are planned to be completed in 2010, followed by asset
evaluation in 2011. The 2011 fiscal year financial statements, which will reflect the value of
the social infrastructures, will be submitted to the National Assembly in 2012.
To include provisions such as pensions and insurance in national accounting, study on
accounting methods will be completed in 2010, and applied from fiscal year 2011.
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To raise professional human resources dealing with the new accounting system , a legal
basis for recruiting personnel specializing in accounting will be founded in 2010, followed by
actual recruitment beginning in 2012. Incentives will be set in 2011 to motivate government
accounting officials and enhance their professional ability.
To help smooth transition to the new accounting system, the government will temporarily
run Accounting Settlement Advisory Committee in 2010 with experts from the private sector,
which will support drawing-up of government financial statements and examine new
accounting methods.
To found a basis for the new system to firmly take hold, the examination for Certified Public
Accountants (CPAs) will cover national accounting from 2012, along with the introduction of
national certification for government accounting in 2011, given to qualified CPAs. The
national certification for government accounting is a response to increasing demand for CPA
consultation expected with the adoption of accrual basis accounting. According to the new
enforcement decree of the National Accounting Act, funds managing more than 500 billion
won are required to submit CAP audit reports along with financial statements.
National Accounting Standards Center, commissioned to develop national accounting
standards, will be set up in 2010 based on the National Accounting Act. The center will work
on practical interpretation of national accounting standards, inquiries concerning the
standards, development of financial indicators based on accrual basis accounting,
accounting systems between central and local governments, and study on foreign
governments accounting systems.
To improve accuracy and reliability of government financial statements, the government
plans to start an amendment process of the National Accounting Act in the second half of
2010. The amendment will make it possible to mandate the review of government financial
statements by private sector accounting experts from 2012. The quality of the private sector
accountants will be strictly assessed on the basis of related regulations enforced from the
second half of 2012.
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G-20 Steering Group leaders urge G-20 members to deliver on reforms
G-20 Steering Group leaders, South Korean President Lee Myung-bak, US President BarackObama, Canadian Prime Minister Stephen Harper, French President Nicolas Sarkozy and
British Prime Minister Gordon Brown, urged fellow G-20 members in a letter signed on March
30, to fulfill the obligations agreed upon during the Pittsburgh Summit.
As the past, current, and future chairs of the G-20 Summit, the group emphasized the need
to implement commitments to ensure strong macroeconomic policy cooperation and to
continue regulatory reforms to strengthen the international financial system.
All G-20 countries must move quickly to implement the new Framework agreed upon in
Pittsburgh to contribute to a strong, sustainable and balanced global growth as well as job
creation, noted the statement. Agreement should be reached in Toronto to fight against the
major risks to global economic stability and sustained growth. In addition, more specific
policy recommendations are needed to be developed for the Seoul Summit in November.
Meanwhile, a financial support group for Seoul G-20 Business Summit was launched on
April 5. At the business summit, about hundred international CEOs will get together on the
sidelines of a G-20 summit and share their ideas on economic collaboration between the
public and private sector.
EconomicNews Briefing
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46 April 2010
Korean economy grows 0.2% in 2009 (Preliminary)
Koreas real gross domestic product (GDP) expanded by 0.2 percent in 2009 compared with
the previous year as increased government spending offset slowed private sector spendingand exports.
On the production side, the manufacturing sector decreased 1.6 percent while the service
sector increased 1.0 percent, a slowdown from the previous years 2.8 percent growth. On the
other hand, the construction turned to an increase of 1.9 percent from a decrease of 2.5
percent a year earlier.
On the expenditure side, facility investment declined at a faster pace of 9.1 percent after
falling 1.0 percent in the previous year. Private consumption and goods exports significantly
slowed the upward trend while government spending and construction investment were up
5.0 percent and 4.4 percent, respectively.
Meanwhile, real gross national income (GNI) in 2009 grew 1.5 percent backed by improving
trade. Per capita GNI at current prices, however, fell US$2,121 or 10.9 percent to post
US$17,175 from US$19,296 a year earlier, due mainly to the wons depreciation against the
dollar. Per-capita income is expected to rebound to US$20,000 this year on the back of a fast
economic recovery, said the Ministry of Strategy and Finance in a statement released on
March 26.
GDP by production and expenditure*
GDP 2.3 0.2 -4.3 -2.2 1.0 6.0 0.2 2.4 3.2 0.2
Agriculture, forestry5.6 1.6 1.5 -1.3 3.3 2.8 -0.1 -0.4 2.9 0.4
and fishery
Manufacturing 2.9 -1.6 -13.6 -7.2 1.7 13.0 -2.5 8.0 9.4 -1.7
Construction -2.5 1.9 0.0 3.2 0.3 3.3 4.4 1.2 -1.0 -0.6
Services4 2.8 1.0 -0.4 0.3 0.9 3.0 0.3 1.0 0.9 0.9
Private consumption 1.3 0.2 -4.4 -1.0 0.7 5.8 0.3 3.3 1.7 0.4
Government consumption 4.3 5.0 7.2 6.7 5.3 1.1 2.9 0.7 0.0 -2.4
Facility investment -1.0 -9.1 -23.1 -17.3 -7.0 13.3 -10.5 9.0 10.8 5.3
Construction investment -2.8 4.4 2.8 5.1 4.4 5.0 5.9 1.8 -0.7 -0.1
Goods exports5 4.6 0.0 -13.5 -3.2 2.3 15.0 -1.7 13.5 5.1 -1.5
Goods imports5 4.5 -7.9 -18.5 -13.8 -6.7 8.9 -5.8 8.7 8.0 -1.3
GNI -0.6 1.5 -5.4 -0.2 3.7 7.5 -0.7 4.9 1.1 2.7
2008 20091 20091 (Original)2
Annual Annual Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
20091 (Seasonally adjusted)3
*At 2005 chained prices
1. Preliminary
2. Percentage changes from the same period of the previous year
3. Percentage change from the previous period
4. Wholesale & retail sales, hotels & restaurants, transportation & storage, communication services, financial & insurance services, real estate & renting,business services, public administration, defen
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