economic bulletin (vol.32 no.2)
TRANSCRIPT
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SpecialThe G-20 Seoul Summit 3
The Green Book: Current Economic Trends
Overview 5
1. Global economy 62. Private consumption 10
3. Facility investment 14
4. Construction investment 16
5. Exports and imports 18
6. Mining and manufacturing production 20
7. Service sector activity 22
8. Employment 24
9. Financial markets 28
9.1 Stock market9.2 Exchange rate9.3 Bond market9.4 Money supply & money market
10. Balance of payments 32
11. Prices and international commodity prices 34
11.1 Prices11.2 International oil and commodity prices
12. Real estate market 38
12.1 Housing market12.2 Land market
13. Composite indices of business cycle indicators 42
Policy IssuesThe National Strategy Meeting on Employment &
Job Creating Policies 44
Economic News Briefing 47
Statistical Appendices 53
Republic of Korea
Economic Bulletin
Vol. 32 | No. 2
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Economic Bulletin 3
s p e c i a l
The G-20 Seoul Summit
Overview
In response to the global financial crisis in late 2008, the first G-20 Summit was convened in
Washington, D.C. on November 14-15, 2008, followed by successive summits in London and
Pittsburgh. The G-20 Summits have responded with swift, bold and coordinated actions to
overcome the crisis, helping the world economy move out of recession faster than expected.
The G-20 was designated as the premier forum for international economic cooperation at thePittsburgh Summit, thanks to its proven accomplishments.
From January 27 to 29, President Lee Myung-bak visited Switzerland to participate in the
40th World Economic Forum and delivered a special address on January 28, introducing the
Korean governments overall plans to host the G-20 Summit in Seoul this year and
emphasizing the significance of the Summit. In the address, President Lee Myung-bak
unveiled the direction of the G-20 Seoul Summit for the first time on the global stage,
representing the chair and host country of this years summit.
Priorities for the G-20 Seoul Summit
The following is a summary of the special address President Lee Myung-bak delivered at the
World Economic Forum with the title of G-20 Seoul Summit: Priorities and Challenges.
1. Successful implementation of the Framework for Strong, Sustainable and Balanced
Growth
As the global economy moves into the path of recovery, the G-20 Seoul Summit will focus on
implementing the agreements of the previous summits. Placing emphasis on the longer-
term framework for policy coordination, the G-20 Seoul Summit will endeavor to achieve the
successful implementation of the Framework for Strong, Sustainable and Balanced
Growth, agreed at the Pittsburgh Summit.
In addition, the initiatives taken at previous summits on improvement of financial regulation
toward a more resilient global financial system and the reform of international financial
institutions such as the IMF and the World Bank will be followed up. Devoted efforts will also
be made toward reaching agreement on a stronger and more effective early warning and
surveillance mechanism at the international level.
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s p e c i a l
As past G-20 Summits have played a pivotal role in resisting protectionist pressure, the
Seoul Summit will continue its effort to guard against protectionism. In this regard,
concluding the Doha Development Agenda (DDA) before the end of the year should be given
the highest priority.
2. Balanced growth of the world economy and the establishment of a Global Financial
Safety Net
Development issues to achieve balanced and sustainable growth will be added to the
agenda for discussion at the G-20 Seoul Summit. Although it is important to address the
weaknesses in the financial regulatory system of the advanced countries, there are also
many pressing policy and reform issues for emerging and developing countries.
In addition, the construction of a Global Financial Safety Net to better prepare for sudden
reversals of international capital flows will be included in the agenda. Along with theestablishment of such a financial safety net, arrangements aimed at successful
implementation of bilateral and regional cooperation should be placed.
3. Extensive outreach efforts toward non-G-20 countries
The G-20 Seoul Summit will be opened to non-member states and the private sector to share
the outcome of the strong and sustainable growth. Extensive outreach efforts to countries
outside the G-20 will be conducted through consultations with the United Nations and other
international bodies. In addition, the private sector business community will be given
opportunities to participate in the November G-20 Summit. As part of the initiative to
underline the role of the business community, a business summit will take place at the
venue of the G-20 Seoul Summit.
Date Meeting Location
Feb 27-28 G-20 Deputies Meeting Songdo, Incheon, Korea
Apr 23 G-20 Finance Ministers & Central Bank Governors Meeting Washington, D.C., USA
Jun 3-5 G-20 Finance Ministers & Central Bank Governors Meeting Busan, Korea
Jun 26-27 G-20 Summit Toronto, Canada
Mid Sep G-20 Deputies Meeting Gwangju, Korea
Early Oct G-20 Finance Ministers & Central Bank Governors Meeting Washington, D.C., USA
Late Oct-Early Nov G-20 Finance Ministers & Central Bank Governors Meeting Gyeongju, Korea
Nov 11-12 G-20 Summit Seoul, Korea
Key meetings1 for the G-20 in 2010
1. Please note that dates of meetings in the latter half of 2010 are subject to flexible scheduling and should not be considered final except for the G-20 Summit
held on November 11-12.
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Economic Bulletin 5
The Korean economy stays on an upward track although it has been bothered by externaluncertainties as well as temporary factors such as a high base effect from recent fastrecovery, the H1N1 flu pandemic, heavy snow and an unusual cold wave.
Mining and manufacturing production in December 2009 rose 3.5 percent month-on-monthand 33.9 percent year-on-year, affected by brisk exports and shipments. Service outputincreased 1.8 percent month-on-month and 5.3 percent year-on-year, thanks to robustwholesale and retail sales.
Consumer goods sales climbed both month-on-month and year-on-year in December by 1.7percent and 12.1 percent, respectively, backed by surging durable goods sales, in particularautomobile sales, and improving semi and non-durable goods sales.
Facilities investment in December soared by 4.0 percent month-on-month and 21.0 percentyear-on-year, helped by recovering machinery investment. Construction completedcontinued to grow for the second consecutive month, up 2.3 percent month-on-month and13.1 percent year-on-year, as both the public and private sector indices increased.
The total number of workers hired deepened a decline year-on-year from a loss of 10,000 to16,000 in December, as hiring in the agriculture, forestry & fishery significantly dropped. Theunemployment rate increased month-on-month from 3.3 percent to 3.5 percent.
Exports in January 2010 jumped 47.1 percent year-on-year, positively affected by a low baseeffect and the recovering global economy. Imports soared 26.7 percent year-on-year, as anunusual cold wave increased crude oil imports and a low base effect lifted the figure.
Consumer prices in January rose 3.1 percent year-on-year, as heavy snowfalls and a coldwave pushed up the prices of agriculture, livestock & fishery products as well as petroleumproducts.
In January, uncertainties in the financial market increased, affected by the US new bankingregulation called the Volcker rule, Chinas tightening liquidity policies and worries oversovereign credit risks in European countries.
To sum up, although the Korean economy has continued to improve in line with the globaleconomy gradually recovering, external uncertainties grow as oil prices are rising, China istightening its liquidity, and some European countries are facing credit risks.
The Korean government, to secure economic recovery and prepare for uncertainties at home
and abroad will keep pursuing expansionary fiscal policies and spend budgets as planned,while continuing its efforts to create jobs and support the working class.On the other hand,the government will keep an eye on any changes in internal and external uncertaintiesincluding real estate markets and international financial markets.
The Green BookCurrent Economic Trends
Overview
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1. Global economy
The global economy continued its upward momentum, as major countries such as the U.S.
and China grew faster than expected in the fourth quarter of 2009. Reflecting this trend, the
IMF and the World Bank revised their 2010 growth outlook for the world economy upward to
3.9 percent from 3.1 percent and to 2.7 percent from 2.3 percent, respectively. However,
uncertainties still remain, as swollen fiscal deficits in European countries such as Portugal,
Greece, and Spain are fueling concerns about sovereign credit risk.
US real GDP jumped 5.7 percent in the fourth quarter (annualized q-o-q, advanced
estimates), thanks to a slower rate of inventory decumulation, a facility investment rebound,
and an increase in private consumption.
However, consumption was still not in full recovery in December, as retail sales contracted
0.3 percent month-on-month, while industrial production increased 0.6 percent.
New home sales in December fell 7.6 percent and existing home sales tumbled 16.7 percent
month-on-month, fanning worries about the U.S. housing market seemingly away from
recovery.
In December, non-farm payrolls declined at a faster pace, while the unemployment rate
stayed flat at 10.0 percent.
The Federal Reserve announced in the Federal Open Market Committee (FOMC) on January
27 that it would maintain the target range for the federal funds rate at 0.0 to 0.25 percent,
and reaffirmed its plan to withdraw the emergency measures for liquidity provision including
the purchase of US$1.25 trillion of agency mortgage-backed securities by March 31 and the
Term Asset-Backed Securities Loan Facility (TALF) by June 30.
US
(Percentage change from previous period)
Annual Q3 Q4 Annual Q1 Q2 Q3 Q4 Dec
Real GDP1
- Personal consumption expenditure- Corporate fixed investment
- Construction investment for housing
Industrial production
Retail 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
-0.21.6
-22.9
-1.8
-0.7
-37.4
-257
3.8
-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
-2.4
-0.6-17.9
-20.4
-9.7
-6.0
-22.6
-347
-0.3
-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
1.7
1.6
9.2
-199
-1.6
5.7
2.02.9
5.7
1.7
1.7
-8.0
-69
1.5
-
--
-
0.6
-0.3
-7.6
-85
2.7
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Economic Bulletin 7
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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The Chinese economy expanded 10.7 percent in the fourth quarter of 2009, posting anannual growth of 8.7 percent, as domestic demand such as investment and consumptioncontinued to improve and exports rebounded. The Chinese government, in an attempt tocurb rising real estate prices, raised banks reserve ratio and imposed stricter requirementson new loans as ways to tighten liquidity.
Japans economy saw its industrial production continue to grow, as exports in December2009 rebounded year-on-year by 12.0 percent for the first time since October 2008.However, domestic demand remains sluggish and consumer prices decreased for ninemonths in a row since March 2009, indicating deflation continued to take its course.
The eurozone economy is recovering at a slow pace, as consumption is still weak and theunemployment rate in November reached 10 percent, showing deteriorating labor markets inEurope. Enormous fiscal deficits in Portugal, Italy, Greece, and Spain downgraded theircredit ratings, fueling sovereign debt concerns.
China
Japan
(Percentage change from same period in previous year)
Real GDP
Fixed asset investment (accumulated)
Retail sales
Industrial production
ExportsConsumer prices
Producer prices
2008 2009
Annual
9.0
26.1
21.6
12.9
17.25.9
6.9
Q3
9.0
27.6
23.2
13.0
22.95.3
9.7
Q4
6.8
26.1
20.6
6.4
4.12.5
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
0.20.7
-2.1
Nov
-
32.1
15.8
19.2
-1.20.6
-2.1
Dec
-
30.5
17.5
18.5
17.71.9
1.7
Source: China National Bureau of Statistics
Home prices (y-o-y, %)
-0.6 (May 2009) 0.2 (Jun) 1.0 (Jul) 2.0 (Aug) 2.8 (Sep) 3.9 (Oct) 5.7 (Nov) 7.8 (Dec)
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
-1.8
-0.7
3.63.3
Q3
-0.3
-1.7
-0.5
5.33.8
Q4
-1.8
-8.0
-0.7
-5.02.3
Q1
-2.5
-8.6
-0.8
-21.31.0
Q2
-0.2
-1.0
-0.3
-23.40.2
Q3
0.4
2.1
-0.3
-19.1-0.4
Q4
-
-
-0.2
-0.4
Nov
-
1.1
-0.5
-5.80.5
Dec
-
-
0.0
-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(Percentage change from previous period)
Annual
-0.7
-3.4
0.3
-3.5
1.4
Q3
-1.0
-3.3
0.8
3.2
2.2
Q4
-2.7
-17.7
-1.5
-23.1
1.0
Annual
-
-22.3
-2.3
-33.1
-1.4
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
Q4
-
4.7
-0.8
-8.0
-2.0
Dec
-
2.2
-0.3
12.0
-1.7
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Economic Bulletin 9
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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10 February 2010
2. Private consumptionPrivate consumption (advanced estimates of GDP) in the fourth quarter of 2009 edged down0.1 percent quarter-on-quarter but increased 5.6 percent year-on-year.
Consumer goods sales in December 2009 rose 1.7 percent month-on-month or 12.1 percentyear-on-year, thanks to the brisk sales of durable goods, in particular automobiles, andsemi-durable goods.
Durable goods sales posted a fourth month-on-month increase of 2.8 percent, while soaring44.4 percent year-on-year, due to solid automobile sales backed by tax incentives set toexpire at the end of 2009.
Semi-durable and non-durable goods sales increased 2.3 percent and 0.9 percent month-on-month or 7.4 percent and 0.7 percent year-on-year, respectively, as sales picked up towardthe end of the year.
Sales at department stores jumped 15.5 percent year-on-year, continuing an upward marchfor ten months in a row, while sales at specialized retailers posted double-digit growth forthe third 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
Q4
-4.2
-3.5
-9.9
-19.5
-9.9
-0.4
Annual1
2.7
-
7.5
21.9
0.9
1.5
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
Q41
10.6
3.7
32.6
73.3
3.8
4.1
Oct
9.8
2.9
15.6
36.1
3.6
10.0
Nov 1
9.9
-1.1
39.6
108.4
0.6
1.9
Dec1
12.1
1.7
44.4
88.6
7.4
0.7
(Percentage change from same period in previous year)
Annual Q4 Annual1 Q1 Q2 Q3 Q41 Oct Nov1 Dec1
- 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
-5.0
-1.2
-8.1
5.3
-1.9
2.9
1.4
-5.0
-6.9
2.8
-2.9
2.6
6.5
-3.2
4.5
10.4
3.4
12.1
12.0
5.5
10.7
4.1
-1.0
12.5
15.5
5.6
13.2
(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
-
Q3
1.4
0.0
Q4
-3.7
-4.6
Annual
0.2
-
Q1
-4.4
0.4
Q2
-0.8
3.6
Q3
0.8
1.5
Q4
5.6
-0.1
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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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Consumer goods sales in January 2010 are projected to slightly decline from a month earlier,given temporary factors such as shrinking consumption caused by heavy snow and a coldwave and decreasing automobiles sales affected by the termination of tax incentives.
Domestic sales of Korean automobiles shed around 38,000 units from the previous month,due to the expiration of the tax break for new car purchases.
Sales at department stores grew 4.9 percent from a year earlier, while sales at largediscounters dropped 11.9 percent.
Gasoline sales continued a downward trend for the third consecutive month, due to therising prices, heavy snow and a cold wave.
The Hope Employment Project suspended in January, rising consumer prices, and growingvolatility in financial markets are likely to negatively affect recovery in consumption.
Private consumption, drifted away from a recovery track, is expected to be back on trackafter February when temporary factors behind shrinkage in consumption disappear.
The Consumer Sentiment Index, staying on an upward trend above the benchmark 100 fornine straight months since May 2009, is also expected to positively affect recovery in privateconsumption.
Value of credit card use (y-o-y, %)
10.9 (Aug 2009) 14.7 (Sep) 9.4 (Oct) 18.3 (Nov) 20.0 (Dec) 20.2 (Jan 2010)
Department store sales (y-o-y, %)
7.6 (Aug 2009) 8.6 (Sep) 11.4 (Oct) 6.4 (Nov) 12.4 (Dec) 4.9 (Jan 2010)
Discount store sales (y-o-y, %)
-1.5 (Aug 2009) -6.0 (Sep) 4.5 (Oct) -2.8 (Nov) 3.9 (Dec) -11.9 (Jan 2010)
Domestic sales of Korean automobiles (y-o-y, %)
13.0 (Aug 2009) 76.0 (Sep) 23.8 (Oct) 83.6 (Nov) 79.9 (Dec) 61.7 (Jan 2010)
Domestic sales of gasoline (y-o-y, %)
4.0 (Aug 2009) -0.3 (Sep) 20.7 (Oct) -3.0 (Nov) -4.4 (Dec) -0.4 (Jan 2010)
Source: Ministry of Knowledge Economy
The Credit Finance Association
Korea Automobile Manufacturers Association
Korea National Oil Corporation
Ministry of Strategy and Finance (for data of January 2010)
Number of workers hired (y-o-y, ten thousand)
-7.6 (Jul 2009) 0.3 (Aug) 7.1 (Sep) 1.0 (Oct) -1.0 (Nov) -1.6 (Dec)
Consumer prices (y-o-y, %)
2.2 (Aug 2009) 2.2 (Sep) 2.0 (Oct) 2.4 (Nov) 2.8 (Dec) 3.1 (Jan 2010)
KOSPI (end-quarter)
1,592 (Aug 2009) 1,673 (Sep) 1,581 (Oct) 1,556 (Nov) 1,683 (Dec) 1,602 (Jan 2010)
The won/dollar exchange rate (end-quarter)
1,245 (Aug 2009) 1,189 (Sep) 1,201 (Oct) 1,167 (Nov) 1,168 (Dec) 1,157 (Jan 2010)
Domestic sales of Korean automobiles (ten thousand units)
13.1 (Oct 2009) 13.7(Nov) 15.7 (Dec) 11.9 (Jan 2010)
Retail sales (excluding automobiles, m-o-m, %)
0.1 (Aug 2009) -0.2 (Sep) 1.9 (Oct) -0.4 (Nov) 1.2 (Dec)
Consumer Sentiment Index (CSI)
109 (Jul 2009) 114 (Aug) 114 (Sep) 117 (Oct) 113 (Nov) 113 (Dec) 113 (Jan 2010)
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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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14 February 2010
3. Facility investment
Facility investment (advanced estimates of GDP ) in the fourth quarter of 2009 posted a
quarter-on-quarter increase of 4.7 percent, and a year-on-year gain of 12.9 percent.
Facility investment in December 2009 rose 21.0 percent year-on-year or 4.0 percent month-
on-month, as machinery investment, in particular that in semi-conductor equipment,continued to increase.
Machinery investment increased 6.4 percent month-on-month, while investment in
transportation equipment fell 4.0 percent month-on-month due to an investment decline in
miscellaneous transportation equipment including vessels.
Facility investment in January will likely continue an upward trend, given steady corporate
investment confidence and improving leading indicators such as rising domestic machinery
orders and increasing facility investment adjustment pressure.
(Percentage change from same period in previous year)
Facility investment1
(Seasonally adjusted)2
- Machinery
- Transportation equipment
1. National accounts 2. Percentage change from previous period
Source: The Bank of Korea
2007 2008 2009
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
Q4
12.9
4.7
-
-
(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
Annual
8.2
-
7.5
11.3
20.6
-11.4
24.5
21.1
1.7
Annual
-4.3
-
-5.7
1.5
-5.5
4.9
-6.2
6.4
-2.2
Q4
-13.4
-9.3
-14.5
-9.0
-47.3
-3.5
-53.9
-11.5
-15.6
Annual1
-8.1
-
-13.0
11.8
-8.6
62.5
-16.2
-16.6
-3.7
Q1
-17.7
-11.6
-21.9
0.4
-33.8
150.5
-42.9
-27.9
-18.9
Q2
-13.4
6.6
-19.5
11.3
-14.1
30.9
-18.5
-27.4
-8.5
Q3
-10.1
4.2
-17.2
19.6
6.5
281.3
-12.4
-15.9
1.6
Q41
10.7
13.4
9.5
15.5
25.6
-26.3
42.0
-7.2
13.2
Oct
0.5
-5.6
0.6
0.0
3.0
-75.7
26.9
-17.3
-2.9
Nov1
11.1
7.7
8.4
21.3
57.7
108.8
47.7
21.6
15.2
Dec1
21.0
4.0
19.2
28.0
24.5
-44.6
56.5
24.7
32.0
Source: The Bank of Korea
Sep Oct Nov Dec Jan Feb
Business survey indices (base=100) for 95 100 96 98 103 101manufacturing facility investment projections
2009 2010
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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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4. Construction investment
Construction investment (advanced estimates of GDP ) in the fourth quarter rose 3.9
percent year-on-year, while unchanged quarter-on-quarter.
Construction completed (current value) in December 2009 rose 13.1 percent year-on-year, asconstruction completed in the private sector increased along with the public sector, landing
at 10.9 percent, the first double digit growth since September 2008. Both building
construction and civil engineering works climbed by 9.5 percent and 17.4 percent,
respectively.
Construction investment in January is projected to fall slightly from the previous month,negatively affected by seasonal factors such as heavy snow and a cold wave. Business
survey index for construction projections dropped to 73.2, the level seen in April 2009.
(Percentage change from same period in previous year)
Construction investment1
(Seasonally adjusted)2
- Building construction
- Civil engineering works
1. National accounts
2. Percentage change from previous period
Source: The Bank of Korea
2007 2008 2009
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
Q4
3.9
0.0
-
-
(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
Annual
3.7
-
21.3
-5.1
1.8
58.1
-22.3
-12.9
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
Q4
4.1
2.6
10.5
1.1
11.1
13.2
16.0
13.1
Oct
-5.2
-2.9
4.9
-9.6
27.2
89.7
16.3
-29.5
Nov1
3.6
0.6
8.1
2.3
77.0
64.6
85.6
14.1
Dec1
13.1
2.3
16.7
10.9
-19.5
-32.2
-10.0
42.7
Source: The Construction and Economy Research Institute of Korea
Sep Oct Nov Dec Jan
Business survey indices (base=100) for 92.8 110.8 90.1 83.6 74.8construction projections
2009 2010
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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 January rose 47.1 percent year-on-year to US$31.08 billion.
The large increase in exports is mainly attributed to a low base effect from the previous year
and the global economic recovery. However, daily average exports in working-day-adjusted
terms fell from the previous month, affected by seasonal factors and a decrease in vessel
exports which dropped from the previous months US$4 billion to US$1.9 billion.
By export category, semiconductors (up 121.6%) and liquid crystal devices (up 103.4%)
surged, and by regional category, exports to China (up 98.9%) and the ASEAN (up 63.0%)
greatly improved.
Imports in January jumped 26.7 percent year-on-year to US$31.55 billion due to a low base
effect and an increase in imports of crude oil by 44.1 percent and petroleum products by201.0 percent, backed by a cold wave. Average daily imports in working-day-adjusted-terms
slightly increased from the previous month. Imports of capital goods, raw materials and
consumer goods all expanded greatly year-on-year.
The trade balance in December shifted to a deficit for the first time in eleven months, posting
a loss of US$470 million. In January, trade balance usually declines as exports fall greatly
due to decreasing year-end demand. However in February, trade balance is projected to
return to the black.
Raw materials (y-o-y, %)
-42.8 (Q2, 2009) -39.3 (Q3) -2.3 (Q4); 24.1 (Dec) 25.5 (Jan 2010)
Capital goods (y-o-y, %)
-23.6 (Q2, 2009) -13.7 (Q3) 8.2 (Q4); 28.1 (Dec) 32.1 (Jan 2010)
Consumer goods (y-o-y, %)-24.4 (Q2, 2009) -20.9 (Q3) 4.6 (Q4); 12.4 (Dec) 19.1 (Jan 2010)
(US$ 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
74.00
-35.6
1.06
Q3
94.78
-17.6
1.32
84.84
-31.0
1.18
Q4
103.97
11.7
1.49
92.85
1.4
1.33
Jan
21.13
-34.5
0.87
24.90
-31.4
1.16
Nov
33.99
17.9
1.48
29.53
2.4
1.28
Dec
36.01
32.8
1.50
32.92
23.9
1.37
Jan
31.08
47.1
1.38
31.55
26.7
1.40
Source: Korea Customs Service
(US$ billion)
Trade Balance
2009 2010
Annual
40.45
Q1
3.00
Q2
16.39
Q3
9.94
Q4
11.12
Jan
-3.77
Nov
4.46
Dec
3.08
Jan
-0.47
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 3.5 percent month-on-month in December 2009,
thanks to brisk exports and domestic shipments, while year-on-year it soared 33.9 percent.
By business category, semiconductors and parts (up 109.2%), automobiles (up 59.0%), andprimary metals (up 36.5%) posted an increase year-on-year, whereas beverages (down
12.4%) and refined petroleum products (down 7.0%) decreased.
Shipments increased at a faster pace year-on-year from 15.5 percent to 26.2 percent, while
the level of inventory decelerated a drop from the previous months 14.3 percent to 7.5
percent.
By business category, the shipments of semiconductors and parts (up 82.1%) and
automobiles (up 46.5%) rose year-on-year, while those of transportation equipment (down
6.5% ) and refined petroleum products (down 3.9% ) declined. The inventories of
semiconductors and parts (up 12.3%) and refined petroleum products (up 8.5%) increased
while those of apparels (down 29.9%) and primary metals (down 16.7%) went down.
The average operation ratio of the manufacturing sector landed at 79.9 percent,
approaching the usual level of 80 percent.
Mining and manufacturing production in January is projected to show limited improvement
month-on-month due to a reduction in the number of working days, despite an increase in
production backed by rising exports and inventory adjustment.
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
Q4
-11.9
-11.3
-12.1
-12.8
-8.8
-10.1
-11.0
-8.8
7.3
69.3
3.5
Dec
-9.6
-18.7
-20.0
-21.8
-10.8
-15.5
-14.9
-16.3
7.3
62.3
3.4
Annual1
-
-0.7
-0.9
0.0
-5.5
-1.7
-2.3
-0.8
-7.5
74.1
2.8
Q3
7.2
4.2
4.4
5.6
-1.8
2.1
3.1
0.8
-13.9
78.9
2.8
Q4
1.4
16.1
16.8
19.9
2.3
12.8
12.2
13.7
-7.5
78.2
3.6
Oct
-3.8
0.3
0.5
2.0
-7.1
-0.6
-1.0
-0.1
-16.1
77.3
3.4
Nov1
1.5
17.9
18.7
21.7
4.1
15.5
13.8
17.8
-14.3
77.3
3.5
Dec1
3.5
33.9
35.9
41.3
11.7
26.2
25.8
26.7
-7.5
79.9
3.9
Industrial electricity sales (thousand GWh)
18.3 (Sep 2009) 17.7 (Oct) 18.1 (Nov) 19.1 (Dec) 19.2 (Jan 2010)1
Export increase (%)
-20.9 (Aug 2009) -9.4 (Sep) -8.5 (Oct) 17.9 (Nov) 32.8 (Dec) 47.1 (Jan 2010)
1. Estimate
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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 December 2009 reversed its course to increase 1.8 percent month-on-
month after decreasing for two consecutive months since October. From a year earlier,
service output expanded 5.3 percent.
By business category, real estate & renting services (up 12.2%), healthcare & social welfare
services (up 11.6%) and wholesale & retail sales (up 8.1% ) led the year-on-year increase in
service activity. On the other hand, educational services declined 2.1 percent from a year
earlier.
Considering credit card spending and the volume of stock transactions, service activity in
January 2010 is expected to hold steady although leisure services are likely to contract due
to heavy snow and cold weather.
(Percentage change from same period in previous year)
Annual Q4 Annual Q1 Q2 Q3 Q4 Oct Nov1 Dec1
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
-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
1.7
-0.2
-5.7
-1.2
0.4
7.5
5.3
0.6
-2.9
1.1
9.6
-0.5
-2.4
3.6
-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
3.3
5.1
1.8
-0.2
1.0
4.9
14.0
0.8
0.5
-3.3
11.6
-3.8
0.1
-0.2
5.3
8.1
5.4
3.7
0.1
5.9
12.2
5.8
1.5
-2.1
11.6
2.3
3.2
0.0
1.3
1.9
-2.1
-2.7
1.5
4.0
14.3
-3.0
0.4
-7.5
11.5
-6.6
-0.6
-3.4
3.5
5.4
2.4
-2.0
1.5
4.8
15.8
-2.4
-0.4
0.1
11.7
-6.6
-2.6
2.7
1. Preliminary
Source: Statistics Korea
Value of credit card use (y-o-y, %)
14.7 (Sep 2009) 9.4 (Oct) 18.3 (Nov) 20.0 (Dec) 20.2 (Jan 2010)
Volume of stock transactions (trillion won)
196.8 (Aug 2009) 217.3 (Sep) 154.5 (Oct) 120.9 (Nov) 138.3 (Dec) 162.2 (Jan 2010)
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Economic Bulletin 23
December 2009 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 December 2009 declined by 16,000 from a year earlier,
while the employment rate fell by 0.8 percentage points to 57.6 percent.
Employment in manufacturing (down 16,000), construction (down 58,000), and agriculture,forestry & fishery (down 169,000) stayed on a downward track, while hiring in the service
sector (up 228,000) surged driven by the governments job creation policies. Manufacturing
employment slowed the pace of decline. The continued fall in construction employment was
attributed to the sluggish private sector construction, while employment slump in
agriculture, forestry & fishery was mainly due to decreased autumn cultivation and a drop in
temperature.
Wage workers rose by 366,000 led by an increase of 564,000 in regular workers, although
the number of daily workers plunged by 191,000. Non-wage workers including self-employed
workers, however, plummeted by 382,000 from a year earlier. In the mean time, female
workers (down 142,000) and workers aged 30 to 39 (down 131,000) saw a sharp decrease.
Number of employed (million)
Employment rate (%)
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
20092008
Annual
23.58
59.5
145
182
-52
-37
263
-37
236
386
-93
-57
-92
-79
96
48
-119
-26
64
207
18
Q1
23.05
58.5
209
272
-18
-22
307
-63
312
435
-98
-25
-102
-79
133
76
-107
-4
52
254
15
Q2
23.87
60.4
173
227
-34
-46
300
-54
289
448
-96
-63
-115
-67
117
56
-87
29
56
199
-24
Q3
23.75
59.9
141
179
-52
-40
262
-38
208
347
-83
-56
-66
-76
92
49
-114
-36
92
169
30
Q4
23.64
59.4
54
46
-103
-41
187
8
137
316
-94
-85
-83
-95
43
12
-166
-92
56
206
50
Dec
23.25
58.4
-12
-16
-133
-48
162
4
86
318
-94
-138
-97
-93
4
-16
-155
-109
46
185
22
Annual
23.51
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
-146
-160
-163
-43
47
14
73
318
-136
-108
-220
-197
-23
-124
-212
-159
8
193
23
Q2
23.74
59.3
-134
-109
-151
-113
155
-25
175
313
-5
-133
-309
-286
24
-158
-99
-213
-27
156
49
Q3
23.75
59.1
-1
24
-143
-103
269
-25
356
386
125
-155
-357
-276
34
-34
-123
-169
-30
211
109
Q4
23.63
58.7
-6
110
-49
-107
264
-116
413
492
186
-264
-424
-307
89
-94
-77
-149
-46
230
37
Dec
23.23
57.6
-16
153
-16
-58
228
-169
366
564
-8
-191
-382
-265
126
-142
-12
-131
-68
242
-47
Source: Statistics Korea
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Economic Bulletin 25
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 the unemployed in December 2009 climbed by 47,000 year-on-year to record
834,000, and the unemployment rate rose by 0.2 percentage points to 3.5 percent.
Contrary to the general trend, unemployment for women (up 51,000) grew at a faster pace
than for men in December.
The unemployment rate was high among youths aged 15 to 29 and high school graduates.
However, their unemployment rates were nearly unchanged or edged down from a year
earlier in December.
The economically inactive population in December was up 481,000 from a year earlier to
post 16,250,000 led by workers quit jobs due to family duties (up 313,000) and retirement(up 98,000) as well as workers stayed away from work to take a rest (up 107,000).
Meanwhile, the labor force participation rate was down 0.7 percentage points year-on-year
to 59.7 percent.
Number of unemployed (thousand)
Unemployment growth (y-o-y, thousand)
- Male
- FemaleUnemployment rate (%)
(Seasonally adjusted)
- Youth aged 15 to 29
- Middle school graduate or under
- High school graduate
- College, univ. graduate or over
20092008
Annual
769
-14
-12
-1
3.2
3.2
7.2
2.2
3.8
3.0
Q1
801
-50
-43
-7
3.4
3.1
7.3
2.5
4.0
3.1
Q2
767
-24
-32
9
3.1
3.2
7.4
2.2
3.7
3.1
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
Dec
787
51
51
0
3.3
3.3
7.6
2.5
4.2
2.7
Annual
889
119
80
40
3.6
3.6
8.1
2.5
4.4
3.5
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
Dec
834
47
-4
51
3.5
3.5
7.6
2.9
4.1
3.1
Source: Statistics Korea
Economically inactive population (million)
Participation rate (%)
Growth in economically inactive
population (y-o-y, thousand)
- Engaged in family duties
- Retired
- Rest
20092008
Annual
15.25
61.5
297
123
76
31
Q1
15.58
60.5
270
122
42
36
Q2
14.90
62.3
256
127
100
14
Q3
15.15
61.8
289
134
104
-27
Q4
15.37
61.3
372
112
59
99
Dec
15.77
60.4
424
88
76
162
Annual
15.70
60.6
447
188
88
123
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
Dec
16.25
59.7
481
313
98
107
Source: Statistics Korea
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Unemployment rate and youth unemployment rate
Source: Statistics Korea (employment trend)
8-4
8-5
8-6 Unemployment rate by education
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 January 2010 plunged in line with a fall in global stock markets.Global investor sentiment has been chilled as the Bank of China raised the bank reserve
ratio by half a percentage point on January 18 and the Obama administration proposed
financial reform regulations on January 21.
Persisting worries over a burgeoning debt crisis of European countries such as Greece and
Spain contracted investment into emerging markets of Europe as well as Asia.
Although the domestic stock market was lifted by the so-called January effect at the
beginning of the year, the market thereafter fell driven by foreign investors who have
continued their net-selling of Korean shares since China raised the reserve requirement ratio
for its banks.
9.2 Exchange rate
The won/dollar exchange rate as of the end of January 2010 fell 2.7 won from 1,164.5 won at
the end of December to wrap up the month at 1,161.8 won.
The exchange rate dropped to 1,119 won, the lowest this year, on January 11 as the won
gained strength with financial soundness and a bright outlook for economic growth. It,
thereafter, shifted to a rise as investors appetite for safe assets grew due to US President
Obamas proposal to strengthen regulations on banks, concerns over Chinas tightening and
credit risks in the eurozone.
The won/yen exchange rate rose to the 1,290 won range as uncertainties in the international
financial markets boosted demand for safe assets including the yen.
Dec 2009 Jan 2010 Change1 Dec 2009 Jan 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 Jan Change1
Won/Dollar 929.8 936.1 1,259.5 1,164.5 1,161.8 0.2
Won/100Yen 783.4 828.6 1,396.8 1,264.5 1,293.2 -2.2
2006 2007 2008 2009 2010
KOSPI KOSDAQ
(End-period, point, trillion won)
1,682.8
887.3
4.7
32.7
1,602.4
848.1
6.2
32.5
-80.4(-4.8%)
-39.2(-4.4%)
1.5(32.2%)
-0.2(-0.6%)
513.1
85.2
2.0
7.8
496.6
84.6
3.2
7.6
16.5(3.2%)
-0.6(-0.7%)
1.2(62.3%)
-0.2(-2.6%)
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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 January 2010 due to the Bank of Koreas policy rate
freeze, growing demand for safe assets amid the bearish stock market and slowed GDP
growth in the fourth quarter of 2009. Foreign investors continued their net-selling of KTB
futures, accelerating the fall in the yields.
9.4 Money supply & money market
The M2 (monthly average) in November 2009 expanded 9.1 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 lower than the previous months 9.9 percent, due to
reduced inflow of foreign funds into securities and a high base effect. The M2 increased 12
trillion won in November 2009, while it swelled 22 trillion won along with fiscal expansion in
November 2008.
In December 2009, bank deposits turned to a decrease as increased demand for money at
year-end fueled withdrawals, and banks stepped up efforts to reduce the amount of CDsunder stiffer regulations on the loan to deposit ratio.
Asset management company (AMC) deposits plummeted as withdrawals of funds expanded
due to efforts at year-end to lower debt ratios by businesses as well as to improve BIS ratios
by banks.
Dec Dec Dec Dec Nov Dec Jan Change1
Call rate (1 day) 3.76 4.60 5.02 3.02 2.01 2.01 2.00 -1
CD (91 days) 4.09 4.86 5.82 3.93 2.79 2.88 2.88 0
Treasury bonds (3 yrs) 5.08 4.92 5.74 3.41 4.10 4.44 4.27 -17
Corporate bonds (3 yrs) 5.52 5.29 6.77 7.72 5.21 5.56 5.39 -17
Treasury bonds (5 yrs) 5.36 5.00 5.78 3.77 4.61 4.98 4.82 -16
(End-period, %)
1. Basis point changes in January 2010 from the previous month
2009 20102008200720062005
Bank deposits
AMC deposits
(Monthly change, end-period, trillion won)
1. Balance at end December 2009, trillion won
2007 2008 2009
Annual
59.6
61.8
Dec
-3.6
-0.4
Annual
104.3
63.0
Dec
-8.2
12.8
Oct
-6.8
-7.3
Nov
1.5
4.4
Dec
-8.3
-11.1
Dec1
1,008
332
M1+2
M2
Lf3
(Percentage change from same period in previous year, average)
1. Balance at end November 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 October 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
Nov
5.5
14.0
11.4
Q1
10.8
11.5
8.8
Q2
17.6
10.1
7.3
Q3
18.9
9.5
7.5
Nov
17.3
9.1
Around 7
Nov1
371
1,556
1,9824
Oct
19.6
9.9
7.4
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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 recorded a US$1.52 billion surplus in December 2009.
The goods account has continued to post a surplus for eleven consecutive months since
February 2009 on the back of trade surpluses. The goods account surplus, however, shrank
to US$4.02 billion from US$5.84 billion a month earlier.
The service account deficit surged to US$2.80 billion from the previous months US$1.66
billion, as deficits swelled in the travel and business service accounts due to seasonal
factors.
The income account surplus expanded to US$700 million from US$390 million of the
previous month mainly due to increased dividend income.
The current transfer account deficit was up to US$400 million from the previous monthsUS$290 million with increased outward remittance.
The capital and financial account in December posted a net inflow of US$1.64 billion.
The direct investment account reduced the net outflow to register US$1.37 billion from the
previous months deficit of US$2.84 billion as outbound foreign direct investment (FDI) by
locals was down.
The portfolio investment account decreased the net inflow to record US$970 million from
US$3.39 billion a month earlier as foreign investment in the Korean bond market declined.
The financial derivatives account expanded the net inflow to post US$990 million from
US$850 million in the previous month as payments related to overseas financial derivative
transactions decreased.
The other investment account increased the surplus to US$1.01 billion from the previous
months US$190 million as the net inflow of trade credits was up.
The current account is likely to shift to a deficit in January 2010 as the trade balance turnedto a deficit of US$470 million and the service account deteriorated due to seasonal factors.
Capital & financial account balance (US$ billion)
-1.40 (Q1 2009) 8.68 (Q2) 14.40 (Q3) 4.77 (Q4); 1.54 (Nov) 1.64 (Dec)
Current account
- Goods balance
- Service balance
- Income balance
- Current transfers
(US$ billion)
20092008
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
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
-5.78
1.65
-0.86
Nov
4.28
5.84
-1.66
0.39
-0.29
Dec
1.52
4.02
-2.80
0.70
-0.40
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 January 2010 increased 0.4 percent month-on-month while rising 3.1percent year-on-year.
Core consumer prices, which exclude the prices of oil and agricultural products, rose by 2.1percent year-on-year. Consumer prices for basic necessities, a barometer of perceivedconsumer prices, were up 3.8 percent compared to the same month of the previous year.
The year-on-year inflation temporarily exceeded 3 percent due to the low base effectfollowing the last years weak oil product prices.
Prices of Dubai crude (US$/barrel)44.1 (Jan 2009) 76.8 (Jan 2010)
Prices of agricultural, livestock and fishery products gained strength due to seasonal factorsincluding cold wave and heavy snowfall.
Prices of agricultural, livestock & fishery products in January 2010 (m-o-m, %)Rice (0.3), radish (9.0), Chinese cabbage (31.5), cucumber (-7.5), lettuce (39.5), mandarin orange (10.1), Korean
beef (-0.2), pork (-3.2), mackerel (0.4), scabbard fish (4.8), Alaska pollack (3.1)
Prices of oil products increased 1.6 percent from a month earlier affected by higherinternational oil prices and increased LPG supply prices in early January.
Prices of oil products in January 2010 (m-o-m, %)Gasoline (1.0), diesel (0.7), kerosene (1.5), LPG for automobiles (6.1), LPG for kitchen use (5.7)
Public utility charges rose 0.4 percent month-on-month as administrative charges increasedand fees for medical treatment climbed due to adjustments by National Health Insurance
Corporation at the beginning of the year. Personal service charges were up 0.2 percent fromthe previous month due to price adjustments of some personal services at the beginning of theyear and increasing fuel surcharge by airliners.
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
3.1
3.07
2.6
0.22
2.4
0.21
0.1
0.03
5.4
1.66
1.6
0.09
18.4
0.94
0.1
0.01
1.2
0.11
0.4
0.07
1.9
0.31
0.2
0.06
2.2
0.78Source: 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)
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
Jan
0.4
3.1
2.1
0.1
3.8
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
Before turning to a decrease after mid-January amid Chinas tightening policy and a strong
dollar led by concerns over credit squeeze in some European countries including Greece,
international oil prices rose as heating demand was boosted by abnormally cold weather and
heavy snow.
Despite the wons appreciation, domestic prices of international oil products inched up
month-on-month as higher international oil product prices were reflected with the timg lag.
Prices of non-ferrous metals in January rose despite a strong dollar while international prices
of grain fell due to weak fundamental factors.
Monthly average prices of non-ferrous metals increased month-on-month before turning to a
decrease after mid-January as China, the worlds largest consumer of raw materials,
announced monetary policy tightening.
International prices of grain including corn, wheat and soybean decreased from the previous
month due to a strong dollar, bullish harvest expectation for 2009-2010, and increased
stockpile.
Prices of non-ferrous metals and grain in January 2010 (m-o-m, %)
Corn (-4.1), wheat (-3.6), soybean (-5.2), bronze (5.6), aluminum (2.4), nickel (7.8), zinc (1.8), lead (1.5), tin (13.8)
(Won/liter, period average)
Annual Annual Annual Jul Aug Sep Oct Nov Dec Jan
Gasoline prices 1,526 1,692 1,601 1,639 1,670 1,681 1,627 1,655 1,646 1,661
Diesel prices 1,273 1,614 1,397 1,428 1,447 1,453 1,409 1,452 1,441 1,450
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), WTI crude: 146 (Jul 14)
(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
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
Jan
76.8
76.4
78.3
Source: KOREAPDS
(Period average)Reuters index*
Annual Annual Annual Jul Aug Sep Oct Nov Dec Jan
2,400 2,536 2,079 2,082 2,159 2,147 2,197 2,243 2,294 2,343
2009 201020082007
* A weighted average index of 17 major commoditiesSource: 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 January 2010, nationwide apartment sales prices inched up mere 0.1 percent month-on-
month, decelerating the pace of increase for four straight months.
Despite an upward trend in Gangnam (up 0.2% ) spurred by development projects,apartment sales prices in the Seoul metropolitan area remained stable as those in Gyeonggiprovince (down 0.1%) continue to fall due to increasing supply of newly built apartments.
On the other hand, apartment sales prices in other cities, especially Busan (up 0.6% ) andDaejeon (up 0.6%), increased relatively significantly amid supply shortage.
The rental prices have moderately accelerated the growth pace by rising 0.4 percent fromthe previous month. The rental prices in Gangnam (up 1.9%), Seocho (up 1.7%), and Songpa(up 0.9%) significantly increased due to rising house demand in good school districts during
school vacation.
Apartment sales transactions in December slightly increased from 81,589 a month earlier topost 81,961. The transactions were up 43.1 percent from a year earlier and down 1.6 percentcompared with the monthly average recorded in the same month for the past 3 years.
Source: Korea Land Corporation
(Monthly average, thousand)Apartment sales transactions
Nationwide
2006 2007 2008 2009
Annual
94
Dec
117
Annual
84
Dec
76
Annual
74
Dec
57
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
(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
Nov
0.3
0.0
0.0
0.1
0.0
0.8
Dec
0.2
0.0
0.0
0.0
-0.1
0.5
Jan
0.1
0.1
0.2
0.0
0.0
0.4
Jan41
0.03
0.02
0.04
0.00
0.00
0.07
Jan111
0.06
0.05
0.09
0.01
0.01
0.14
Jan181
0.06
0.03
0.05
0.00
0.01
0.13
Jan251
0.08
0.09
0.14
0.03
0.03
0.17
(Percentage change from previous period)Nationwide apartment rental prices
Nationwide
Seoul
Gangnam2
Gangbuk3
Seoul metropolitan area
5 metropolitan cities1. 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
Nov
0.8
0.8
1.0
0.6
0.7
1.1
Dec
0.3
0.4
0.5
0.2
0.1
0.7
Jan
0.4
0.6
0.9
0.1
0.3
0.7
Jan41
0.09
0.13
0.20
0.04
0.05
0.18
Jan111
0.13
0.19
0.29
0.07
0.10
0.23
Jan181
0.13
0.22
0.29
0.13
0.10
0.22
Jan251
0.19
0.26
0.35
0.14
0.15
0.30
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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 since April 2009, nationwide land prices in
December rose 0.34 percent, slightly accelerating from the previous month.
Land prices in Seoul metropolitan area (up 0.38% ) continued to rise faster than the
nationwide average prices (up 0.34% ). In particular, Incheon and Gyeonggi province
continued to post high price increases rising by 0.63 percent and 0.46 percent, respectively.
In addition, price increases in areas excluding the Seoul metropolitan area, especially North
Gyeongsang province (up 0.43%) and Daegu (up 0.40%), accelerated the growth pace, rising
by 0.26 percent.
Nationwide land transactions in December expanded 48.9 percent from a year earlier to
241,000 land lots. For the full year of 2009, land transactions were down 2.7 percent year-
on-year.
Nationwide land transactions excluding Daegu (down 4.2% ) increased year-on-year.
Particularly, land transactions in Gyeonggi province (up 85.5%), South Chungcheong
province (up 71.7%) and Busan (up 71.3%) soared.
Land price increases in Seoul metropolitan area(m-o-m, %)
0.41 (Sep 2009) 0.37 (Oct) 0.36 (Nov) 0.38 (Dec)
Land price increases in areas excluding the Seoul metropolitan area (m-o-m, %)
0.12 (Sep 2009) 0.16 (Oct) 0.21 (Nov) 0.26 (Dec)
(Percentage change from previous period)Land prices by region
Nationwide
Seoul
GyeonggiIncheon
2007 2008 2009
Annual
3.88
5.88
4.224.86
Q3
0.91
1.40
1.051.12
Q4
1.15
1.90
1.141.13
Annual
-0.31
-1.00
-0.261.37
Q1
1.23
1.83
1.281.36
Q2
1.46
2.17
1.571.67
Q3
1.18
1.59
1.282.01
Q4
-4.08
-6.34
-4.28-3.57
Annual
0.96
1.40
1.221.99
Q1
-1.20
-1.38
-1.62-1.39
Q2
0.35
0.68
0.370.53
Q3
0.88
1.30
1.131.16
Oct
0.30
0.30
0.420.51
Nov
0.30
0.24
0.470.55
Dec
0.34
0.27
0.460.63
Source: Korea Land Corporation
(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
Dec
162
13
31
8
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
Dec
241
21
58
12
Oct
212
25
52
14
Nov
207
19
48
11
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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42 February 2010
13. Composite indices of business cycle indicators
The cyclical indicator of coincident composite index was down 0.3 points in December, 2009.
Three out of all components of the index including the service activity index decreased.
Meanwhile, the wholesale & retail sales index, the domestic shipment index, and the mining
& manufacturing production index were up.
The 12-month smoothed change in leading composite index increased 0.2 percentage points
month-on-month, running on an upward track since January 2009.
The indicator of inventory cycle, the volume of capital goods imports, the ratio of job
openings to job seekers and the liquidity in the financial institutions were up.
Components of coincident composite index in December 2009 (m-o-m)
Wholesale & retail sales index (0.6%), domestic shipment index (0.5%), mining & manufacturing production
index (0.3%), volume of imports (0.3%), number of non-farm payroll employment (0.0%), manufacturing
operation ratio index (-0.2%), value of construction completed (-0.3%), service activity index (-0.4%)
Components of the leading composite index in December 2009 (m-o-m)
Indicator of inventory cycle (5.6%p), volume of capital goods imports (1.3%), ratio of job openings to job
seekers (0.6%p), liquidity in the financial institutions (0.1%), net terms of trade index (0.0%), spreads between
long & short term interest rates (-0.1%p), consumer expectations index (-0.2%p), value of construction
orders received (-0.3%), composite stock price index (-0.6%), value of machinery orders received (-1.1%)
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
Jul
1.2
96.2
0.8
1.4
7.8
2.0
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
Oct
0.4
96.9
0.0
1.1
11.3
1.2
Nov1
0.4
96.9
0.0
1.4
12.6
1.3
Dec1
0.2
96.6
-0.3
0.6
12.8
0.2
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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 employment situation in 2009 did not keep up with the economic recovery, partly due tothe late refection of economic conditions on employment. However, this caused the real
economic sentiment of the Korean people to remain low, making sustainable economic
rebound arguable. Against this backdrop, the Korean government put the first policy priority
in 2010 on job creation, focusing both on short-term measures to create jobs and long-term
measures to transform the economy into a more employment-friendly one. The National
Strategy Meeting on Employment, which will be held every month until the end of 2010, will
serve as a center where all governmental ability convenes to improve the employment
situation.
The National Strategy Meeting on Employment
The National Strategy Meeting on Employment, presided over by the president and
participated in by those from related ministries, government agencies, political parties,
Cheong Wa Dae (office of the president) and the private sector, deals with a wide range of
job creating policies from laying out job creating measures, to finding ways to most
effectively implement the measures, and to how to assess the effect of such measures. The
meeting is supported by three task force teams, each of which is in charge of 1) creating jobs
in the public sector and improving labor markets, 2) developing the service sector and
promoting investment, and 3) job training and education. The pool of experts from the
private sector serves as a policy consulting committee.
Key policies
Short-terms measures, which will be adopted for a limited period of time, focus on
motivating employment through financial incentives including tax breaks, while mid- and
long- term measures on a paradigm shift of the countrys economy to achieve economicgrowth with job creation.
The National Strategy Meeting on Employment &Job Creating Policies
Policy Issues
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To help create jobs in a sustainable manner, the government will reform existing regulations
to become more employment-friendly, and push toward deregulating service industries, as
they are expected to create more jobs than other industries. The reform will also be directed
to upgrade the labor market to be more flexible and secure, and to raise quality workers by
providing right training and education.
Short-term measures
Short-terms measures involve 1) linking job seekers and companies with job openings, 2)
running programs which facilitate employment such as job brokering, training, and start-up
consulting, and 3) providing financial incentives.
To link small-and medium-sized enterprises (SMEs) suffering workforce shortages with job
seekers, the government will expand Work-net, the state-run job portal, to cover information
on job seekers in addition to information on college and professional high school graduates
currently available. The number of job openings accessible through the portals data base is
expected to increase from 30,000 to 100,000.
To meet the needs of those seeking different kinds of employment, the government will run
three kinds of programs: 1) Those who want to be employed at present will access job
opening information by private job agencies more easily, as the government will increase the
number of private job agencies with the state certification, support setting up a computer
network between public and private job agencies, and offer financial incentives to private
agencies when they link job seekers and job positions through the network. 2) For those
who want job training, the government planned to support education fees and living
expenses, the latter of which will be loaned from Korea Workers Compensation & Welfare
Service at a low rate. Private institutions will be main trainers, and trainees will receive the
education fee support of up to 2 million won a year. 3) Those who want to start businesses
are eligible for consulting services as well as financial support. One trillion won of venture
fund will be established in 2010 to finance promising venture enterprises.
Governments financial incentives to promote employment include incentives given to thosegetting jobs in SMEs through the state-run data base, 50 percent of six month salaries of
those newly employed without college education given to companies if they recruit them as
trainees, and 50 percent of one year salaries of those newly employed with higher than
masters degrees in science and engineering given to venture companies.
Tax deduction will be offered to SMEs employing more workers than the previous year,
which will be effective until the first half of 2011 and also available for new enterprises.
SMEs increasing total number of employees will have a higher priority in governments
financial support. Public institutions will be allowed to recruit part time.
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The government will continue its efforts to create jobs in the public sector with projects such
as housing construction for low income brackets and the four river restoration project. Job
creating measures such as Hope Employment Program will be implemented in the first half.
Mid-and long-term measures
For the Korean economy to create jobs in a sustainable manner, the government will pursue
developing industries with higher job creating potential, upgrading services markets,
developing quality work force needed by businesses, and reforming labor markets.
Industries with higher job creating potential, in particular parts manufacturing and skill-
intensive industries, will receive more financial support from the government. Regulations
on establishing enterprises will be eased, along with the ban on location being lifted. The
Korean government will nurture SMEs and help them develop into strong enterprises, as th