economic bulletin (vol. 32, no.1)
TRANSCRIPT
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The Green Book: Current Economic TrendsOverview 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 24
9.1 Stock market9.2 Exchange rate9.3 Bond market9.4 Money supply & money market
10. Balance of payments 28
11. Prices and international commodity prices 30
11.1 Prices11.2 International oil and commodity prices
12. Real estate market 34
12.1 Housing market12.2 Land market
13. Composite indices of business cycle indicators 38
Policy IssuesLabor union law revised 40
Economic News Briefing 43
Statistical Appendices 49
Republic of Korea
Economic Bulletin
Vol. 32 | No. 1
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Economic Bulletin 3
The Korean economy continued an upward trend as real economic indicators such asproduction, investment and exports stayed in a recovery phase, while financial marketsremained stable.
Mining and manufacturing production in November rose 1.4 percent month-on-month and17.8 percent year-on-year. Service output fell 1.2 percent month-on-month, affected by theH1N1 flu pandemic. On a year-on-year basis, however, the index rose 3.3 percent.
Consumer goods sales slightly declined month-on-month by 0.9 percent in November due todrops in semi-durable and non-durable goods sales, while the indicator accelerated a year-on-year rise from 9.8 to 10.0 percent, backed by a low base effect and growing durable goodssales.
Facilities investment increased in November by 7.0 percent month-on-month and 10.3percent year-on-year, helped by recovering machinery investment. Construction completed,thanks to the private sector posting a year-on-year rise in nine months, grew both month-on-month and year-on-year by 1.2 percent and 4.2 percent, respectively.
Exports in December jumped 33.7 percent year-on-year, positively affected by a rise in majorexports including liquid crystal devices and a low base effect. Imports soared 24.0 percentyear-on-year, as imports of raw materials and capital goods rose and the low base lifted theindex.
The total number of workers hired shed 10,000 year-on-year in November, as hiring in theagriculture, forestry & fishery significantly dropped. The unemployment rate slightlyincreased month-on-month from 3.2 to 3.3 percent.
Consumer prices in December remained in the 2 percent range, despite rising prices ofagriculture, livestock & fishery products, of which the shipments declined due to a cold wave.
In December, financial markets continued to be stable, as worries over Dubai Worldspossible default eased, a Koreas consortium won a contract to export nuclear facilities to theUnited Arab Emirate (UAE), and the stock market rallied reflecting expectations over aneconomic recovery, while the interest rate reversed to a slight increase.
To sum up, although the Korean economy passed the critical stage and has continued toimprove, the recovery does not seem to be firmly entrenched, as the private sector is notstrong enough to drive consumption, investment and employment, and externaluncertainties including oil prices are still lingering.
The Korean government, to secure economic recovery, will keep pursuing expansionary fiscal
policies and spend budgets as planned, and at the same time it will continue to create jobsand support the working class. On the other hand, the government will step up its efforts toreform the economy through corporate restructuring and nurture growth potential, in orderto found a basis for a future economic take-off.
The Green BookCurrent Economic Trends
Overview
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4 January 2010
1. Global economy
The global economy is showing a gradual recovery as production and exports improved in
advanced countries. However, potential threats to global economic stability including
sluggish employment still remain.
Also, concerns grew over sovereign debt risks as Standard & Poors revised its credit outlook
for Spain to negative from stable on December 9, 2009 and Fitch cut Greece's credit rating to
BBB+ from A- on December 8.
The US revised down annualized quarter-on-quarter real GDP growth in the third quarter
from 2.8 to 2.2 percent, as the level of inventory declined and investment in non-housing
construction decelerated.
In November, production and consumption continued upward trends, as industrialproduction increased 0.8 percent month-on-month, and retail sales 1.3 percent.
Sales of existing homes in November jumped 7.4 percent from the previous month, backed
by the tax credit, while new home sales fell 11.3 percent.
In November, non-farm payrolls declined at a slightly slower pace, while the unemployment
rate hovered over the 10-percent range, showing the sluggish labor market.
The Federal Reserve announced in the Federal Open Market Committee (FOMC) on
December 17, 2009 that it would maintain the target range for the federal funds rate at 0.0 to
0.25 percent, along with the plan to complete the purchase of US$1.25 trillion of agencymortgage-backed securities and about US $175 billion of agency debt by the first quarter of
2010.
US
(Percentage change from previous period)
Annual Q1 Q2 Q3 Q4 Q1 Q2 Q3 Nov
Real GDP1
- Personal consumption expenditure
- Corporate fixed investment
- Construction investment for housing
Industrial productionRetail sales
New home sales
New non-farm payroll employment(q-o-q, thousand)2
Consumer prices (y-o-y, %)
2008 2009
1. Annualized rate (%)
2. Monthly average
Source: US Department of Commerce
0.4
-0.2
1.6
-22.9
-1.8-0.7
-37.4
-257
3.9
-0.7
-0.6
1.9
-28.2
0.1-0.5
-14.8
-113
4.2
1.5
0.1
1.4
-15.8
-1.20.4
-9.6
-153
4.3
-2.7
-3.5
-6.1
-15.9
-2.3-1.5
-9.8
-208
5.2
-5.4
-3.1
-19.5
-23.2
-3.4-6.7
-15.0
-553
1.5
-6.4
0.6
-39.2
-38.2
-5.2-1.2
-13.5
-691
-0.2
-0.7
-0.9
-9.6
-23.3
-2.7-0.3
9.9
-428
-0.9
2.2
2.8
-5.9
18.9
1.51.6
9.4
-199
-1.6
-
-
-
-
0.81.3
-11.3
-11
1.8
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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 January 2010
Investment and consumption in China continued to improve in November, with industrialproduction surging and exports declining at a much slower pace. The consumer price indexturned positive and home prices had accelerated a rise since June 2009, fanning concernsover a potential asset bubble.
Japan revised down annualized quarter-on-quarter real GDP growth in the third quarter to0.3 percent, but automobile sales rose in overseas markets, helping exports and industrialproduction continue an upward march.
The Cabinet Office unveiled on December 9, 2009 its new economic stimulus package of 7.2trillion yen (US$81 billion), which included employment promotion, while deflation took itscourse as consumer prices declined for the eighth straight month.
Eurozones exports declined at a slower pace, whereas the unemployment rate in Octoberhit 9.8 percent, the highest since 1980, showing the depressed employment market. The EU,at the summit meeting on December 14, announced that the eurozone would maintaineconomic stimulus policies until a durable economic recovery takes hold, as uncertaintiesand vulnerabilities still lingered in the economy.
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
Annual
9.0
26.1
21.6
12.9
17.2
5.9
6.9
Q1
10.6
25.9
20.6
16.4
21.4
8.0
6.9
Q2
10.1
26.8
22.2
15.9
22.4
7.8
8.4
Q3
9.0
27.6
23.2
13.0
22.9
5.3
9.7
Q4
6.8
26.1
20.6
6.4
4.1
2.5
2.5
Q1
6.1
28.6
15.0
5.1
-19.7
-0.6
-4.6
Q2
7.9
33.6
15.0
9.1
-23.5
-1.5
-7.2
Q3
8.9
33.3
15.4
12.4
-20.7
-1.3
-7.7
Oct
-
33.1
16.2
16.1
-13.8
-0.5
-5.8
Nov
-
32.1
15.8
19.2
-1.2
0.6
-2.1
Source: China National Bureau of Statistics
Real GDP
Industrial and mining production
Retail sales (y-o-y, %)
Exports (y-o-y, %)
Consumer prices (y-o-y, %)
2008 2009(Percentage change from previous period)
Annual
-0.7
-3.4
0.3
-3.5
1.4
Q1
1.4
0.3
1.8
5.9
1.0
Q2
-2.1
-1.5
0.2
1.8
1.4
Q3
-1.0
-3.3
0.8
3.2
2.2
Q4
-2.7
-17.7
-1.5
-23.1
1.0
Q1
-3.1
-17.2
-3.9
-46.9
-0.1
Q2
0.7
14.6
-0.9
-38.5
-1.0
Q3
0.3
5.9
-3.4
-34.4
-2.2
Oct
-
0.5
-1.0
-23.2
-2.5
Nov
-
2.6
-1.0
-6.3
-1.9
Source: Japan's Statistics Bureau and Statistics Centre
Home prices (y-o-y, %)-1.1 (Apr 2009) -0.6 (May) 0.2 (Jun) 1.0 (Jul) 2.0 (Aug) 2.8 (Sep) 3.9 (Oct) 5.7 (Nov)
Eurozone
Source: Eurostat
Real GDP
Industrial production
Retail sales
Exports (y-o-y, %)
Consumer prices (y-o-y, %)
2008 2009
(Percentage change from previous period)
Annual
0.8
-1.7
-0.7
3.6
3.3
Q1
0.8
0.9
0.3
6.5
3.3
Q2
-0.3
-1.1
-0.6
8.0
3.6
Q3
-0.4
-1.8
-0.5
5.3
3.8
Q4
-1.9
-7.6
-0.9
-5.0
2.3
Q1
-2.4
-8.7
-0.8
-20.9
1.0
Q2
-0.2
-1.2
-0.3
-23.2
0.2
Q3
0.4
2.1
-0.3
-19.3
-0.4
Oct
-
-0.6
0.1
-16.8
-0.1
Nov
-
-
-
-
0.5
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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 January 2010
2. Private consumption
Private consumption (preliminary GDP) in the third quarter increased 1.5 percent quarter-on-
quarter, or 0.8 percent year-on-year.
Consumer goods sales in November edged down 0.9 percent month-on-month, but rose 10.0
percent year-on-year, posting an increase for the seventh consecutive month.
On a month-on-month basis, durable goods sales was up 4.4 percent for the third straight
month, whereas semi-durable and non-durable goods sales fell 1.9 percent and 3.3 percent,
respectively. On a year-on-year basis, durable goods sales jumped 39.5 percent, thanks to
solid automobiles sales backed by tax incentives, while sales of semi-durable and non-
durable goods rose 1.3 percent and 2.1 percent, respectively.
Sales at department stores rose 5.5 percent, continuing an upward track for nine months in
a row, while sales at specialized retailers posted double-digit growth for the second straight
month.
(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
Annual
1.0
-
1.9
-2.0
-2.4
0.7
Q2
2.9
-1.3
8.7
7.1
-2.1
0.3
Q3
1.4
-0.1
0.0
-4.9
0.6
1.2
Q4
-4.2
-3.5
-9.9
-19.5
-9.9
-0.4
Q1
-4.9
0.4
-13.6
-21.3
-0.9
-1.4
Q2
1.6
5.0
4.0
18.4
0.3
1.0
Q3
3.4
1.5
9.9
29.7
0.2
2.0
Sep
6.6
1.7
26.1
65.7
2.6
0.3
Oct1
9.8
2.9
15.6
36.1
3.6
10.0
Nov1
10.0
-0.9
39.5
108.4
1.3
2.1
(Percentage change from same period in previous year)
Annual Q2 Q3 Q4 Q1 Q2 Q3 Sep Oct1 Nov1
- Department stores
- Large discounters
- Specialized retailers2
2008 2009
1. Preliminary
2. Specialized retailers are defined as stores carrying a few (1 to 3) specialized items.
Source: Statistics Korea
0.5
2.2
-1.7
3.7
3.1
0.7
0.2
-0.2
-1.0
-5.0
-1.2
-8.1
1.4
-5.0
-6.9
2.8
-2.9
2.6
6.5
-3.2
4.5
8.8
-2.0
8.6
12.0
5.5
10.7
5.5
-1.1
12.5
(Percentage change from same period in previous year)
Private consumption2
(Seasonally adjusted)3
2007 20081 20091
1. Preliminary 2. National accounts 3. Percentage change from previous period
Source: The Bank of Korea
Annual
5.1
-
Annual
0.9
-
Q1
4.0
1.1
Q2
2.3
-0.2
Q3
1.4
0.0
Q4
-3.7
-4.6
Q1
-4.4
0.4
Q2
-0.8
3.6
Q3
0.8
1.5
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Economic Bulletin 9
Consumer goods sales by type
Source: Statistics Korea (industrial activity trend)
Consumer goods sales
Source: Statistics Korea (industrial activity trend)
Private consumption
Source: The Bank of Korea (national accounts)2-1
2-2
2-3
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10 January 2010
In December, consumer goods sales is likely to turn positive month-on-month, and continue
to rise year-on-year, given improving advanced estimates and consumer sentiment, and a
low base effect from the same period in the previous year.
Domestic credit card spending increased year-on-year from the previous months 18.3
percent to 20.0 percent, posting double-digit growth for the second consecutive month.
Sales at department stores grew 12.4 percent year-on-year, up 6.0 percentage points from
the previous month, continuing an upward trend. Sales at large discounters grew 3.9
percent year-on-year from the previous months decline of 2.8 percent.
Domestic sales of Korean cars soared 79.9 percent year-on-year, affected by the release of
new cars, demand surge before expiration of the tax break for new car purchases, and a low
base effect from the previous year. However, gasoline sales slightly declined.
Stabilizing financial markets and improving consumer sentiment are also expected to
positively affect consumption.
Value of credit card use (y-o-y, %)
7.3 (Jul 2009) 10.9 (Aug) 14.7 (Sep) 9.4 (Oct) 18.3 (Nov) 20.0 (Dec)
Department store sales (y-o-y, %)
4.0 (Jul 2009) 7.6 (Aug) 8.6 (Sep) 11.4 (Oct) 6.4 (Nov) 12.4 (Dec)
Discount store sales (y-o-y, %)
-6.0 (Jul 2009) -1.5 (Aug) -6.0 (Sep) 4.5 (Oct) -2.8 (Nov) 3.9 (Dec)
Domestic sales of Korean automobiles (y-o-y, %)
10.8 (Jul 2009) 13.0 (Aug) 76.0 (Sep) 23.8 (Oct) 83.6 (Nov) 79.9 (Dec)
Domestic sales of gasoline (y-o-y, %)
15.8 (Jul 2009) 4.0 (Aug) -0.3 (Sep) 20.7 (Oct) -3.0 (Nov) -4.4 (Dec)
Source: Ministry of Knowledge EconomyThe Credit Finance Association
Korea Automobile Manufacturers Association
Korea National Oil Corporation
Ministry of Strategy and Finance (for December data)
Consumer prices (y-o-y, %)
1.6 (Jul 2009) 2.2 (Aug) 2.2 (Sep) 2.0 (Oct) 2.4 (Nov) 2.8 (Dec)
The won/dollar exchange rate (monthly average)1,264 (Jul 2009) 1,238 (Aug) 1,219 (Sep) 1,175 (Oct) 1,164 (Nov) 1,166 (Dec)
KOSPI (monthly average)
1,460 (Jul 2009) 1,579 (Aug) 1,659 (Sep) 1,631 (Oct) 1,583 (Nov) 1,647 (Dec)
Consumer Sentiment Index (CSI)
109 (Jul 2009) 114 (Aug) 114 (Sep) 117 (Oct) 113 (Nov) 113 (Dec)
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Economic Bulletin 11
Domestic automobile sales
Source: Korea Automobile Manufacturers Association (monthly automobile industry trend)
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
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12 January 2010
3. Facility investment
Facility investment (preliminary GDP ) in the third quarter posted a quarter-on-quarter
increase of 10.4 percent, and a year-on-year loss of 7.4 percent.
Facility investment in November rose 10.3 percent year-on-year, as machinery investment, in
particular that in semi-conductor equipment, rapidly improved, and transportationequipment investment, in particular automobile investment, continued to increase.
Machinery investment increased 7.4 percent year-on-year, the second fastest increase since
November 2007 when it rose 7.9 percent, approaching the pre-crisis level.
Facility investment in December is projected to stay on an upward track, given growing
corporate investment confidence and improving leading indicators such as rising domestic
machinery orders and increasing facility investment adjustment pressure.
Machinery investment index
109.7 (Sep 2008) 99.2 (Oct) 83.1 (Jan 2009) 90.1 (Aug) 107.8 (Nov)
(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 20081 20091
Annual
9.3
-
9.2
9.6
Annual
-2.0
-
-2.7
0.4
Q1
1.5
-0.4
-1.2
12.2
Q2
1.1
0.4
-0.1
5.1
Q3
4.3
0.2
6.5
-3.6
Q4
-14.0
-14.2
-15.3
-9.9
Q1
-23.5
-11.2
-24.0
-21.8
Q2
-15.9
10.1
-19.6
-3.2
Q3
-7.4
10.4
-15.1
21.8
(Percentage change from same period in previous year)
Facility investment
(Seasonally adjusted)2
- Machinery
- Transportation equipment
Domestic machinery orders
- Public
- Private
Facility investmentadjustment pressure3
1. Preliminary
2. Percentage change from previous period3. Production growth rate minus production capacity growth rate in the manufacturing sector (%p)
Sources: Statistics Korea
2007 2008 2009
Annual
8.2
-
7.5
11.3
20.6
-11.4
24.5
1.7
Annual
-4.3
-
-5.7
1.5
-5.5
4.9
-6.2
-2.2
Q4
-13.4
-9.3
-14.5
-9.0
-47.3
-3.5
-53.9
-15.6
Q1
-17.7
-11.6
-21.9
0.4
-33.8
150.5
-42.9
-18.9
Q2
-13.4
6.6
-19.5
11.3
-14.1
30.9
-18.5
-8.5
Q3
-10.1
4.2
-17.2
19.6
6.5
281.3
-12.4
1.6
Sep
5.0
17.9
-6.0
54.4
31.9
129.5
25.5
8.3
Oct1
0.5
-5.6
0.6
0.0
3.0
-75.7
26.9
-3.0
Nov1
10.3
7.0
7.4
21.1
56.6
108.8
46.4
15.1
Source: The Bank of Korea
Sep Oct Nov Dec Jan
Business survey indices (base=100) for
95 100 96 98 103manufacturing 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 January 2010
4. Construction investment
Construction investment (preliminary GDP ) in the third quarter rose 2.7 percent year-on-
year, and declined 2.0 percent quarter-on-quarter.
Construction completed (current value ) in November rose 4.2 percent year-on-year, as
construction completed in the private sector improved along with the public sector, for the
first time in nine months since February 2009, landing at a 3.4 percent increase year-on-year.
Both building construction and civil engineering works climbed by 0.5 percent and 9.8
percent, respectively.
Construction investment is projected to slightly improve in December, given a rise in leading
indicators such as construction orders and building permit area. Construction orders in the
private sector, for the first time since December 2007, advanced for three consecutive
months from a year earlier.
(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 20081 20091
Annual
1.4
-
-0.0
3.8
Annual
-2.1
-
-4.3
1.3
Q1
-1.9
-2.5
-1.2
-3.2
Q2
-0.3
-0.3
-0.1
-0.7
Q3
0.2
0.1
-0.1
0.7
Q4
-5.6
-3.0
-14.3
5.7
Q1
1.6
5.2
-11.1
24.9
Q2
3.7
1.7
-3.5
14.3
Q3
2.7
-2.0
-0.4
7.7
(Percentage change from same period in previous year)
Construction completed
(Seasonally adjusted)2
- Public
- Private
Construction orders
- 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
Annual
6.6
-
8.4
4.6
23.6
40.3
16.5
13.3
Annual
4.7
-
6.5
1.7
-9.0
9.1
-15.8
-20.1
Q4
-2.2
-6.2
8.7
-9.1
-6.5
5.0
-15.3
-41.9
Q1
4.5
7.7
24.4
-5.0
-16.5
22.0
-38.4
-31.6
Q2
7.0
2.2
32.1
-5.2
-2.0
186.5
-62.4
-32.7
Q3
-0.6
-6.6
21.7
-11.3
9.1
75.6
-10.7
-4.6
Sep
7.7
10.1
32.2
-4.3
58.4
101.1
61.8
31.4
Oct1
-5.2
-2.9
4.9
-9.6
27.2
89.7
16.3
-29.5
Nov1
4.2
1.2
8.1
3.4
77.0
64.6
85.6
14.1
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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 December soared 33.7 percent year-on-year to US$36.24 billion.
The large increase in exports is mainly attributed to a low base effect from the previous year
and the global economy recently recovering. Daily average exports in working-day-adjusted-
terms also rose from the previous month.
By export category, liquid crystal devices (up 177.7% ) and semiconductors (up 125.5%)
surged, and by regional category, exports to China (up 94.0%) and the EU (up 41.7%) greatly
improved.
Imports in December jumped 24.0 percent year-on-year to US$32.94 billion due to a low
base effect and improving domestic demand. Average daily imports in working-day-
adjusted-terms also increased from the previous month. Imports of capital goods further
expanded, while raw material imports switched to an increase, affected by rising oil prices.
The trade balance in December posted a surplus of US$3.30 billion, staying in the black foreleven straight months since February 2009. The annual trade balance of 2009 recorded a
surplus of US$40.98 billion, the largest surplus ever.
Raw materials (y-o-y, %)
-34.7 (Q1 2009) -43.0 (Q2) -39.3 (Q3); -7.0 (Nov) 24.8 (Dec)
Capital goods (y-o-y, %)
-29.1 (Q1 2009) -23.6 (Q2) -13.7 (Q3); 17.8 (Nov) 29.1 (Dec)
Consumer goods (y-o-y, %)
-29.5 (Q1 2009) -24.4 (Q2) -20.9 (Q3); 15.3 (Nov) 7.4 (Dec)
(US$ billion)
Exports
(y-o-y, %)
Average daily exports
Imports
(y-o-y, %)
Average daily imports
2008 2009
Annual
422.0113.6
1.53
435.27
22.0
1.58
Dec
27.12-17.9
1.13
26.58
-21.6
1.11
Q1
74.41-25.2
1.10
71.45
-32.6
1.06
Q2
90.32-21.1
1.30
73.82
-35.7
1.06
Q3
94.77-17.6
1.32
84.79
-31.0
1.18
Oct
33.96-8.5
1.48
30.34
-16.0
1.32
Nov
34.0818.1
1.48
29.46
2.1
1.28
Dec
36.2433.7
1.51
32.94
24.0
1.37
Jan-Dec
363.77-13.8
1.30
322.79
-25.8
1.16
Source: Korea Customs Service
(US$ billion)
Trade Balance
2008 2009
Annual
-13.27
Dec
0.32
Q1
2.99
Q2
16.50
Q3
9.98
Oct
3.62
Nov
4.62
Dec
3.30
Jan-Dec
40.98
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 rose 1.4 percent month-on-month in November,
thanks to an export increase and a low base effect from the previous month due to Chuseok
holidays, while year-on-year it surged 17.8 percent
By business category, semiconductors and parts (up 56.3%), chemical products (up 28.0%),
and automobiles (up 14.9% ) posted an increase year-on-year, whereas beverages (down
9.6%) and metalworks (down 2.5%) decreased.
Shipments soared 2.0 percent month-on-month, or 15.3 percent year-on-year, thanks to
brisk shipments of semiconductors and parts, while the level of inventory decelerated a drop
from the previous months 16.2 percent to 14.5 percent.
By business category, the shipments of semiconductors and parts (up 47.1%) and
automobiles (up 18.6%) rose year-on-year, while those of refined petroleum products (down
2.4%) and transportation equipment (down 2.9% ) declined. The inventories of automobiles
(down 30.9% ), primary metals (down 21.4% ), and chemical products (down 21.1% ) went
down.
The average operation ratio of the manufacturing sector registered 77.3 percent, staying at
the same level as the previous month.
Mining and manufacturing production in December is projected to continue an upward track,
as advanced estimates, in particular electricity sales and exports, showed an improvement.
Production (q-o-q, m-o-m)
(y-o-y)
- Manufacturing
Heavy chemical industry
Light industry
Shipment
- Domestic demand
- Exports
Inventory3
Average operation ratio (%)
Production capacity
1. Preliminary 2. Including mining, manufacturing, electricity and gas industry 3. End-period
Source: Statistics Korea
(Percentage change from same period in previous year)
Mining andmanufacturingactivity2
Manufacturingactivity
20092008
Annual
-
3.0
3.0
4.1
-2.2
2.4
-0.7
7.1
7.3
77.2
5.2
Q3
-1.9
5.6
5.6
6.8
0.0
5.3
1.7
10.3
17.3
78.3
5.3
Nov
-10.1
-13.8
-14.5
-15.0
-12.2
-13.2
-14.0
-11.9
16.1
68.4
3.4
Q2
11.4
-6.2
-6.6
-6.2
-8.8
-5.8
-6.6
-4.7
-16.7
73.7
1.9
Q3
7.2
4.2
4.4
5.6
-1.8
2.1
3.1
0.8
-13.9
78.9
2.8
Sep
5.7
11.0
11.5
12.4
6.5
8.9
12.4
4.3
-13.9
80.2
3.2
Oct1
-3.8
0.2
0.4
1.9
-7.1
-0.6
-1.0
-0.1
-16.2
77.3
3.4
Nov1
1.4
17.8
18.6
21.5
4.4
15.3
13.5
17.7
-14.5
77.3
3.5
Industrial electricity sales (thousand GWh)
18.3 (Sep 2009) 17.7 (Oct) 18.1 (Nov) 19.0 (Dec)1
Exports (US$ billion)
32.0 (Jul 2009) 28.9 (Aug) 34.1 (Sep) 34.0 (Oct) 34.1 (Nov) 36.2 (Dec)
1. Estimate
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Inventory
Source: Statistics Korea (industrial activity trend)
Average manufacturing operation ratio
Source: Statistics Korea (industrial activity trend)
Industrial production
Source: Statistics Korea (industrial activity trend)6-1
6-2
6-3
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7. Service sector activity
Service activity in November 2009 decreased 1.2 percent from the previous month partly due
to the H1N1 flu pandemic. From a year earlier, however, service output expanded 3.3
percent.
By business category, real estate & renting services (up 15.9%), healthcare & social welfare
services (up 11.6%) and wholesale & retail sales (up 5.4%) led the year-on-year increase in
the service sector.
Meanwhile, entertainment, cultural & sports services (down 6.9% ) and professional,
scientific & technical activities (down 3.9%) declined from a year earlier.
Amid robust advanced indicators including credit card spending, service activity in
December 2009 is expected to reverse its course to post a month-on-month increase, mainly
affected by the subdued H1N1 flu pandemic and rising stock prices.
(Percentage change from same period in previous year)
Annual Q3 Q4 Q1 Q2 Q3 Sep Oct1 Nov1
Service activity index
- Wholesale & retail
- Transportation services
- Hotels & restaurants
- Information & communication services
- Financial & insurance services
- Real estate & renting
- Professional, scientific & technical services
- Business services
- Educational services
- Healthcare & social welfare 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
3.4
1.4
4.3
0.7
3.5
9.7
-2.1
2.0
4.6
1.8
6.3
2.2
0.1
5.8
3.2
3.6
4.3
1.7
3.4
9.6
-8.4
1.8
3.2
-0.5
6.1
1.7
-1.4
3.9
-0.4
-4.6
-3.2
-3.0
-0.2
4.5
-7.5
0.9
0.1
2.3
6.5
4.3
-1.0
4.0
-0.4
-4.0
-10.8
-2.4
-1.9
6.6
-3.1
-1.9
-4.8
3.7
8.6
1.5
-3.4
0.5
1.6
-2.2
-9.5
-0.3
0.9
9.8
1.5
3.2
-6.6
6.9
8.1
0.9
-5.0
8.8
2.2
0.3
-4.1
-2.2
1.5
8.7
9.3
0.1
-1.1
-2.6
9.8
0.1
-1.7
5.5
4.4
3.3
0.4
0.0
3.2
9.4
9.7
3.0
-1.2
-0.3
11.4
4.7
1.9
9.6
3.3
5.4
2.6
-2.0
1.4
4.5
15.9
-3.9
-2.4
0.2
11.6
-6.9
-3.5
0.3
1.3
1.9
-2.5
-2.7
1.5
4.0
14.3
-2.9
-0.5
-7.0
11.4
-6.6
-0.8
-3.5
1. Preliminary
Source: Statistics Korea
Value of credit card use (y-o-y, %)
10.9 (Aug 2009) 14.7 (Sep) 9.4 (Oct) 18.3 (Nov) 20 (Dec)1
KOSPI (monthly average)
1,630 (Oct 2009) 1,583 (Nov) 1,647 (Dec)
1. Estimate
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November 2009 service industry by business
Source: Statistics Korea (service industry activity trend)
Wholesale and retail sales
Source: Statistics Korea (service industry activity trend)
Service industry
Source: Statistics Korea (service industry activity trend)7-1
7-2
7-3
Totalin
dex
Who
lesal
e&retail
Tran
sportatio
n
Hotels
&re
staurants
Informa
tion&
comm
unica
tions
Real
estate
&renting
Professional,s
cientifi
c&
technic
alservice
s
Busin
essfacilit
ymanag
ement&
busin
esssupport
servi
ces
Education
alservi
ces
Healthc
are&
socialw
elfa
re
servi
ces
Ente
rtainm
ent,
cultu
ral&
sports
servi
ces
Membe
rship
organiz
atio
ns,repair
&
othe
rpersonals
ervic
es
Sewe
rage
,waste
mana
geme
nt,m
aterials
recovery&
remedia
tiona
ctivities
Finan
cial&
insuran
ceservi
ces
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8. Employment
The number of workers on payroll in November 2009 declined by 10,000 from a year earlier
as hiring in the agriculture, forestry & fishery dropped significantly.
Employment in the manufacturing sector continued to decrease mainly due to sluggishexports. The pace of decline in the sector, however, decelerated to 43,000. Hiring in the
construction sector stayed on a downward track with a 115,000 decrease as employment in
the private sector remained weak. Employment in the service sector soared by 294,000
driven by the governments job creation policies. Meanwhile, the number of employed in the
agriculture, forestry & fishery plunged 151,000 as fall cultivation declined while the
temperature dropped.
By status of workers, non-wage workers including self-employed workers plummeted by
424,000 from a year earlier. In the mean time, wage workers rose by 413,000 led by an
increase of 492,000 in regular workers and 186,000 in temporary workers, although the
number of daily workers shrank by 264,000.
The employment rate stood at 59.1 percent, down 0.8 percentage points compared to the
same month of the previous year. The unemployment rate rose 0.2 percentage points year-
on-year to 3.3 percent, while that of youths aged 15 to 29 was up 1.5 percentage points from
a year earlier to 7.6 percent.
Unemployment rate (%)
Employment rate (%)
(Change from same period in previous year, thousand)
20092008
Annual
3.2
59.5
Nov
3.1
59.9
Q1
3.4
58.5
Q2
3.1
60.3
Q3
3.1
59.9
Q4
3.1
59.4
Q1
3.8
57.4
Q2
3.8
59.3
Q3
3.6
59.1
Oct
3.2
59.3
Nov
3.3
59.1
Source: Statistics Korea
Employment growth
- Manufacturing
- Construction
- Services
- Agriculture, forestry & fishery
- Wage workers
Regular workers
Temporary workers
Daily workers
- Non-wage workers
Self-employed workers
(Change from same period in previous year, thousand)
20092008
Annual
145
-52
-37
263
-37
236
386
-93
-57
-92
-79
Nov
78
-86
-32
150
42
159
318
-103
-56
-81
-83
Q1
209
-18
-22
307
-63
312
435
-98
-25
-102
-79
Q2
173
-34
-46
300
-54
289
448
-96
-63
-115
-67
Q3
141
-52
-40
262
-38
208
347
-83
-56
-66
-76
Q4
54
-103
-41
187
8
137
316
-94
-85
-83
-95
Q1
-146
-163
-43
47
14
73
318
-136
-108
-220
-197
Q2
-134
-151
-113
155
-25
175
313
-5
-133
-309
-286
Q3
-1
-143
-103
269
-25
356
386
125
-155
-357
-276
Oct
10
-87
-147
269
-29
376
490
136
-250
-367
-266
Nov
-10
-43
-115
294
-151
413
492
186
-264
-424
-307
Source: Statistics Korea
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Economic Bulletin 23
Share of employed by industry
Source: Statistics Korea (service industry activity trend)
Number of employed and employment growth
Source: Statistics Korea (service industry activity trend)8-1
8-2
8-3 Unemployment rate and number of unemployed
Source: Statistics Korea (service industry activity trend)
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9. Financial market
9.1 Stock market
The Korean stock market in December 2009 was up amid global market rallies andexpectations over an economic recovery.
Investor sentiment in the market was boosted as Koreas GDP in the third quarter expanded
3.2 percent from the previous quarter posting the highest quarter-on-quarter growth in 90
months while the IMF upgraded its forecasts for Koreas economic growth for 2009 and 2010
to 0.25 percent and 4.5 percent, respectively, from initial estimates of minus 1 percent and
3.6 percent.
Despite liquidity problems of Kumho Asiana Group, the Korean stock market rallies
continued until the end of the year, mainly affected by a Korean consortiums gaining of the
nuclear-plant contract with the United Arab Emirate (UAE).
Foreign investors led domestic stock market rallies by continuing their net-buying of Korean
shares since July, although the market was in a wait-and-see mode toward the end of the
year.
9.2 Exchange rate
The won/dollar exchange rate in December rose 1.7 won from 1,162.9 won at the end of
November to wrap up the month at 1,164.5 won.
The exchange rate dropped to 1,153 won, the lowest this year, on December 4 as did on
November 18, as fear eased over Dubais debt default crisis. It, thereafter, turned to anincrease as investors appetite for safe assets grew as downgrades of Greeces sovereign
credit rating fueled concerns over credit risks in the eurozone.
The won/yen exchange rate fell to the 1,200 won range with worries about deflation in
Japan.
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 Nov Dec Change1
Won/Dollar 929.8 936.1 1,259.5 1,162.8 1,164.5 8.2
Won/100Yen 783.4 828.6 1,396.8 1,348.8 1,264.5 10.5
Nov 2009 Dec 2009 Change1 Nov 2009 Dec 2009 Change1
Stock price index
Market capitalization
Average daily trade valueForeign stock ownership
1. Change from the previous month
2006 2007 2008 2009
KOSPI KOSDAQ
(End-period, point, trillion won)
1,555.6
818.5
4.032.7
1,682.8
887.3
4.532.7
127.2 (8.2%)
68.8 (8.4%)
0.5 (12.5%)0.0 (0.0%)
464.3
75.4
1.67.3
513.1
85.2
2.07.4
48.8 (10.5%)
9.8 (13.0%)
0.4 (25.0%)0.1 (5.8%)
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Foreign exchange rate (month-end)
Stock prices9-1
9-2
9-3 Recent foreign exchange rate
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9.3 Bond market
Treasury bond yields were up in December due to less demand for safe assets with global
stock market rallies and expectations over an economic rebound.
Despite the Bank of Koreas decision to keep its policy rate unchanged, the yieldsaccelerated the growth pace, as foreign investors made a net selling of KTB futures amid an
improvement of economic indicators such as industrial activities.
9.4 Money supply & money market
The M2 (monthly average) in October expanded 9.9 percent from a year earlier excluding
cash management accounts (CMAs), which were included in M2 since July 2009. The year-
on-year M2 growth was higher than the previous months 9.5 percent, as financial
institutions are likely to have hiked their deposit rates to attract matured deposits.
Bank deposits in November increased driven by time deposits which expanded at a faster
pace with the inflow of massive corporate funds fueled by deposit rate hikes.
Asset management company (AMC) deposits shifted to an increase as financial institutions
short-term idle money flowed into the deposits while money withdrawals from equity funds
declined.
Dec Dec Dec Dec Oct Nov Dec Change1
Call rate (1 day) 3.76 4.60 5.02 3.02 2.01 2.01 2.01 0
CD (91 days) 4.09 4.86 5.82 3.93 2.79 2.79 2.88 9
Treasury bonds (3 yrs) 5.08 4.92 5.74 3.41 4.44 4.10 4.44 34
Corporate bonds (3 yrs) 5.52 5.29 6.77 7.72 5.58 5.21 5.56 35
Treasury bonds (5 yrs) 5.36 5.00 5.78 3.77 4.94 4.61 4.98 37
(End-period)
1. Basis point changes in December 2009 from the previous month
20092008200720062005
Bank deposits
AMC deposits
(Monthly change, end-period, trillion won)
1. Balance at end November 2009, trillion won
2007 2008 2009
Annual
59.6
61.8
Nov
11.2
14.3
Annual
104.3
63.0
Nov
9.4
2.8
Sep
16.5
-18.3
Oct
-6.8
-7.3
Nov
1.5
4.4
Nov1
1,015.8
342.9
M1+2
M2
Lf3
(Percentage change from same period in previous year, average)
1. Balance at end October 2009, 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 September 2009, trillion won
2009
Annual
-5.2
11.2
10.2
2007 2008
Annual
-1.8
14.3
11.9
Q1
-12.4
13.3
11.6
Q4
5.0
13.8
11.2
Q2
-0.1
15.3
12.8
Q3
2.1
14.7
12.1
Oct
4.2
14.2
11.9
Q1
10.8
11.5
8.8
Q2
17.6
10.1
7.3
Aug
18.5
9.5
7.6
Oct
19.6
9.9
Lower7
Oct1
371.5
1,543.4
1,965.34
Sep
19.5
9.5
7.3
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Economic Bulletin 27
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 recorded a US$4.28 billion surplus in November.
The goods account surplus exceeded US$5 billion for three consecutive months since
September 2009 as the trade balance continued to post a surplus.
The surplus expanded to US$5.84 billion from US$5.68 billion a month earlier. The service
account deficit increased to US$1.66 billion from the previous months US$1.31 billion, as
deficits swelled in the travel balance and fee payments such as payments for patent rights.
The income account surplus reduced to US$390 million from US$560 million of the previous
month as dividend and interest payments increased.
The current transfer account deficit was up to US$290 million from the previous months
US$160 million with increased outward remittance.
The capital and financial account in November posted a net inflow of US$1.54 billion.
The direct investment account expanded the net outflow to register US$2.84 billion from the
previous months deficit of US$510 million as outbound foreign direct investment (FDI) by
locals increased while inward FDI by foreigners decreased.
The portfolio investment account decreased the net inflow to record US$3.39 billion fromUS$6.13 billion a month earlier as foreign investment in the Korean bond market declined.
The financial derivatives account turned to a net inflow of US$850 million from a net outflow
of US$570 million in the previous month as payments related to overseas financial
derivative transactions decreased.
The other investment account reversed its course to post a surplus of US$190 million after
recording a deficit of US$3.48 billion a month earlier as financial institutions collected short-
term foreign currency-denominated lending from overseas.
The current account is likely to record a surplus of around US$2 billion in December as the
trade balance posted a surplus of US$3.30 billion.
Current account
- Goods balance
- Service balance
- Income balance
- Current transfers
(US$ billion)
20092008
Capital & financial account balance (US$ billion)
-1.44 (Q1 2009) 8.68 (Q2) 14.40 (Q3); 1.58 (Oct) 1.54 (Nov)
Annual
-5.78
5.67
-16.67
5.90
-0.67
Q1
-4.87
-1.38
-4.94
1.98
-0.53
Q2
-0.41
5.53
-4.46
-0.52
-0.96
Q3
-8.33
-3.23
-5.84
1.50
-0.76
Q4
7.83
4.75
-1.44
2.94
1.58
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
Oct
4.76
5.68
-1.31
0.56
-0.16
Nov
4.28
5.84
-1.66
0.39
-0.29
Jan-Nov
41.15
52.11
-14.40
3.86
-0.41
Source: The Bank of Korea
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11. Prices and international commodity prices
11.1 Prices
Consumer prices in December 2009 increased 0.4 percent month-on-month while rising 2.8percent year-on-year.
The overall price index was up 0.4 percent month-on-month as prices for agricultural,livestock and fishery products gained strength and a price adjustment increased personalservice charges in the year-end. Prices of agricultural, livestock and fishery products rose 2.8percent from the previous month due to decreased supply affected by cold wave and higherstorage cost.
Prices of agricultural, livestock & fishery products in December 2009 (m-o-m, %)Rice (-1.9), radish (0.7), Chinese cabbage (-6.4), cucumber (50.3), lettuce (36.3), mandarin orange (-11.1),
Korean beef (1.5), pork (3.1), mackerel (5.6), scabbard fish (4.1), Alaska pollack (3.1)
Despite stabilized international oil prices, prices of oil products increased 0.2 percent from a monthearlier affected by LPG price increases in December.
Prices of oil products in December 2009 (m-o-m, %)Gasoline (-0.5), diesel (-0.7), kerosene (-0.3), LPG for automobiles (5.4), LPG for kitchen use (4.4)
Public utility charges remained at a similar level to the previous month as an increase in local publicutility charges was offset by falling medical service fees followed by expanded medical insurancecoverage.
Due to higher expenses for dining-out affected by beef price increases and strong demand for year-end parties on top of a peak price tariff introduced in the tourism and lodging industry during thehigh season, personal service charges rose 0.3 percent month-on-month.
Core consumer prices, which exclude the prices of oil and agricultural products, rose by 2.2 percentyear-on-year. Consumer prices for basic necessities, a barometer of perceived consumer prices, wereup 3.3 percent compared to the same month of the previous year.
Consumer price inflation in major sectors
Publicutility
Industrialproducts
Oilproducts
TotalAgricultural,
livestock & fisheryproducts
Housingrents
Personalservices
Month-on-Month (%)
Contribution (%p)
Year-on-Year (%)
Contribution (%p)
0.4
0.35
2.8
2.80
2.8
0.23
3.4
0.28
0.1
0.03
4.6
1.42
0.2
0.01
11.9
0.63
0.2
0.02
1.2
0.11
0.0
0.00
1.8
0.29
0.3
0.09
2.0
0.71
30 January 2010
Source: Statistics Korea
Consumer price inflation
Source: Statistics Korea
2008 2009
Month-on-Month (%)
Year-on-Year (%)
Core consumer prices (y-o-y)
(m-o-m)
Consumer prices for basicnecessities (y-o-y)
Dec
0.0
4.1
5.6
0.5
3.0
Jan
0.1
3.7
5.2
0.2
2.8
Feb
0.7
4.1
5.2
0.4
3.3
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
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Economic Bulletin 31
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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32 January 2010
11.2. International oil and commodity prices
Before rising to the high-US$70s affected by strong demand for heating oil in the month-end,
international oil prices in December tumbled to remain around US$70 a barrel as the US
dollar gained strength. The monthly average oil prices turned to a fall for the first time in three
months.
Despite the wons deppreciation, domestic prices of oil products inched down month-on-
month as weak international oil product prices by mid-December were reflected with the
time lag.
Prices of non-ferrous metals in December continued to rise while international prices of grain
rose due to Chinas increased demand.
Prices of non-ferrous metals increased with expectations of economic recovery in 2010
rather than fundamental factors including demand and supply conditions. Aluminum prices
grew at double digit with the spreading recognition that it remained relatively undervalued
compared to other non-ferrous metals.
Corn and soybean prices rose due to deteriorating weather conditions and increasing
demand from China while the wheat price increase is limited by favorable supply and
demand dynamics.
Prices of non-ferrous metals and grain in December 2009 (m-o-m, %)
Corn (3.0), wheat (0.2), soybean (2.4), bronze (4.8), aluminum (11.7), nickel (0.6), zinc (8.6), lead (1.2), tin (4.9)
(Won/liter, period average)
Annual Annual Annual Jun Jul Aug Sep Oct Nov Dec
Gasoline prices 1,526 1,692 1,601 1,607 1,639 1,670 1,681 1,627 1,655 1,646
Diesel prices 1,273 1,614 1,397 1,389 1,428 1,447 1,453 1,409 1,452 1,441
2007 2008 2009
Source: Korea National Oil Corporation
Record high oil prices (spot prices, US$/barrel)
Dubai crude: 141 (Jul 4, 2008), Brent crude: 145 (Jul 3), WTI crude: 146 (Jul 14)
(US$/barrel, period average)
Dubai crude
Brent crude
WTI crude
2007 2008 2009
Annual
68.4
72.8
72.3
Annual
94.3
97.5
99.9
Annual
61.9
61.7
61.9
Jun
69.4
68.6
69.7
Jul
65.0
64.6
64.2
Aug
71.4
72.9
71.1
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
Source: KOREAPDS
(Period average)Reuters index*
Annual Annual Annual Jun Jul Aug Sep Oct Nov Dec
2,400 2,536 2,079 2,117 2,082 2,159 2,147 2,197 2,243 2,294
200920082007
* A weighted average index of 17 major commodities Source: KOREAPDS
Reuters index*
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Economic Bulletin 33
International oil prices (Dubai crude) and import prices
Source: Korea National Oil Corporation & Korea Customs Service
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.
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34 January 2010
12. Real estate market
12.1 Housing market
In December 2009, nationwide apartment sales prices were up 0.2 percent month-on-month,
decelerating the pace of increase for three straight months. Compared with the end of 2008,apartment prices rose 1.6 percent. Apartment sales prices in the Seoul metropolitan areawere down for the first time since March 2009 as property transactions in major areas suchas Gangnam (down 0.1%), Seocho (down 0.1%), and Gwacheon (down 0.7%) continued tocontract. On the other hand, apartment sales prices in other cities, especially Busan (up0.8%) and Daejeon (up 0.7%), increased relatively significantly.
The rental prices have slowed down the growth pace for the third month in a row with thebeginning of the winter low season, by rising 0.3 percent from the previous month. From theend of 2008, rental prices were up 4.5 percent. The rental prices in Gangnam (up 0.8%),Seocho (up 1.2%), and Songpa (up 0.7%) remained strong.
Apartment sales transactions in November decreased 6.6 percent from 87,329 a monthearlier to post 81,589. The transactions were up 52.1 percent from a year earlier and down8.3 percent compared with the monthly average recorded in the same month for the past 3years.
Source: Korea Land Corporation
(Monthly average, thousand)Apartment sales transactions
Nationwide
2006 2007 2008 2009
Annual
94
Nov
152
Annual
84
Nov
80
Annual
74
Nov
54
Dec
57
Jan
49
Feb
60
Mar
79
Apr
76
May
72
Jun
81
Jul
91
Aug
81
Sep
90
Oct
87
Nov
82
(Percentage change from previous period)Nationwide apartment sales prices
Nationwide
SeoulGangnam2
Gangbuk3
Seoul metropolitan area
5 metropolitan cities
Other cities
1. Weekly trends 2. Upscale area of southern Seoul 3. Northern Seoul Source: Kookmin Bank
2006 2007 2008 2009
Annual
13.8
24.127.6
19.0
24.6
2.1
3.0
Annual
2.1
3.60.5
8.3
4.0
-0.6
0.3
Annual
2.3
3.2-1.9
9.4
2.9
1.0
2.3
Dec
-0.5
-1.6-2.0
-1.3
-1.4
-0.3
-0.3
Annual
1.6
2.63.9
0.9
0.7
2.8
2.2
Q1
-1.2
-1.3-1.1
-1.7
-1.8
-0.7
-0.3
Q2
0.4
1.01.7
0.2
0.5
0.3
0.3
Q3
1.5
2.63.1
2.0
1.8
1.3
0.8
Q4
0.9
0.30.2
0.4
0.2
1.9
1.5
Oct
0.4
0.30.3
0.4
0.3
0.6
0.5
Nov
0.3
0.00.0
0.1
0.0
0.8
0.6
Dec
0.2
0.00.0
0.0
-0.1
0.5
0.4
Dec211
0.03
0.000.00
0.00
-0.02
0.09
0.08
Dec71
0.05
-0.01-0.01
-0.01
-0.03
0.19
0.08
Dec141
0.03
-0.01-0.01
0.00
-0.03
0.08
0.12
Dec281
0.03
0.010.04
-0.02
-0.01
0.10
0.05
(Percentage change from previous period)Nationwide apartment rental prices
Nationwide
Seoul
Gangnam2
Gangbuk3
Seoul metropolitan area
5 metropolitan cities
Other cities
1. Weekly trends 2. Upscale area of southern Seoul 3. Northern Seoul Source: Kookmin Bank
2006 2007 2008 2009
Annual
7.6
11.5
11.3
11.8
11.7
3.0
4.1
Annual
1.9
2.2
0.5
4.6
2.1
1.1
2.2
Annual
0.8
-1.8
-3.6
0.5
-0.4
1.6
2.6
Dec
-1.4
-2.7
-0.9
-2.4
-2.2
-0.4
-0.5
Annual
4.5
8.1
10.4
5.4
5.6
3.9
2.9
Q1
-1.3
-0.8
-0.1
-1.6
-1.8
-0.9
-0.4
Q2
0.9
1.8
2.4
1.0
1.4
0.4
0.5
Q3
2.8
4.7
5.1
4.2
4.1
1.9
1.0
Q4
2.0
2.3
2.7
1.9
1.8
2.6
1.8
Oct
0.9
1.1
1.1
1.1
1.0
0.8
0.5
Nov
0.8
0.8
1.0
0.6
0.7
1.1
0.7
Dec
0.3
0.4
0.5
0.2
0.1
0.7
0.5
Dec211
0.08
0.12
0.18
0.04
0.04
0.15
0.11
Dec71
0.09
0.14
0.25
0.00
0.02
0.21
0.13
Dec141
0.09
0.08
0.10
0.07
0.04
0.14
0.17
Dec281
0.08
0.01
0.20
-0.01
0.06
0.13
0.09
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Economic Bulletin 35
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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36 January 2010
12.2 Land market
Nationwide land prices in November rose 0.30 percent, the same level as the previous
month, continuing the moderate recovery pace since April 2009. The accumulated increase
rate from January to November was 0.61 percent, with land prices standing below the record
high in October 2008 by 3.5 percent.
In the Seoul metropolitan area, Seoul continued to slow the upward pace while Incheon and
Gyeonggi province continued to post high price increases rising by 0.55 percent and 0.47
percent, respectively.
In addition, price increases in other cities, especially Daegu (up 0.35%) and North
Gyeongsang province (up 0.33%), accelerated the growth pace.
Nationwide land transactions in November expanded 39.0 percent or 58,000 land lots from a
year earlier to 207,000 land lots. In terms of gross area, land transactions were up 39.9
percent.
Nationwide land transactions excluding Daegu (down 26.1%) increased year-on-year.
Particularly, land transactions in Daejeon (up 98.0%), Gangwon province (up 74.2% ), andBusan (up 69.4%) soared.
(Monthly average, land lot, thousand)Land sales transactions
Nationwide
Seoul
Gyeonggi
Incheon
2007 2008 2009
Annual
208
33
49
13
Annual
208
26
45
13
Sep
173
20
37
11
Oct
191
23
36
10
Nov
148
14
28
8
Dec
162
13
31
8
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
Nov
207
19
48
11
Sep
226
28
56
13
Oct
212
25
52
14
Source: Korea Land Corporation
Land price increases in Seoul metropolitan (m-o-m, %)
0.41 (Sep 2009) 0.37 (Oct) 0.36 (Nov)
Land price increases in other cities (m-o-m, %)
0.09 (Aug 2009) 0.12 (Sep) 0.16 (Oct) 0.21 (Nov)
(Percentage change from previous period)Land prices by region
Nationwide
SeoulGyeonggi
Incheon
2007 2008 2009
Annual
3.88
5.884.22
4.86
Q1
0.96
1.381.07
1.24
Q2
0.79
1.070.89
1.28
Q3
0.91
1.401.05
1.12
Q4
1.15
1.901.14
1.13
Annual
-0.31
-1.00-0.26
1.37
Q1
1.23
1.831.28
1.36
Q2
1.46
2.171.57
1.67
Q3
1.18
1.591.28
2.01
Q4
-4.08
-6.34-4.28
-3.57
Q1
-1.20
-1.38-1.62
-1.39
Q2
0.35
0.680.37
0.53
Q3
0.88
1.301.13
1.16
Oct
0.30
0.300.42
0.51
Nov
0.30
0.240.47
0.55
Source: Korea Land Corporation
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Economic Bulletin 37
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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38 January 2010
13. Composite indices of business cycle indicators
The coincident composite index was up 0.3 percent in November from the previous month
while the cyclical indicator of coincident composite index remained unchanged.
Three out of all components of the index including the volume of imports decreased. The
value of construction completed, the mining & manufacturing production index, the
domestic shipment index, and the number of non-farm payroll employment were up.
The year-on-year leading composite index, which foresees the future economic conditions,
went up 1.3 percentage points month-on-month in November. The 12-month smoothed
change in leading composite index increased 1.2 percentage points month-on-month,
running on an upward track since January.
The value of received construction orders, the value of machinery orders received, the
indicator of inventory cycle, the ratio of job openings to job seekers, the volume of capital
goods imports, and the composite stock price index were up.
Components of coincident composite index in November 2009 (m-o-m)
Value of construction completed (2.5%), mining & manufacturing production index (1.0%), domestic shipment
index (0.7%), number of non-farm payroll employment (0.1%), service activity index (0.0%), manufacturing
operation ratio index (-0.1%), wholesale & retail sales index (-0.7%), volume of imports (-0.9%)
Components of the leading composite index in November 2009 (m-o-m)
Value of received construction orders (27.4%), value of machinery orders received (12.7%), indicator of
inventory cycle (5.7%p), ratio of job openings to job seekers (3.4%p), volume of capital goods imports (0.5%),
composite stock price index (0.3%), liquidity in the financial institutions (0.3%), net terms of trade index
(0.1%), spreads between long & short term interest rates (0.0%p), consumer expectations index (-1.0%p)
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
1. Preliminary
Jan
-1.9
92.4
-2.2
0.3
-4.0
0.1
Feb
0.0
92.0
-0.4
1.1
-2.9
1.1
Aug
0.9
96.7
0.5
1.0
9.1
1.3
Sep
0.6
96.9
0.2
0.7
10.1
1.0
Oct1
0.4
96.8
-0.1
1.1
11.3
1.2
Nov1
0.3
96.8
0.0
1.3
12.5
1.2
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Economic Bulletin 39
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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The proposed revision of the labor union law was passed by the National Assembly, which
limits wage payment for full time unionists and allows multiple unions at one workplace.
Background
Banning corporations from paying wages to full time union members and allowing multiple
unions at one workplace have been controversial for 13 years, although both of them need
to be adopted to help improve Koreas labor-management relations. The revised labor union
law regulates details concerning ban on paying full time union members and multiple unions
at one workplace, which aim to guarantee as much freedom as possible to companies and
unions, while at the same time be in line with the principles of labor-management relations.
Main contents of the revision
1. Banning corporations from paying full time union members
Although full time union members are allowed when employers agree or collective
agreements approve, they are required to be paid not by companies but by unions.Corporations paying full time labor union members will be punished for not complying with
the law. However, the revised labor union law provides some flexibility to the wage payment
system for labor unionists.
The revision allows unionists to be paid by corporations through the time-off system, in
which employees receive time off payment when they are engaged in union activities
considered relevant to the common interests of the union and management, such as
collective bargaining and job site safety, or when the activities are considered essential for
operating the union. The ceiling of time off for union activities is set by the deliberation
committee, based on the number of union members in a worksite.
40 January 2010
Labor Union Law Revised
Policy Issues
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The deliberation committee is composed of 10 members, five appointed by the business
circle and labor community, and five by the government. The existing time off ceilings are
examined every three years to decide whether to keep the current limits or revise them. The
deliberation committee is required to decide on the first time off ceiling by April 30, 2010,
otherwise the five members appointed by the government will set the ceiling.
10 million won or less penalty will be imposed on strikes which demand wage payment to
full time unionists beyond the time off ceiling, even if wage demand is not a major issue of a
strike, but one of the agenda of a strike. Existing agreements will be in force until they
expire, although the revised law has taken effect since January 1, 2010.
2. Multiple unions in one workplace
Multiple unions will be allowed in one workplace from July 1, 2010, but they are required to
use a single negotiation channel when they bargain with employers. The revised law
regulates ways and procedures to set up a single body representing multiple unions, as the
representative body, if set up in a fair and reasonable way, will increase negotiation
efficiency and minimize chances of strife between employers and employees.
The procedure to set up a representative body starts when one of the multiple unions calls
for a negotiation with the employer. Each union is entitled to call for a negotiation before the
existing collective agreement expires, and employers are required to announce the call to
give all unions in the company an equal opportunity to be a representative body. The
negotiation union is chosen by unions in the company, or if the unions fail to select their
representative body, the union with more than half of the total corporate union members
represents the other unions. In the process, the unions are allowed to unite to be a majority
union, or become part of a larger union.
If the unions fail to have a representative body with more than half of the total corporate
union members, they need to create a new negotiation body. The unions of which the
number of members exceeds 10 percent of the participants in the negotiation union
selecting process can qualify for being a part of the new representative body. If this fails
again, the Labor Relations Commission will set up a negotiation body, reflecting the numberof members in each union.
The negotiation body represents all union members in a company or workplace, without
being affected by industrial unions or craft unions. However, the revised law allows separate
negotiation bodies when there are major differences in working conditions, employment
types, and negotiation styles. The Labor Relations Commission decides on whether separate
negotiation bodies are necessary, and separate bodies are set up with the same procedures
as those for setting up general negotiation bodies. Employers as well as unions are allowed
to request a separate negotiation body.
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The negotiation union is responsible for fairly representing the other unions: It is required to
listen to minority unions before or during a negotiation. Employers are also responsible for
taking part in a negotiation without any bias. If the negotiation union fails to be a fair
representative body, the union claiming to be treated unfairly reports the case to the Labor
Relations Commission within three months from the incident. The commission then ordersremoval of unfairness if any unequal treatment is detected.
Terms regulating walkouts and time off union activities are added to the revision: Staging a
strike requires consent from more than half of the total union members, but individual
unions are not entitled to deciding on a strike. Only a representative union decides on
strikes. Union activities taken as time off work are set through a negotiation between a
representative union and an employer, or by the Labor Relations Commission.
42 January 2010
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Government to frontload 70% of 2010 estimated expenditure
Korea will spend some 70 percent of the 2010 estimated expenditure during the first half of
the year in an effort to accelerate the economic recovery, the Ministry of Strategy and Finance
said on January 4, 2010. The spending plan covering both the general and special accounts is
as follows:
Some 178.4 trillion won of the governments planned annual expenditure of 255.3 trillion won
will be spent during the period, from which a total of 164 trillion won will be spent to create
jobs, stabilize low-income households, and support on-going SOC projects.
The spending plan was released along with the budget spending guidelines, the purposes of
which are: (i) to facilitate early spending; (ii) to help reduce energy consumption in public
institutions by 10 percent; and (iii) to enhance transparency and efficiency in budget
spending.
Economic Bulletin 43
EconomicNews Briefing
(Trillion won, %)
Annual Q1 Q2 Q3 Q4
Budget 255.3 109.8 68.6 44.8 32.1
Spending rate (accumulated) 43.0 69.8 87.4 100.0
2010 budget plan
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44 January 2010
Asia to launch Chiang Mai Initiative Multilateralization (CMIM) in March
Korea, China, Japan, and 10 member states of the Association of Southeast Asian Nations
(ASEAN+3) completed the signing of the Chiang Mai Initiative Multilateralizaton (CMIM)Agreement on December 24, 2009 to launch the pact on March 24, 2010.
The CMIM will strengthen the regions capacity to safeguard against increased risks and
challenges in the global economy. The core objectives of the CMIM are (i) to address
balance-of-payments and short-term liquidity difficulties in the region and (ii) to supplement
the existing international financial arrangements.
The initial amount of the multilateral currency swap fund will be US$120 billion. The CMIM
will provide financial support through currency swap transactions to the CMIM participants
facing balance-of-payments and short-term liquidity difficulties. Participating countries are
entitled to swap its own currency into US dollars in accordance to their contributions.
Korea to further develop Knowledge Sharing Program (KSP)
The Knowledge Sharing Program (KSP), a comprehensive policy consultation program
launched by the Ministry of Strategy and Finance to share Koreas development experience
with other countries, will be further advanced in 2010 to provide more systematic assistanceto developing countries.
With Koreas accession to the OECD Development Assistance Committee (DAC) last
November ahead of chairing the G20 Summit this year, Korea plans to improve its official
development assistance (ODA) system and establish an original Korean assistance model as
a part of its contribution to the international society. In this regard, the Korean government
will upgrade KSP in a more systematized way in 2010 while expanding aid volume to
developing countries.
(End-period, %)
US$ (billion) (%) US$ (billion)
China1 38.40 32 19.20
Japan 38.40 32 19.20
Korea 19.20 16 19.20
ASEAN 24.00 20 63.10
Financial contribution Maximum amount of available funds
1. Hong Kong is included
CMIM contributions and maximum amount of available funds
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The 2010 KSP will be directed in ways as follows: (i) 20 cases of Koreas economic
development experience to be selected and developed into programs; (ii) consultants and
consulting firms specializing in KSP to be introduced; (iii) the link between KSP and
untied/tied aid to be strengthened to fully support developing countries; (iv) joint
consultation with international organizations to be accompanied by Koreas official financialaid; and (v) comprehensive consultation to be provided to 4 countries in 2010 from only one
country in 2009.
Microcredit program starts from December 2009
The Miso Credit Foundation, a microcredit lending program in Korea to support low
income households, opened its first branch on December 15, 2009 as Samsung has set up
the first office of Microcredit foundation in Suwon. Other non-financial companies including
Hyundai-Kia Automotive, SK, LG, POSCO and Lotte have also launched their microcredit
foundations in December 2009. In the banking sector, Kookmin, Woori, Shinhan, Hana and
Industrial Bank of Korea (IBK) have embarked their foundations.
The Miso Credit Foundation plans to open some 50 branches by May 2010 and gradually
expand branches up to 300 through 2010. In addition, 11 regional units of Miso Credit
Foundation are to kick off by February 2010.
Names of foundation Dates of establishment
Samsung Miso Credit Foundation December 15, 2009
Kookmin Miso Credit Foundation
December 17, 2009Woori Miso Credit Foundation
Shinhan Miso Credit Foundation
Hyundai-Kia Automotive Miso Credit Foundation December 18, 2009
LG Miso Credit FoundationDecember 21, 2009
Hana Miso Credit Foundation
SK Miso Credit Foundation December 23, 2009
Posco Miso Credit Foundation December 24, 2009
Lotte Miso Credit Foundation December 28, 2009
IBK Miso Credit Foundation December 30, 2009
Current situation of Miso Credit Foundation
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46 January 2010
Korean group wins landmark UAE nuclear power deal
A Korean consortium, on December 27, 2009, won a landmark deal valued at about US$20.4
billion to build four nuclear reactors for the United Arab Emirates (UAE), in a high-profilecontest with a French consortium led by Areva, an industry leader, and a US-Japanese
consortium including General Electric and Hitachi. The victory for the Korea Electric Power
(Kepco) led consortium marks the first international deal for Korea, which built its first
commercial nuclear plant in 1987, making the nation the worlds sixth exporter of the nuclear
reactors after the US, France, Canada, Russia and Japan. The deal is expected to secure
stepping stone for the countrys advance into the fast-growing international market for
nuclear power plants.
The Kepco led group also includes Hyundai Engineering and Construction, Samsung C&T,
Doosan Heavy Industries and Construction as well as Westinghouse, a US-based unit of
Japans Toshiba. According to the deal, the Korean consortium will build four 1,400-
megawatt nuclear power units in the UAE that will be completed from 2017 to 2020. The
Korean group expects to earn another US$20 billion by jointly operating the reactors for 60
years, and hopes to build more plants in the UAE beyond 2020 to meet future demand.
The Ministry of Knowledge Economy attributed the Korean consortiums winning of the UAE
deal to its cost-effectiveness, high safety standards, technological know-how and relatively
short period of construction. President Lee Myung-baks aggressive diplomacy also
contributed to the success of Koreas nuclear power plant export, which was highlighted in
his surprise trip to Abu Dhabi on December 26 to support the Korean firms.
At a summit with President Sheikh Khalifa bin Zayed al-Nahayan in Abu Dhabi on December
27, 2009, President Lee said the contract will deepen relations between Korea and the UAE
in the economic, cultural, security and diplomatic sectors. The two leaders also agreed to
continue developing the relationship between the countries into a strategic partnership to
help ensure their joint development in the future.
Koreas trade surplus hits all-time high in 2009
Koreas trade balance posted a record high US$40.98 billion surplus in 2009 as exports fell
13.8 percent year-on-year to US$363.77 billion while imports declined 25.8 percent from a
year earlier to US$322.79 billion. Amid the substantial decrease in global trade volume,
Koreas exports performed relatively well, making the nation the ninth largest exporter in
2009. Year-on-year export growth in December, in particular, jumped 33.7 percent from the
previous months 18.1 percent, confirming the upward trend in exports.
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By export item, ships and LCD devices led the healthy export performance by increasing 4.4
percent and 28.5 percent, respectively. By export destination, exports to emerging markets
such as China (down 7.5%) and the Middle East (down 11.7%) declined at a smaller pace
compared with those to developed countries including the US (down 18.9%) and Japan(down 23.7%).
The Korean government forecasts that exports this year will increase around 9 percent from
the previous year to post US$410 billion while imports will climb about 21 percent to register
US$390 billion, resulting in the trade surplus of around US$20 billion.
Economic Bulletin 47
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Tables & Figures
1. National accounts
2. Production, shipment and inventory
3. Production capacity and operation ratio
4. Consumer goods sales index
5. Consumer goods shipment index and consumer sentiment index
6. Machinery orders received, domestic machinery shipment,and estimated facility investment index
7. Value of construction completed and domestic construction orders received
8. Composite indices of business cycle indicators and BSI
9. Balance of payments (I)
10. Balance of payments (II)
11. Prices
12. Employment
13. Financial indicators
14. Monetary indicators
15. Exchange rates
StatisticalAppendices
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50 January 2010
(year-on-year change, %, chained 2005 year prices)
Period
2002 7.2 -2.2 8.7 8.1 7.1 6.2 7.3
2003 2.8 -5.4 5.4 0.5 4.4 8.5 -1.5
2004 4.6 9.1 10.0 1.0 2.1 1.3 3.8
2005 4.0 1.3 6.2 4.6 1.9 -0.4 5.3
2006 5.2 1.5 8.1 5.1 3.4 0.5 8.2
2007 5.1 4.0 7.2 5.1 4.2 1.4 9.3
2008P 2.2 5.5 3.1 1.6 -1.7 -2.1 -2
2002 I 6.6 2.3 5.1 10.3 7.5 11.4 2.6
II 7.0 -2.4 7.2 9.1 7.9 7.2 7.7
III 6.8 -1.1 9.3 7.7 3.2 -1.5 9.8
IV 8.1 -5.5 13.1 5.7 9.6 9.4 9.1
2003 I 3.5 0.7 5.4 2.0 5.1 8.2 2.9
II 1.8 -1.6 3.1 0.3 4.7 8.4 -0.7
III 2.0 -9.6 4.3 0.0 2.8 8.3 -5.8
IV 3.9 -8.0 8.5 -0.4 5.0 9.0 -2.2
2004 I 5.2 8.2 10.9 -0.1 2.3 5.3 -0.6
II 5.9 7.6 12.9 1.3 4.9 4.2 6.4
III 4.8 8.3 10.4 1.0 3.1 1.2 7.7
IV 2.