economic bulletin (vol. 33 no.12)
TRANSCRIPT
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The Green Book: Current Economic Trends
Overview 3
1. External economic situation 4
2. Private consumption 8
3. Facility investment 12
4. Construction investment 14
5. Exports and imports 16
6. Mining and manufacturing production 18
7. Service sector activity 20
8. Employment 22
9. Financial markets 26
9.1 Stock market9.2 Exchange rate9.3 Bond market9.4 Money supply & money market
10. Balance of payments 30
11. Prices and international commodity prices 32
11.1 Prices11.2 International oil and commodity prices
12. Real estate market 36
12.1 Housing market12.2 Land market
13. Composite indices of business cycle indicators 40
Policy Issues2012 economic policies aim at stronger economy andimproved living quality 42
Economic News Briefing 47
Statistical Appendices 53
Republic of Korea
Economic Bulletin
Vol. 33 | No. 12
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Economic Bulletin 3
Although the Korean economy has seen employment and the service sector steadilyrecovering, it has been affected by external uncertainties with some real economic indicatorsslowing down, and the possibilities of rising prices remain.
Employment accelerated an increase in October from 264,000 jobs to 501,000, as negative
effects from Chuseok holidays which had temporarily affected the job market were removed.The employment rate improved to 59.9 percent from 59.1 percent, and the unemploymentrate landed at 2.9 percent, down from 3.0 percent in the previous month.
Consumer price inflation rose at a faster pace from 3.6 percent a month ago to 4.2 percent inNovember due partly to a low base effect, with both core prices and expected inflationremaining high.
Mining and manufacturing production declined 0.7 percent month-on-month in October dueto a fall in automobile production, while service output increased 0.7 percent as wholesale &retail sales and financial & insurance services rose.
In October retail sales went up 0.6 percent from the previous month despite decliningdurable and semi-durable goods sales, as non-durable goods sales had increased.
Facilities investment dropped 12.1 percent month-on-month in October in line with weakmachinery and transportation equipment investment, while construction investment gained3.1 percent.
Trade continued to maintain a positive balance, posting a surplus of around US$4 billion inNovember, while exports regained a double digit increase year-on-year, from 8.0 percent to13.8 percent.
The cyclical indicator of the coincident composite index fell 0.3 percentage points from theprevious month in October, in line with the manufacturing operation ratio going down. Theleading composite index dropped 0.4 percentage points year-on-year from the previousmonth, as the net terms of trade declined.
In November, financial markets which had been volatile due to unstable external situationsand erratic international financial markets became stable to some extent, as expectations ofglobal cooperation built up.
There had been remaining gaps of housing price trends between the Seoul metropolitanarea and other areas in November, while the rental price increase slowed down month-on-month from 1.1 percent to 0.7 percent.
There have been lingering external uncertainties, due to the deepening European debt crisisand the possibility that the global economy may slow down.
The Korean government will closely monitor local and global economic situations and swiftlyrespond to any changes, while renewing efforts to help the economy keep recovering and
prices continue stabilizing. In the meantime, it will pursue active job creation and betterlivelihood for working class families, and push forward economic restructuring in a way toboost domestic demand and facilitate the soft-landing of household debts.
The Green BookCurrent Economic Trends
Overview
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4 December 2011
1. External economic situation
Worries over a global economic recession have slightly eased with the US and Chinese
economies posting better-than-expected performances in the third quarter. However,
downward risks from the continuing European financial woes are still a main concern.
On November 30, the US Federal Reserve announced a coordinated action with five other
central banks, including the European Central Bank and the Bank of Japan, to ease strains in
financial markets. They agreed to extend US dollar liquidity swaps for six months until
February 1, 2013 and to lower the interest rate by 50 basis points.
The OECD revised downward its 2011 and 2012 global economic growth forecasts to 3.8
percent and 3.4 percent, respectively, from 4.2 percent and 4.6 percent in May.
The U.S. economic recovery continued with an improvement of economic indicators such asconsumption, production and employment, but economic growth was revised downward to
2.0 percent (annualized q-o-q) in the third quarter from the advanced estimate.
Sales of consumer goods continued to grow with an improvement of consumer sentiment
that had significantly declined due to unease in financial markets from the European
financial crisis.
The ISM Manufacturing Index and industrial production also continued to improve.
The recovery of the job market gained momentum as the unemployment rate fell from 9.0percent in September to 8.6 percent in October, although the housing market remained ina slump.
US
(Percentage change from previous period)
Real GDP2
- Personal consumption expenditure
- Corporate fixed investment
- Housing construction investment
Industrial production
Retail sales
Existing home sales
Unemployment rate3
Consumer prices
2009 2010 20111
1. Preliminary 2. Annualized rate (%) 3. Seasonally adjusted Source: US Department of Commerce
Annual
-3.5
-1.9
-17.8
-16.0
-11.2
-1.7
5.2
9.3
-0.3
Annual
3.0
2.0
4.4
14.6
5.3
3.8
-4.5
9.6
1.6
Q3
2.5
2.6
11.3
-27.7
1.6
0.9
-25.1
9.6
0.4
Q4
2.3
3.6
8.7
2.5
0.8
1.4
13.8
9.6
0.7
Q1
0.4
2.1
2.1
-2.4
1.2
1.5
8.2
8.9
1.3
Q2
1.3
0.7
10.3
4.2
0.1
1.0
-4.9
9.1
1.0
Q3
2.0
2.3
14.8
1.6
1.3
1.1
-0.1
9.1
0.8
Aug
-
-
-
-
0.0
0.2
8.4
9.1
0.4
Oct
-
-
-
-
0.7
0.1
1.4
8.6
-0.1
Sep
-
-
-
-
-0.1
0.7
-3.2
9.0
0.3
ISM manufacturing Index (base=50)
53.5 (May 2011) 55.3 (Jun) 50.9 (Jul) 50.6 (Aug) 51.6 (Sept) 50.8 (Oct) 52.7 (Nov)
University of Michigan consumer sentiment index
71.5 (Jun 2011) 63.7 (Jul) 55.7 (Aug) 59.4 (Sept) 60.9 (Oct) 64.1 (Nov)
Retail sales (m-o-m, %)
0.2 (Apr 2011) 0.0 (May) 0.2 (Jun) 0.4 (Jul) 0.3 (Aug) 1.1 (Sept) 0.5 (Oct)
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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 December 2011
The growth of Chinas exports slowed down significantly due to the global economicslowdown, and the manufacturing Purchasing Managers Index (PMI) hit its lowest mark in33 months in November.
On November 30, the Peoples Bank of China announced that it was lowering its deposit-reserve ratio by 50 basis points from 21.5 percent to 21 percent to cope with the worseningof external conditions and the slowdown of growth.
Japans exports declined in October due to the European financial crisis and the flooding inThailand, but the country posted positive quarter-on-quarter growth in the third quarter forthe first time in four quarters at 1.5 percent. On November 21, the Japanese governmentapproved its third supplementary budget of 12.1 trillion yen.
Industrial production and retail sales shifted to a decline and export growth slowed down,
while consumer prices continued to increase. The EU Commission revised downward itsgrowth forecast for the eurozone, predicting that growth will remain low due to financial marketunease and the slowdown of the global economy.
China
Japan
(Percentage change from same period in previous year)
Real GDP
Industrial production2
Fixed asset investment (accumulated)
Retail sales
ExportsConsumer prices2
Producer prices2
2009 2010 20111
1. Preliminary
2. Quarterly change: average of monthly change
Source: China National Bureau of Statistics
1. Preliminary Source: Eurostat
Real GDP
Industrial production
Retail sales
Exports (y-o-y)Consumer prices (y-o-y)
2009 2010 20111
(Percentage change from previous period)
1. Preliminary Source: Japan's Statistics Bureau and Statistics Centre, Ministry of Economy, Trade and Industry, Ministry of Finance
Real GDP
Industrial production
Retail sales (y-o-y)
Exports (y-o-y)
Consumer prices (y-o-y)
2009 2010 20111
(Percentage change from previous period)
Manufacturing PMI (base=50)
52.0 (May 2011) 50.9 (Jun) 50.7 (Jul) 50.9 (Aug) 51.2 (Sept) 50.4 (Oct) 49.0 (Nov)
EU growth forecast (May November, %)
1.6 1.5 (2011), 1.8 0.5 (2012), 1.3 (2013)
Annual
9.1
11.0
30.5
15.5
-16.0-0.7
-5.4
Annual
10.3
15.7
24.5
23.3
31.33.3
5.5
Q3
9.6
13.5
24.5
23.9
32.23.5
4.5
Q4
9.8
13.3
24.5
22.0
24.94.7
5.7
Q1
9.7
14.9
32.5
17.1
26.44.9
7.0
Q2
9.5
13.9
27.0
18.2
22.05.7
6.9
Q3
9.1
13.8
28.0
17.2
20.56.3
7.1
Aug
-
13.5
28.1
17.0
24.56.2
7.3
Oct
-
13.2
28.7
17.7
15.95.5
5.0
Sep
-
13.8
28.0
17.7
17.16.1
6.5
Annual
-6.3
-21.9
-2.3
-33.1
-1.4
Annual
4.0
16.4
2.5
24.4
-0.7
Q3
0.8
-1.1
3.2
17.8
-0.8
Q4
-0.3
-0.1
-0.4
10.0
0.1
Q1
-0.7
-2.0
-3.0
2.4
-1.4
Q2
-0.3
-4.0
-1.7
-8.0
-0.4
Q3
1.5
4.3
-1.0
0.5
0.1
Aug
-
0.6
-2.6
2.8
0.2
Sep
-
-3.3
-1.1
2.3
0.0
Oct
-
2.4
1.9
-3.8
-0.2
Annual
-4.1
-14.7
-2.4
-18.10.3
Annual
1.8
7.4
0.8
20.11.6
Q3
0.4
1.0
0.2
22.81.7
Q4
0.3
1.8
0.3
21.82.0
Q1
0.8
0.9
-0.1
21.72.4
Q2
0.2
0.4
-0.3
13.02.7
Q3
0.2
0.9
0.0
9.42.6
Aug
-
1.5
0.1
12.1
2.5
Sep
-
-2.1
-0.7
9.7
3.0
Oct
-
-
-
-
3.0
Eurozone
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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 December 2011
2. Private consumption
Private consumption (preliminary) rose 0.4 percent quarter-on-quarter and 2.0 percent year-
on-year in the third quarter of 2011.
Retail sales rose month-on-month in October for the first time in three months as sales of
groceries and other non-durable goods increased due to the slowdown of the rise of
consumer prices.
However, sales of semi-durable goods and durable goods including automobiles slightly
declined month-on-month.
On a year-on-year basis, sales of durable, semi-durable and non-durable goods all rose, but
those of durable and non-durable goods slowed down an increase to a certain extent.
Sales of large discounters rose significantly year-on-year, but those of specialized
retailers declined.
Month-on-month, sales of department stores, large discounters and nonstore retailers,
excluding those of specialized retailers, all rose.
(Percentage change from same period in previous year)
Consumer goods sales
q-o-q
- Durable goods2
Automobiles
- Semi-durable goods3
- Non-durable goods4
1. Preliminary
2. Durable goods: Automobiles, electronic appliances, furniture, telecommunications devices, etc.
3. Semi-durable goods: Clothing, footwear, etc.
4. Non-durable goods: Food, medicine, cosmetics, fuel, tobacco, etc.
Source: Statistics Korea
2009 2010 20111
(Percentage change from same period in previous year)
- Department stores
- Large discounters
- Specialized retailers2
- Nonstore retailers
(Percentage change from same period in previous year)
Private consumption2
q-o-q
2009 20101 20111
1. Preliminary 2. National accounts
Source: The Bank of Korea
Annual Q3 Q4 Annual Q1 Q2 Q3 Q4 Q1 Q2 Q3
0.0 0.4 5.6 4.1 6.6 3.5 3.6 2.9 2.8 3.0 2.0
- 1.4 0.9 - 0.5 0.7 1.4 0.3 0.4 0.9 0.4
2009 2010 20111
1. Preliminary
2. Specialized retailers are defined as stores carrying a few (1 to 3) specialized items.
Source: Statistics Korea
Annual
2.7
-
8.2
21.8
1.3
1.2
Annual
6.6
-
14.9
11.1
6.8
2.2
Q3
7.5
3.3
17.0
12.0
6.6
3.0
Q4
5.1
0.8
10.6
0.1
11.1
-0.7
Q1
5.1
1.1
12.9
10.2
6.1
0.8
Q2
5.7
0.2
17.5
13.0
5.6
-0.4
Q31
4.4
2.3
10.4
8.3
4.0
2.0
Aug
5.2
-0.2
12.2
6.7
3.8
2.6
Oct1
2.2
0.6
2.9
-7.7
3.5
3.1
Sep1
2.8
-3.2
6.5
7.3
4.4
1.1
Annual
4.3
-2.2
3.0
8.7
Annual
8.8
4.4
5.6
15.6
Q3
7.4
7.6
7.3
11.4
Q4
10.5
0.8
4.2
13.5
Q1
11.5
3.5
4.3
11.5
Q2
9.7
5.1
4.9
9.2
Q31
6.5
2.3
3.9
9.4
Oct1
3.5
7.7
-0.6
6.5
Sep1
5.3
0.3
1.8
7.0
Aug
7.6
3.0
3.8
15.4
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Economic Bulletin 9
Consumer goods sales
Source: Statistics Korea (industrial activity trend)
Private consumption
Source: The Bank of Korea (national accounts)2-1
2-2
2-3 Consumer goods sales by type
Source: Statistics Korea (industrial activity trend)
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Considering advanced indicators, there is a possibility that retail sales may slow down in
November compared to the previous month.
The growth of credit card use slowed down slightly as sales of distributors went down, with
department store sales dropping from a 3.8 percent increase to a 1.1 percent decrease and
sales at large discounters falling from 5.6 percent to 0.3 percent.
Automobile sales declined at a faster pace than the previous month.
However, gasoline sales climbed 1.4 percent year-on-year due to a drop in prices from the
stabilization of the exchange rate.
Gasoline prices (won per liter)
1,992 (1st week of Nov, 2011) 1,988 (2nd week) 1,983 (3rd week) 1,977 (4th week) 1,965 (5th week)
Credit card use (y-o-y, %)
19.8 (Jun 2011) 16.6 (Jul) 19.8 (Aug) 19.7 (Sep) 17.4 (Oct) 14.5 (Nov1)
Department store sales (y-o-y, %)
8.2 (Jun 2011) 8.5 (Jul) 8.3 (Aug) 6.5 (Sep) 3.8 (Oct) -1.1 (Nov1)
Large discounter sales (y-o-y, %)
2.7 (Jun 2011) 4.9 (Jul) 2.0 (Aug) -1.1 (Sep) 5.6 (Oct) 0.3 (Nov1)
Domestic sales of gasoline (y-o-y, %)
-3.4 (Jun 2011) 9.2 (Jul) -0.3 (Aug) 1.0 (Sep) -1.4 (Oct) 1.4 (Nov1)
Domestic sales of cars (y-o-y, %)
6.0 (Jun 2011) 6.1 (Jul) 3.7 (Aug) 3.8 (Sep) -8.8 (Oct) -12.6 (Nov1)
1. Preliminary
Source: Ministry of Knowledge Economy
The Credit Finance Association
Korea National Oil Corporation
The Korea Customs Service
Korea Automobile Manufacturers Association
Ministry of Strategy and Finance (for November data)
Private consumption is expected to be positively affected by an improvement in
consumption related situations, although it is being limited by domestic and external
uncertainties such as the European financial unease.
Inflationary pressures, especially on grocery prices, is weakening, while the recovery in
employment is continuing.
Employment (y-o-y, thousand)355 (May 2011) 472 (Jun) 335 (Jul) 490 (Aug) 264 (Sep) 501 (Oct)
Consumer prices (y-o-y, %)
3.9 (May 2011) 4.2 (Jun) 4.5 (Jul) 4.7 (Aug) 3.8 (Sep) 3.6 (Oct) 4.2 (Nov)
Fresh food prices (y-o-y, %)
3.5 (May 2011) 6.6 (Jun) 11.1 (Jul) 13.9 (Aug) -4.2 (Sep) -10.1 (Oct) -4.2 (Nov)
The consumer sentiment index rose above the benchmark in November, showing that
consumer sentiment is gradually improving.
Consumer sentiment index (CSI, base=100)100 (Apr 2011) 104 (May) 102 (Jun) 102 (Jul) 99 (Aug) 99 (Sep) 100 (Oct) 103 (Nov)
10 December 2011
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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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12 December 2011
3. Facility investment
Facility investment (preliminary GDP) in the third quarter of 2011 fell 0.8 percent quarter-on-
quarter, and rose 1.0 percent year-on-year.
Facility investment in October slipped 12.1 percent month-on-month and 11.9 percent year-
on-year, as investment in both machinery and transportation equipment declined. It is
expected to further struggle as corporate investment sentiment is worsening amid external
uncertainties. Leading indicators sent mixed signals, with domestic machinery orders
increasing and machinery imports and the manufacturing operation ratio decreasing.
(Percentage change from same period in previous year)
Facility investment2
q-o-q
- Machinery
- Transportation equipment
1. Preliminary
2. National accounts
Source: The Bank of Korea
2009 20101 20111
Annual
-9.8
-
-13.5
2.8
Annual
25.0
-
30.8
6.7
Q1
29.1
2.8
30.0
24.2
Q2
30.5
7.9
35.3
15.6
Q3
26.6
5.6
38.9
-6.6
Q4
15.9
-1.0
20.5
0.6
Q1
11.7
-1.1
13.9
3.2
Q2
7.5
3.9
9.0
2.0
Q3
1.0
-0.8
-
-
(Percentage change from same period in previous year)
Facility investment
q-o-q, m-o-m
- Machinery
- Transportation equipment
Domestic machinery orders
q-o-q, m-o-m
- Public
- Private
Machinery imports
Manufacturing operation ratio
Facility investment adjustmentpressure2
1. Preliminary
2. Production growth rate minus production capacity growth rate in the manufacturing sector (%p)
Sources: Statistics Korea, the Korea International Trade Association (machinery imports data)
2009 2010 20111
Annual
-9.4
-
-12.6
4.6
-10.3
-
62.4
-18.2
-16.6
-3.5
-3.7
Annual
25.1
-
30.5
4.3
11.2
-
-37.9
21.8
40.4
8.8
9.5
Q3
29.3
7.2
37.4
-0.1
-0.2
-3.6
-71.7
22.0
40.0
1.8
3.4
Q4
13.6
-5.4
17.1
-1.2
11.3
4.1
31.4
7.8
26.3
5.3
4.6
Q1
6.6
-0.2
6.8
5.6
19.5
3.6
-10.3
22.7
8.0
2.6
4.1
Q2
4.8
3.0
7.0
-5.7
8.2
3.9
82.0
3.1
10.5
-0.3
1.6
Q31
-3.5
-0.9
-3.6
-3.2
1.3
-9.4
6.1
0.9
9.2
-0.1
1.2
Aug
-3.3
1.9
-5.3
8.8
6.0
1.0
8.0
5.9
11.3
0.6
1.1
Sep1
-4.3
-2.2
-2.5
-11.9
3.3
-4.3
-19.1
5.5
3.3
1.9
3.3
Oct1
-11.9
-12.1
-11.3
-14.5
14.2
0.4
198.7
2.7
-7.6
-2.2
2.3
Source: The Bank of Korea
Jun Jul Aug Sep Oct Nov Dec
Business survey indices (base=100) for102 103 103 100 98 96 97
manufacturing facility investment projections
2011
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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 December 2011
4. Construction investment
Construction investment (preliminary GDP) in the third quarter of 2011 rose 1.8 percent
quarter-on-quarter, and dropped 4.6 percent year-on-year.
The value of construction completion (constant) in October increased 3.1 percent month-on-
month and 3.0 percent year-on-year, as both building construction and civil engineering
works rose.
Construction investment is forecast to slowly recover given recovery signs in the housing
market such as a drop in unsold houses and improving leading indicators of building
construction orders, the building permit area, and building permits for new homes. As of
October 31, building permits for new homes increased 88.4 percent year on year. However, the
poor corporate sentiment of construction industries is likely to limit construction investment.
(Percentage change from same period in previous year)
Construction investment2
q-o-q
- Building construction
- Civil engineering works
1. Preliminary 2. National accounts
Source: The Bank of Korea
2009 20101 20111
Annual
3.4
-
-2.3
11.6
Annual
-1.4
-
-2.9
0.5
Q1
4.3
2.0
4.5
4.0
Q2
-2.3
-4.2
-5.1
1.0
Q3
-3.1
-0.8
-6.3
1.7
Q4
-2.9
-1.0
-2.8
-2.9
Q1
-11.9
-6.7
-11.3
-12.7
Q2
-6.8
1.6
-3.7
-10.4
Q3
-4.6
1.8
-
-
(Percentage change from same period in previous year)
Value of construction completion(constant)
q-o-q, m-o-m
- Building construction
- Civil engineering works
Construction orders (current value)
q-o-q, m-o-m
- Building construction
- Civil engineering works
Building permit area
1. Preliminary
Source: Statistics Korea, the Ministry of Land, Transport and Maritime Affairs
2009 2010 20111
Annual
1.6
-
-6.4
16.1
5.0
-
-14.2
44.3
-12.9
Annual
-3.3
-
-7.1
2.2
-18.7
-
-9.9
-29.5
19.3
Q3
-6.8
-4.3
-12.3
1.9
-3.6
-1.4
-1.3
-7.0
-14.3
Q4
-4.3
-1.6
-8.5
1.2
-40.2
-22.9
-46.4
-29.9
18.1
Q1
-12.6
-4.6
-15.2
-9.2
-12.8
12.8
-9.7
-17.0
21.5
Q2
-6.6
3.5
-8.4
-4.3
-3.3
9.8
-4.0
-1.5
3.8
Q31
-8.6
-6.1
-8.1
-9.3
0.9
8.2
8.6
-11.0
58.7
Aug
-9.51
0.81
-10.71
-7.9
75.4
65.8
87.7
50.7
87.8
Sep1
-0.8
4.9
0.7
-2.9
-5.0
-25.5
4.1
-22.4
59.2
Oct1
3.0
3.1
2.6
3.5
56.3
-4.1
38.4
113.4
20.1
Source: The Construction and Economy Research Institute of Korea
Jul Aug Sep Oct Nov Dec
Business survey indices (base=100) for 76.8 64.1 74.0 72.2 69.0 70.3construction projections
2011
Dec Dec Aug Sep Oct
Unsold houses 123,000 89,000 69,000 68,000 66,000
2009 2010 2011
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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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16 December 2011
5. Exports and imports
Exports in November increased 13.8 percent (preliminary) year-on-year to US$46.97 billion.
Despite external uncertainties, exports in November posted a month-on-month gain,
returning to double-digit growth year-on-year.
By regional category, exports to Japan (up 29.5%), the ASEAN countries (up 27.9%) and
China (up 8.3%) remained on an upward track year-on-year, with those to the US (up 22.5%)
turning positive.
By business category, exports of petroleum products (up 45.8%), automobiles (up 30.2%),
and steel products (up 20.7%) surged year-on-year, while those of semiconductors (down
0.8%) and mobile phones (down 30.7%) dropped.
Imports in November increased 11.3 percent (preliminary) year-on-year to US$43.06 billion.
Commodity imports slowed down in November with falling international commodity
prices and a drop in crude oil imports from 84 million barrels in the previous month to 74
million barrels, posting a decelerating year-on-year increase of 14.9 percent from 26.2
percent a month ago. Capital goods imports went up to US$12.71 billion from US$11.5
billion in the previous month, growing 3.7 percent year-on-year, a shift from last months
3.9 percent decrease.
The current account surplus (preliminary) in November was US$3.91 billion, staying in
the black.
(US$ billion)
Exports
(y-o-y, %)
Average daily exports
Imports
(y-o-y, %)
Average daily imports
2009 2010 2011
Annual
363.53
-13.9
1.30
323.08
-25.8
1.16
Annual
466.38
28.3
1.70
425.21
31.6
1.46
Q3
116.32
22.7
1.72
105.70
24.6
1.57
Q4
128.75
23.8
1.79
115.73
24.6
1.61
Q1
130.99
29.6
1.99
123.79
26.1
1.87
Q2
142.71
18.7
2.08
134.37
27.2
1.96
Q3
141.23
21.7
2.05
134.94
27.7
2.05
Nov1
46.97
13.8
1.96
43.06
11.3
1.79
Jan-Nov1
508.73
20.5
2.03
478.92
24.3
1.91
Sep
46.55
18.8
2.12
45.27
29.3
2.06
Oct
46.82
8.0
2.08
42.76
15.6
1.90
1. Preliminary
Source: Korea Customs Service
(US$ billion)
Trade balance
2009 2010 2011
Annual
40.45
Annual
41.17
Q3
10.62
Q4
13.02
Q1
7.20
Q2
8.34
Q3
6.29
Nov 1
3.91
Jan-Nov1
29.81
Sep
1.28
Oct
4.07
1. Preliminary
Source: Korea Customs Service
Jul Aug Sep Oct Nov
Reuters index (average) 3,145 3,038 2,978 2,781 2,772
2011
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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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18 December 2011
6. Mining and manufacturing production
Mining and manufacturing production in October fell 0.7 percent month-on-month due toweak automobiles and audio-visual communications equipment, while rising 6.2 percentyear-on-year.
By business category, semiconductors and parts (up 1.2%) and chemical products (up 3.1%)increased month-on-month, while automobiles (down 3.0%) and audio-visualcommunications equipment (down 4.3%) went down.
The manufacturing inventory-shipment ratio increased month-on-month by 5.4 percentagepoints, as the inventory added 3.2 percent and the shipments shed 1.7 percent.
By business category, the shipments of refined petroleum products (up 2.6%) and chemicalproducts (up 1.3%) increased month-on-month, while those of automobiles (down 6.1%)and semiconductors and parts (down 1.3%) declined. The inventories of semiconductorsand parts (up 11.6%) and chemical products (up 4.1%) climbed month-on-month, whilethose of primary metals (down 3.8%) and computers (down 21.4%) fell.
The average operation ratio of the manufacturing sector lost 1.8 percentage points to 79.5 percent.
Mining and manufacturing production is expected to continue a moderate recovery.However there are still possibilities that the index will be affected by external uncertainties,with a drop in major exports, particularly semiconductors.
Automobile production (thousand)
438 (Jun 2011) 392 (Jul) 320 (Aug) 374 (Sep) 415 (Oct) 429 (Nov)
OECD leading indicator (base=100)
-0.5 (Jun 2011) -0.5 (Jul) -0.5 (Aug) -0.4 (Sep)
Semiconductor exports (US$ billion)4.21 (Jun 2011) 3.97 (Jul) 4.11 (Aug) 4.59 (Sep) 4.35 (Oct) 4.10 (Nov)
Production (q-o-q, m-o-m)
(y-o-y)
- Manufacturing
ICT 3
Automobiles
Shipment
- Domestic demand
- Exports
Inventory4
Average operation ratio (%)
Production capacity
1. Preliminary
2. Including mining, manufacturing, electricity, and gas industry
3. Information and Communications Technology
4. End-period
Source: Statistics Korea
(Percentage change from same period in previous year)
Mining andmanufacturing
activity2
Manufacturingactivity
2010 2011
Annual
-
16.2
16.7
25.2
23.1
14.4
11.5
18.2
17.4
81.2
7.2
Q3
1.1
10.9
11.2
19.1
11.3
9.9
6.6
14.5
19.1
81.2
7.8
Oct
-2.5
13.4
13.7
13.4
15.8
13.5
11.1
16.8
18.8
79.7
7.6
Q2
0.0
7.2
7.4
10.5
12.1
7.2
3.8
11.6
10.0
81.4
5.8
Q31
-0.1
5.1
5.1
5.4
16.2
5.0
2.6
7.9
10.8
81.3
3.9
Aug
-1.9
4.7
4.7
2.7
22.7
4.3
2.6
6.2
11.9
80.4
3.6
Oct1
-0.7
6.2
6.3
16.9
11.7
4.0
0.2
9.0
14.8
79.5
4.0
Sep1
1.2
6.9
7.1
10.2
15.5
7.5
4.2
11.8
10.8
81.3
3.8
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Economic Bulletin 19
Average manufacturing operation ratio
Source: Statistics Korea (industrial activity trend)
6-1
6-2
6-3
Industrial production
Source: Statistics Korea (industrial activity trend)
Inventory
Source: Statistics Korea (industrial activity trend)
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20 December 2011
7. Service sector activity
Service activity in October expanded 0.7 percent from the previous month helped by robust
wholesale & retail sales and financial & insurance services. On a year-on-year basis, service
activity rose 3.5 percent.
Wholesale & retail sales had temporarily plunged in September due to Chuseok holidays
falling earlier than usual and its effect already having been reflected in the previous months
index. In October, however, the index significantly increased, affected by a low base effect
from the previous month and by slower growth in consumer prices.
Consumer prices (y-o-y)
3.9 (May 2011) 4.2 (Jun) 4.5 (Jul) 4.7 (Aug) 3.8 (Sep) 3.6 (Oct)
Fresh food index (y-o-y)
3.5 (May 2011) 6.6 (Jun) 11.1 (Jul) 13.9 (Aug) -4.2 (Sep) -10.1 (Oct)
After the EU summit held on October 27, financial markets stabilized on expectations for a
resolution to Europes debt crisis. With financial markets regaining stability, financial &
insurance services rose 2.1 percent month-on-month.
KOSPI (points)
1,796.1 (end-September) 1,766.4 (October 10) 1,805.1 (October 20) 1,909.0 (October 31)
Real estate & renting declined 3.8 percent month-on-month and 4.3 percent year-on-year,
falling for 17 consecutive months.
Amid increased volatility in financial markets, service activity in November is expected to beaffected by weak wholesale & retail sales and financial & insurance services.
(Percentage change from same period in previous year)
Service activity index 100.0
21.8
9.0
7.7
8.4
15.3
6.3
4.8
2.9
10.8
6.0
2.9
3.8
0.4
Weight2009
- Wholesale & retail sales
- Transportation services
- Hotels & restaurants
- Information & communications 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
2010 2011
1. PreliminarySource: Statistics Korea
Oct1
3.5
3.5
1.4
0.5
6.5
7.4
-4.3
3.1
2.3
0.7
7.6
-0.1
-2.3
3.9
Sep1
3.8
2.4
4.1
0.5
5.9
8.2
-3.6
7.7
1.3
1.0
5.7
2.3
1.1
-1.1
Aug
4.9
4.7
4.8
1.0
6.0
11.0
-3.1
3.7
2.7
2.8
5.0
1.0
1.1
7.1
Q31
4.2
3.3
4.3
1.3
5.4
9.0
-3.4
3.8
3.0
1.9
5.1
2.1
1.5
0.2
Q2
3.3
4.8
3.5
1.9
3.4
8.2
-11.5
-1.4
5.5
0.2
5.0
1.2
2.4
-3.1
Q1
2.7
4.0
7.2
-0.6
3.9
7.2
-17.7
-3.6
5.7
1.1
6.2
2.4
2.9
0.0
Q4
3.2
4.7
10.0
1.7
3.6
8.2
-24.2
-1.3
8.6
3.1
4.6
2.7
4.5
6.4
Q3
2.3
5.0
10.1
1.3
2.2
1.4
-15.9
-3.9
7.6
0.5
8.6
-0.4
5.0
1.7
Annual
3.9
5.7
12.0
1.2
1.9
4.6
-8.6
-0.5
7.5
2.0
8.8
-0.4
4.3
5.1
Annual
1.8
-0.4
-6.6
-1.4
0.9
7.8
5.3
1.2
-3.0
2.1
10.4
-0.5
-2.1
3.7
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Economic Bulletin 21
October 2011 service industry by business
Source: Statistics Korea (service industry activity trend)
7-1
7-2
7-3
Service industry
Source: Statistics Korea (service industry activity trend)
Wholesale and retail sales
Source: Statistics Korea (service industry activity trend)
Totalin
dex
Who
lesale
&retail
Tran
sportatio
n
Hotels
&re
staurants
Inf
ormatio
n&comm
unica
tions
Real
estate
&renting
Professional,s
cientifi
c&
technic
alservice
s
Busin
essfacility
man
agem
ent&
busin
esssupport
servi
ces
Education
alservi
ces
Health
care&
socialw
elfar
e
servi
ces
Ente
rtainm
ent,
cultu
ral&
sports
servi
ces
M
embe
rship
organizatio
ns,repair
&oth
erpersonal
servi
ces
Sewe
rage,wa
stema
nageme
nt,
m
aterials
recovery&
remediation
activitie
s
Finan
cial&
insuran
ceservi
ces
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22 December 2011
8. Employment
The number of workers on payroll in October increased by 501,000 from a year earlier to
24,670,000 and the employment rate (seasonally adjusted) rose by 0.5 percentage points
year-on-year to 59.9 percent.
By industry, services (up 555,000) led the upward trend. In addition, employment in
construction (up 41,000), which had remained weak in the previous months, contributed to
payroll employment gains.
By status of workers, regular workers (up 517,000) continued to increase. The number of
daily workers (down 91,000) and unpaid family business employees (down 36,000), which
had temporarily plummeted in September due to Chuseok holidays, decelerated the pace
of a decline.
Number of employed (million)
Employment rate (%)
(seasonally adjusted)
Employment growth (y-o-y, thousand)
(Excluding agriculture, forestry & fishery)
- Manufacturing
- Construction
- Services
- Agriculture, forestry & fishery
- Wage workers
Regular workers
Temporary workers
Daily workers
- Non-wage workers
Self-employed workers
- Male
- Female
- 15 to 29
- 30 to 39
- 40 to 49
- 50 to 59
- 60 or more
2009 2010 2011
Source: Statistics Korea
Oct
24.67
59.9
59.2
501
534
-55
41
555
-33
430
517
-5
-91
71
107
248
253
20
-66
55
300
192
Sep
24.32
59.1
58.6
264
323
-48
-50
434
-59
275
547
-60
-213
-11
88
181
83
2
-104
12
241
114
Q3
24.48
59.5
59.1
363
414
-12
-35
472
-51
392
572
-76
-104
-29
34
208
155
-1
-83
46
270
131
Q2
24.57
59.9
59.2
402
39
112
-41
331
3
421
621
-137
-63
-19
-39
221
181
-74
-13
59
294
137
Q1
23.46
57.4
58.8
423
451
228
-3
224
-28
519
605
-88
2
-96
-115
266
157
-49
-34
77
286
143
Oct
24.17
59.4
58.7
316
371
241
94
55
-55
488
652
-81
-84
-167
-131
161
88
-58
-7
26
262
26
Q4
23.99
58.9
58.6
358
393
269
57
80
-35
532
699
-114
-53
-174
-146
212
146
-57
17
50
287
60
Q3
24.12
59.3
58.9
369
414
262
92
83
-45
541
671
-26
-104
-172
-130
207
163
-44
21
40
295
57
Q2
24.17
59.6
58.9
433
518
172
44
325
-85
623
766
42
-185
-189
-91
188
245
-58
-13
48
342
114
Q1
23.04
57.0
58.3
132
296
61
-61
313
-164
371
651
-37
-243
-239
-106
117
15
-12
-42
-21
251
-44
Annual
23.83
58.7
58.7
323
405
191
33
200
-82
517
697
-34
-146
-194
-118
181
142
-43
-4
29
294
47
Q4
23.63
58.7
58.5
-6
110
-49
-107
261
-116
385
515
105
-235
-391
-279
89
-94
-77
-149
-46
230
37
Annual
23.51
58.6
58.6
-72
-34
-126
-91
179
-38
247
383
22
-158
-319
-259
31
-103
-127
-173
-24
198
54
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Economic Bulletin 23
Share of employed by industry
Source: Statistics Korea (employment trend)
8-1
8-2
8-3 Share of employed by status of workers
Source: Statistics Korea (employment trend)
Number of employed and employment growth
Source: Statistics Korea (employment trend)
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24 December 2011
The number of unemployed persons in October decreased by 96,000 year-on-year to
736,000 and the year-on-year unemployment rate (seasonally adjusted) dropped 0.4
percentage points to 2.9 percent.
The unemployment rate declined in all age groups, with the youth unemployment rate falling
0.3 percentage points year-on-year to 6.7 percent.
The economically inactive population in October was up 49,000 from a year earlier to
15,760,000. Meanwhile, the labor force participation rate (seasonally adjusted) rose 0.3
percentage points year-on-year to 61.7 percent.
The number of workers quitting jobs due to housework (up 141,000), rest, time-off and
leisure (up 124,000), and childcare (up 21,000) increased, while those who quit jobs due to
education (down 97,000) and old age (down 6,000) decreased.
2009 2010 2011
Economically inactive population (million)
Labor force participation rate (%)
(seasonally adjusted)
Growth in economically inactive
population (y-o-y, thousand)
- Childcare
- Housework
- Education
- Old age
- Rest, time-off and leisure
2009 2010 2011
Source: Statistics Korea
Number of unemployed (thousand)
Unemployment growth (y-o-y, thousand)
- Male
- Female
Unemployment rate (%)
(Seasonally adjusted)
- 15 to 29
- 30 to 39
- 40 to 49
- 50 to 59
- 60 or more
Source: Statistics Korea
Annual
889
119
80
40
3.6
3.6
8.1
3.6
2.4
2.5
1.6
Q4
817
60
25
36
3.3
3.5
7.6
3.3
2.3
2.2
1.5
Annual
920
31
-7
38
3.7
3.7
8.0
3.5
2.5
2.5
2.8
Q1
1,130
222
83
139
4.7
4.3
9.5
3.9
2.9
3.2
5.8
Q2
868
-75
-47
-29
3.5
3.5
7.7
3.6
2.3
2.1
2.1
Q3
873
-13
-48
35
3.5
3.6
7.6
3.5
2.5
2.3
2.0
Q4
808
-10
-16
6
3.3
3.4
7.1
3.2
2.2
2.3
1.9
Oct
832
33
-5
38
3.3
3.5
7.0
3.4
2.4
2.3
1.8
Q1
1,028
-101
-70
-32
4.2
3.9
8.8
4.0
2.5
2.7
4.5
Q2
865
-3
-32
29
3.4
3.4
7.9
3.5
2.1
2.0
2.3
Q3
786
-88
-48
-40
3.1
3.2
6.7
3.2
2.0
2.1
2.1
Sep
758
-100
-39
-61
3.0
3.2
6.3
3.1
2.0
2.2
2.2
Oct
736
-96
-46
-50
2.9
3.1
6.7
2.9
2.0
1.8
1.7
Annual
15.70
60.6
60.6
447
40
148
31
88
123
Q4
15.83
60.7
60.6
456
15
235
-36
92
123
Annual
15.84
61.0
61.0
143
-125
201
12
80
-56
Q1
16.25
59.8
61.0
166
-118
237
-74
193
-187
Q2
15.49
61.8
61.0
146
-126
175
23
59
-27
Q3
15.66
61.5
61.1
128
-149
203
46
43
15
Q4
15.96
60.8
60.8
133
-107
189
55
25
-27
Oct
15.71
61.4
60.8
130
-125
234
37
1
-25
Q1
16.39
59.9
61.1
138
-44
130
-16
-103
241
Q2
15.56
62.0
61.3
66
-16
27
-39
-58
163
Q3
15.85
61.5
61.0
191
17
143
-78
-22
193
Sep
16.07
61.0
60.6
294
25
248
-50
-32
202
Oct
15.76
61.7
61.1
49
21
141
-97
-6
124
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Economic Bulletin 25
Unemployment rate
Source: Statistics Korea (employment trend)
8-4
8-5
8-6 Economically active population
Source: Statistics Korea (employment trend)
Employment rate
Source: Statistics Korea (employment trend)
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26 December 2011
9. Financial market
9.1 Stock market
The Korean stock price index in November dropped 3.2 percent month-on-month to 1,848
points from the previous months 1,909 points. Due to weak investment sentiment affected by
concerns over a spread of the eurozone debt crisis, sluggish economic indicators in the US
and China, and the US congressional supercommittees failure to reach an agreement on a
long-term debt-reduction plan, the Korean stock market fell to 1,776 points on November 25.
The index decelerated the decline thereafter, boosted by expectations over improved US
economic indicators ahead of the holiday shopping season and the EUs policy coordination
such as agreeing on the expansion of the European Financial Stability Fund (EFSF).
Foreign investors shifted to a net-selling position of 3.1 trillion won from the previousmonths net-buying position of 1.2 trillion won.
9.2 Exchange rate
The won/dollar exchange rate in November increased 33.0 won to wrap up the month at
1,143.0 won from 1,110.0 won at the end of October.
The won/dollar exchange rate climbed due to concerns over a spread of Europes debt
problems, particularly soaring Treasury bond yields in Spain and France.
Despite the Japanese governments currency market intervention, the yen strengthened andthe won/100 yen exchange rate rose 69.8 won from the end of the previous month.
Oct 2011 Nov 2011 Change1 Oct 2011 Nov 2011 Change1
Stock price index 1,909.0 1,847.5 -61.5 (-3.2%) 490.7 492.8 +2.1 (+0.4%)
Market capitalization 1,081.8 1,049.1 -32.6 (-3.0%) 102.0 103.4 +1.4 (+1.4%)
Average daily trade value 6.7 5.4 -1.3 (-19.5%) 3.04 2.81 -0.2 (-7.5%)
Foreign stock ownership 33.1 33.0 -0.1 (-0.3%) 9.1 8.5 -0.6 (-6.4%)
1. Change from the end of the previous month
(End-period)
Dec Dec Dec Dec Oct Nov Change1
Won/Dollar 936.1 1,259.5 1,164.5 1,134.8 1,110.0 1,143.0 -0.7
Won/100 Yen 828.6 1,396.8 1,264.5 1,393.6 1,398.0 1,467.8 -5.1
2007 2008 2009 2010 2011
KOSPI KOSDAQ
(End-period, point, trillion won)
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.
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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
The 5-year Treasury bond yield dropped 14 basis points in November to 3.49 percent from
the previous months 3.63 percent. Treasury bond yields fell due to flight to safety trade
fueled by Euro debt contagion fears, foreign investment inflows to Treasury bond futures,
and a drop in US Treasury bond yields.
9.4 Money supply & money market
The M2 (monthly average) in September expanded 4.2 percent from a year earlier excluding
cash management accounts (CMAs), which were included in M2 since July 2009.
Although the overseas sectors surplus narrowed, the month-on-month M2 growth
accelerated from 4.0 percent to 4.2 percent, helped by expanded private sector credit from
4.8 percent to 7.3 percent and increased money supply from the government sector.
In October, bank deposits accelerated increases, as regional government funds and
household funds from the Korean Federation of Community Credit Cooperatives flowed into
time deposits. Treasury fund inflows into instant access deposit accounts also contributed to
the growth.
Asset management company (AMC) deposits also grew at a faster pace as MMF significantly
expanded due to inflows of Treasury funds and bank funds that had flowed out at the end of
the previous quarter.
Dec Dec Dec Dec Dec Sep Oct Nov Change1
Call rate (1 day) 4.60 5.02 3.02 2.01 2.51 3.28 3.26 3.27 +1
CD (91 days) 4.86 5.82 3.93 2.88 2.80 3.58 3.57 3.55 -2
Treasury bonds (3 yrs) 4.92 5.74 3.41 4.44 3.38 3.55 3.51 3.38 -13
Corporate bonds (3 yrs) 5.29 6.77 7.72 5.56 4.27 4.36 4.35 4.22 -13
Treasury bonds (5 yrs) 5.00 5.78 3.77 4.98 4.08 3.66 3.63 3.49 -14
(End-period)
1. Basis point, changes in November 2011 from the previous month
2006 2007 2008 2009 2010 2011
Annual Annual Annual Q1 Q2 Q3 Q4 Jun Jul Aug Sep Sep1
M12 -1.8 16.3 11.8 14.5 10.7 10.8 11.2 5.4 3.8 5.4 5.14 425.24
M2 14.3 10.3 8.7 9.4 9.5 8.6 7.4 3.0 3.2 4.0 4.24 1,729.54
Lf 3 11.9 7.9 8.2 8.5 9.1 8.2 7.1 4.1 4.6 5.6 5.74 2,243.74
(Percentage change from same period in previous year, average)
1. Balance at end September 2011, trillion won
2. M1 excluding corporate MMFs and individual MMFs while including CMAs
3. Liquidity aggregates of financial institutions (mostly identical with M3)
4. Preliminary
2009 2010 20112008
Annual Oct Annual Oct Aug Sep Oct Oct1
Bank deposits 54.8 -6.8 36.9 13.7 3.9 6.8 13.0 1,098.9AMC deposits -27.6 -7.3 -16.7 0.1 4.4 3.0 9.3 1,318.4
(Monthly change, end-period, trillion won)
1. Balance at end October, trillion won
2009 2010 2011
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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 surplus (preliminary) in October posted US$4.23 billion, expanding
from the previous months US$2.83 billion. The accumulated current account surplus from
January to October 2011 registered US$19.23 billion.
Despite Europes debt problems, the goods account surplus widened to US$3.65 billion
from the previous months US$2.10 billion, helped by robust exports to emerging markets
such as China and the ASEAN countries.
The service account showed a near balance, from a US$70 million deficit to a surplus of
US$3 million, as the construction service account surplus narrowed while the travel account
deficit improved, affected by the Chinese national holiday at the end of October.
The primary income account surplus expanded to US$640 million from the previous months
US$540 million owing to decreasing interest payments. Meanwhile, the secondary income
account swung to a deficit of US$60 million from a surplus of US$120 million a monthearlier, due to increased outward remittances.
The capital and financial account (preliminary) in October registered an outflow of US$4.37
billion. The accumulated capital and financial account from January to October 2011 posted a
deficit of US$22.25 billion.
Capital & financial account balance (US$ billion)
-3.96 (May, 2011) -3.25 (Jun) -2.47 (Jul) -1.69 (Aug) -4.16 (Sep) -4.37 (Oct1)
1. Preliminary
The direct investment account recorded a net outflow of US$1.13 billion, declining from the
previous months outflow of US$2.10 billion as foreign direct investment increased whileoverseas direct investment by locals decreased.
The portfolio investment account expanded to a net inflow of US$3.92 billion from the
previous months US$1.77 billion as the net inflow of debt securities investment funds
continued and foreign investor funds for equity securities investment shifted to a net inflow.
The financial derivatives account swung to a net inflow of US$110 million from the previous
months outflow of US$150 million. Meanwhile, the other investment account shifted to an
inflow of US$2.81 billion from the previous months outflow of US$16.75 billion due to an
increase in local banks borrowings.
The current account in November is expected to maintain a surplus, helped by a continuing
surplus in the goods account.
Annual Annual Q3 Q4 Q1 Q2 Q3 Aug Sep Oct Jan-Oct
Current account 32.79 29.39 10.12 8.47 2.61 5.49 6.90 0.29 2.83 4.23 19.23
- Goods balance 37.87 40.08 11.57 11.91 5.84 7.66 7.20 0.37 2.10 3.65 24.35
- Service balance -6.64 -8.63 -1.79 -2.57 -2.54 -0.80 -1.20 -0.58 0.07 0.00 -4.53
- Income balance 2.28 1.01 1.29 0.03 0.39 -0.82 1.31 0.70 0.54 0.64 1.52
- Current transfers -0.71 -3.08 -0.95 -0.91 -1.08 -0.55 -0.42 -0.20 0.12 -0.06 -2.11
(US$ billion)
2009 2010 2011
1. Preliminary
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 stabilized in November to a monthly rate of 0.1 percent, but year-on-year
growth accelerated to 4.2 percent due to a low base effect. The prices of agricultural,livestock & fishery products moderated, along with those of personal services. However,prices of certain agricultural products and processed food rose.
Core consumer prices, which exclude oil and agricultural products, rose 3.5 percent year-on-year. However, core consumer prices based on the newly-adopted OECD method, whichexcludes food and energy, rose 2.8 percent. Consumer prices of basic necessities, abarometer of perceived consumer prices, were up 4.5 percent compared to the same monthof the previous year.
Expected inflation inched down from the previous month, but the upward trend in importprices accelerated.
Expected inflation (%)
3.9 (Jun) 4.0 (Jul) 4.2 (Aug) 4.3 (Sep) 4.2 (Oct) 4.1 (Nov)Import price increases (m-o-m, %, won)10.0 (Aug) 14.0 (Sep) 16.0 (Oct)
The prices of most agricultural, livestock & fishery products fell as supply chains stabilized,but those of rice, chili powder and a few others continued to rise due to a smaller harvest.
Prices of agricultural, livestock & fishery products in November (m-o-m, %)
Chinese cabbage (-37.7), tomato (-27.0), radish (-26.1), pork (-2.9), rice (2.8), green chili (10.5), chestnut (24.6),
cucumber (30.8), squash (33.9)
Oil product prices fell slightly (down 0.1%, m-o-m) as a result of the weaker won, butprocessed food and textile prices rose, thus accelerating the overall upward trend in theprices of industrial products (up 0.7%, m-o-m).
Rents continued to rise (up 0.5%, m-o-m) due to strong demand for rental housing. The pricemoderations in personal services persisted (down 0.1%, m-o-m), influenced in part bycheaper school lunches.
(%)
Consumer price inflation in major sectors
Publicutility
Industrialproducts
Oilproducts
TotalAgricultural,
livestock & fisheryproducts
Housingrents
Personalservices
Month-on-Month (%) 0.1 -1.5 0.7 -0.1 0.5 -0.2 -0.1
Contribution (%p) 0.1 -0.12 0.21 -0.01 0.04 -0.03 -0.03
Year-on-Year (%) 4.2 3.4 6.4 16.0 5.1 -1.2 3.7Contribution (%p) 4.17 0.27 2.02 0.85 0.47 -0.17 1.18
Source: Statistics Korea
Consumer price inflation
2011
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Month-on-Month -0.5 0.4 1.2 0.7 0.4 0.0 0.0 0.2 0.5 0.7 -0.1 -0.2 0.1
Year-on-Year 3.0 3.0 3.4 3.9 4.1 3.8 3.9 4.2 4.5 4.7 3.8 3.6 4.2
Consumer prices excluding oil and agricultural
products (y-o-y)- - 2.1 2.6 3.0 3.0 3.2 3.5 3.6 3.5 3.3 3.2 3.5
Consumer prices excluding food and energy (y-o-y) - - 1.9 2.1 2.4 2.5 2.7 2.8 2.8 2.8 2.6 2.6 2.8Consumer prices for basic necessities (y-o-y) - - 4.1 4.6 4.7 4.1 4.0 4.5 4.9 5.2 3.8 3.6 4.5
2010
Source: Statistics Korea
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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
In November, the prices of international oil and domestic oil products edged up from theprevious month.
Despite predictions that the European financial crisis would lead to lower demand,international oil prices rose due to major economies decision to expand dollar liquidity*,decreasing crude oil inventories in the OECD member nations, and increased geopoliticalrisks in the Middle East such as Irans nuclear threat.
* Six central banks (US Federal Reserve, Bank of Canada, Bank of England, Bank of Japan, European
Central Bank, Swiss National Bank) agreed to lower interest rates on dollar swaps by 50 basis points on
November 30.
OECD crude oil inventories in September (International Energy Agency, as of end-Nov)2.684 billion barrels (down 0.4% m-o-m)
Domestic oil prices inched up, reflecting price increases in international oil. Diesel pricesextended the gains, particularly due to higher demand for heating fuel.
Prices of international commodities declined in November due to expectations thatrecessionary factors such as the European financial crisis would lower demand.
Copper prices rose as a result of production disruptions caused by strikes at copper mines inIndonesia, but other non-ferrous metal prices fell due to uncertainties in the global economyand concerns about lower demand.
Prices of non-ferrous metals in November (m-o-m, %)Electrolytic copper (2.8), tin (-2.5), aluminum (-4.9), nickel (-5.4)
International grain prices continued to fall amid lingering uncertainties in the globaleconomy and expectations for increased grain production with a bumper harvest in Russia.
World grain production outlook for 2011~12 (USDA, Oct)
2.28 billion tons (up 2 million tons, m-o-m)
Prices of grain in November (m-o-m, %)
Corn (-1.0), wheat (-1.8), soybean (-3.7), raw sugar (-7.0)
(Won/liter, period average)
Annual Annual Annual May Jun Jul Aug Sep Oct Nov
Gasoline prices 1,692 1,601 1,710 1,938 1,915 1,935 1,946 1,945 1,978 1,981
Diesel prices 1,614 1,397 1,503 1,773 1,736 1,754 1,758 1,746 1,772 1,788
2008 2009 20112010
Source: Korea National Oil Corporation
(Period average)
Annual Annual Annual May Jun Jul Aug Sep Oct Nov
2,536 2,079 2,553 3,128 3,143 3,145 3,038 2,978 2,781 2,770
20092008
* A weighted average index of 17 major commodities Source: KOREA PDS
2010 2011
Annual Annual Annual May Jun Jul Aug Sep Oct Nov
Dubai crude 94.3 61.9 78.1 108.0 107.5 110.2 105.0 105.7 103.5 107.9
Brent crude 97.5 61.7 79.7 114.3 114.0 116.8 110.0 111.5 109.1 110.5
WTI crude 99.9 61.9 79.5 101.3 96.3 97.3 86.3 85.6 86.5 86.5
(US$/barrel, period average)
2008 2009 20112010
Source: Korea National Oil Corporation
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
The upward trend of nationwide apartment sales prices slightly accelerated in November,
with prices rising 0.6 percent from the previous month.
Apartment sales prices in the Seoul metropolitan area declined 0.1 percent month-on-month.
Apartment sales price increases accelerated in areas excluding the Seoul metropolitan area,
in particular Busan (up 1.2%, m-o-m), Daegu (up 1.6%, m-o-m), South Chungcheong Province
(up 1.7%, m-o-m), and Ulsan (up 2.7%, m-o-m). Apartment prices in 5 metropolitan cities and
other cities climbed 1.2 percent and 1.3 percent each, surpassing the national average.
Nationwide apartment rental price increases slowed down for the second straight month in
November (up 0.7%, m-o-m). Price increases decelerated sharply in Seoul (up 0.3%, m-o-m),
the Seoul metropolitan area (up 0.2%, m-o-m) and Gyeonggi Province (up 0.0%, m-o-m).
Apartment rental price increase in major districts in Seoul (m-o-m, %)
Gangnam (-0.1), Seocho (0.1), Songpa (0.0), Gangdong (-0.1)
Apartment sales transactions in October increased 12.4 percent from the previous months
43,118 to 48,444. The transactions were up 17.2 percent from 41,342 a year earlier.
(Percentage change from previous period)
Annual Annual Annual Q1 Q2 Jul Aug Sep Oct Nov Oct 311 Nov 71 Nov 141 Nov 211
Nationwide 0.8 4.5 8.8 5.5 3.6 1.0 1.5 1.8 1.1 0.7 0.13 0.10 0.05 0.03
Seoul -1.8 8.1 7.4 5.1 1.5 1.1 1.7 2.2 1.0 0.3 0.06 0.03 -0.01 -0.04
Gangnam2 -3.6 10.4 8.8 4.6 1.5 1.2 1.7 2.1 0.9 0.1 0.01 0.00 -0.04 -0.05
Gangbuk3 0.5 5.4 5.6 5.7 1.4 1.0 1.8 2.3 1.2 0.5 0.11 0.06 -0.04 -0.05Seoul metropolitan area -0.4 5.6 7.2 5.6 2.2 0.9 1.6 2.0 1.1 0.2 0.00 -0.01 -0.05 -0.05
5 metropolitan cities 1.6 3.9 12.0 5.8 5.5 1.0 1.3 1.4 1.1 1.3 0.28 0.19 0.12 0.08
1. Weekly trends 2. Upscale area of Southern Seoul 3. Northern Seoul Source: Kookmin Bank
2008 2009 2010 2011
Nationwide apartment rental prices
Source: Ministry of Land, Transport and Maritime Affairs
(Monthly average, thousand)Apartment sales transactions
Annual Annual Annual Annual Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Nationwide 38 39 44 40 34 41 54 63 45 52 59 56 48 47 43 44 43 48
20082007 2009 2010 2011
(Percentage change from previous period)
Annual Annual Annual Q1 Q2 Jul Aug Sep Oct Nov Oct 311 Nov 71 Nov 141 Nov 211
Nationwide 2.3 1.6 2.5 3.1 2.9 0.6 0.7 0.7 0.5 0.6 0.13 0.09 0.07 0.06
Seoul 3.2 2.6 -2.2 0.6 -0.2 -0.2 -0.1 -0.1 -0.1 -0.2 -0.04 -0.03 -0.04 -0.05
Gangnam2 -1.9 3.9 -1.8 0.8 -0.3 -0.2 -0.1 -0.1 -0.2 -0.3 -0.05 -0.05 -0.06 -0.07
Gangbuk3 9.4 0.9 -2.7 0.4 -0.1 -0.1 -0.1 -0.1 0.0 -0.1 -0.03 -0.01 -0.02 -0.03
Seoul metropolitan area 2.9 0.7 -2.9 0.8 0.0 -0.1 0.0 0.0 0.0 -0.1 -0.02 -0.02 -0.03 -0.04
5 metropolitan cities 1.0 2.8 8.7 5.6 6.3 1.4 1.4 1.4 1.0 1.2 0.30 0.16 0.14 0.13
1. Weekly trends 2. Upscale area of Southern Seoul 3. Northern Seoul Source: Kookmin Bank
2008 2009 2010 2011
Nationwide apartment sales prices
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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
Nationwide land prices in October rose for the twelfth consecutive month (up 0.1%, m-o-m),
but were still 1.25 percent lower than the pre-crisis peak reached in October 2008. Land
prices were higher compared to a year ago, when the prices fell 0.04 percent. The pace of
increase slightly accelerated nationwide.
Monthly land prices in Seoul (up 0.04%), the Seoul metropolitan area (up 0.08%), Gyeonggi
Province (up 0.13%) and Incheon (up 0.05%) continued to rise.
Land price increases in Seoul metropolitan area (m-o-m, %)
0.10 (Jun, 2011) 0.10 (Jul) 0.10 (Aug) 0.09 (Sep) 0.08 (Oct)
Land prices in areas excluding the Seoul metropolitan area rose 0.12 percent month-on-
month in October, continuing the upward trend since October 2010.
Land price increases in areas excluding Seoul metropolitan area (m-o-m, %)
0.09 (Jun, 2011) 0.10 (Jul) 0.09 (Aug) 0.11 (Sep) 0.12 (Oct)
Nationwide land transactions in October recorded 200,000 land lots, up 10.5 percent from
the previous month and up 10.3 percent from 181,000 a year earlier. Land transactions were
4.6 percent less than the most recent five-year October average of 210,000 land lots.
Monthly land transactions increased significantly in areas such as Busan (up 19.7%), Gwangju
(up 29.5%), North Jeolla Province (up 31.6%), and South Jeolla Province (up 27.2%).
(Percentage change from previous period)Land prices by region
Annual Annual Annual Q4 Annual Q3 Q4 Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Nationwide 3.88 -0.31 0.96 0.94 1.05 -0.05 0.11 0.09 0.09 0.11 0.10 0.10 0.10 0.10 0.09 0.09 0.10
Seoul 5.88 -1.00 1.40 0.81 0.53 -0.25 0.39 0.12 0.12 0.15 0.12 0.09 0.07 0.07 0.05 0.05 0.04
Gyeonggi 4.22 -0.26 1.22 1.36 1.49 -0.08 0.07 0.08 0.08 0.10 0.11 0.12 0.14 0.15 0.15 0.13 0.13
Incheon 4.86 1.37 1.99 1.70 1.43 -0.10 0.02 0.06 0.06 0.06 0.06 0.06 0.06 0.05 0.06 0.05 0.05
2007 2008 2009 2010 2011
Source: Korea Land & Housing Corporation
(Land lot, thousand)Land sales transactions
Annual1 Annual1 Annual1 Nov Dec Annual1 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Nationwide 208 208 203 207 241 187 208 257 191 176 244 226 212 207 196 196 181 200
Seoul 33 26 22 19 21 16 18 24 18 17 23 19 18 18 15 17 16 18
Gyeonggi 49 45 46 48 58 41 45 58 46 38 52 46 43 40 40 39 39 41
Incheon 13 13 10 11 12 8 9 11 8 9 13 11 13 10 11 9 9 9
2007 2008 2009 2010 2011
1. Monthly average
Source: Korea Land & Housing Corporation
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Land trade volume
Source: Korea Land Corporation (land trade trend)
12-4
12-5
12-6
Land and consumer prices since 1970s
Source: Korea Land Corporation (land prices) & Statistics Korea (consumer prices)
Land prices by region
Source: Korea Land Corporation (land price trend)
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13. Composite indices of business cycle indicators
Industrial output in October increased 0.3 percent month-on-month and 4.8 percent year-on-
year. Output from services (up 0.7%, m-o-m) and construction (up 3.1%, m-o-m) rose, while
public administration (down 0.2%, m-o-m) and mining & manufacturing (down 0.7%, m-o-m)
declined.
The cyclical indicator of the coincident composite index fell 0.3 points in October.
Two components of the coincident composite index rose, one of which is the value of
construction completion. Meanwhile five components, including the volume of imports and
manufacturing operation ratio, were lower compared to the previous month.
Components of coincident composite index in October (m-o-m)
Value of construction completion (2.9%), number of non-farm payroll employment (0.2%), service activity
(0.0%), mining & manufacturing production (-0.5%), wholesale & retail sales (-0.6%), domestic shipment
(-0.9%), manufacturing operation ratio (-1.1%), volume of imports (-1.6%)
The year-on-year leading composite index fell 0.4 percentage points from the previous month.
Among the components of the leading composite index, two, including the value of construction
orders received, were higher compared to the previous month, while eight components, such as
the composite stock price index and value of capital goods imports, dropped.
Components of the leading composite index in October (m-o-m)
Value of construction orders received (4.6%), liquidity in the financial institutions (0.2%), spreads betweenlong & short term interest rates (-0.1%p), consumer expectations index (-0.6p), value of machinery orders
received (-1.0%), indicator of inventory cycle (-1.3%p), net terms of trade (-1.6%), ratio of job openings to job
seekers (-2.3%p), value of capital goods imports (-2.7%), composite stock price index (-5.1%)
Mar Apr May Jun Jul1 Aug1 Sep1 Oct1
Industrial output (m-o-m, %) 2.8 -1.3 1.7 1.7 -1.6 -0.2 -0.1 0.3
(y-o-y, %) 3.4 3.2 4.4 4.0 3.1 4.3 4.9 4.8
Coincident composite index (m-o-m, %) 0.4 -0.3 0.8 0.8 0.7 0.4 -0.4 0.1
Cyclical indicator of coincident composite index 100.6 99.9 100.2 100.6 100.9 100.9 100.1 99.8(m-o-m, p) 0.0 -0.7 0.3 0.4 0.3 0.0 -0.8 -0.3
Leading composite index (m-o-m, %) -0.3 -0.4 0.5 0.5 0.5 0.1 -0.4 -0.2
12 month smoothed change1.6 1.0 1.3 1.7 2.0 1.9 1.4 1.0in leading composite index (%)
(m-o-m, %p) -0.7 -0.6 0.3 0.4 0.3 -0.1 -0.5 -0.4
2011
1. Preliminary
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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 of the 2012 policies
The Korean government has made persistent efforts to ride out the global financial crisis and
create jobs, while steadily working on improving the lives of working class families and
preparing for the future. Korea has quickly overcome the crisis and employment has been on
the rise. However, the real economy has not recovered enough, and there are risks from the
Eurozone sovereign debt crisis. The global economy may slow down and international
financial markets would remain highly volatile.
To successfully deal with risks from external uncertainties and continue on the path to
economic recovery, the Korean government designed directions for 2012, aiming at
stimulating the economy and improving the lives of working class families.
Key policies for 2012
The 2012 policies prioritize swiftly managing possible risks from the global debt crisis, while
boosting the economy and improving living quality.
To preempt potential difficulties from global uncertainties, the government will continue to
run an emergency response system through which it will regularly assess contingency plans,
42 December 2011
2012 Economic Policies Aim at Stronger Economyand Improved Living Quality
Policy Issues
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and improve the fundamentals of the household, corporate, finance, foreign exchange and
public sectors. To stimulate the economy, the government will create an investment-friendly
environment, while fostering service industries, SMEs (small- and medium-sized enterprises)
and self-employed businesses, which is expected to help boost domestic demand. With the
countrys trade having hit US$1 trillion, small- to medium-sized exporters will be moreencouraged to raise their competitiveness, develop new markets and maximize the benefits
of the FTAs. Government efforts for sustainable growth such as pursuing green growth and
supporting childcare will be intensified, with social capital such as sharing and social
responsibility promoted.
As working classes are easily affected by changing economic situations, the government will
make an utmost effort to secure their livelihood through low inflation and job creation.
Governments efforts to achieve this end will include securing supplies and promoting
competition for stable prices, increasing youth employment and creating an employment-
friendly environment, reducing the costs of education, housing, and medical services, and
providing customized welfare services designed to encourage working and self-supporting,
streamlining welfare delivery systems, and minimizing those left out of welfare programs.
Major tasks for 2012
1. Stimulating the economy
Macroeconomic policies are to be flexibly implemented in the face of rapidly changing external
and domestic conditions, with continuing focus on price stabilization. In the first half of 2012,
60 percent of the budget will be spent, and budgets for major projects will be allocated before
the new fiscal year begins. Contingency plans for each situation will be reviewed through the
emergency response system. The government will hold regular meetings to check the
economic situation, and closely examine macroeconomic soundness.
In the face of external uncertainties, household debts will be managed not to outgrow theeconomy, while corporate restructuring will be facilitated with tax incentives, Fast-Track
financing extension, and the credit guarantee scheme amendment. The financial soundness
of savings banks and other financial institutions will be kept under strict supervision, while
the pay system for executive board members of the institutions will be made transparent.
The government will tightly control fiscal aggregates to achieve a fiscal balance in 2013, with
revised regulations related to fiscal management and public firms credit management.
Government policies to boost domestic demand cover measures to boost investment in the
countrys free economic zones, various benefits including tax incentives given to startup
SMEs, companies relocating to Korea and energy saving investment, and government support
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for self-employed and small businesses when they develop joint brands with education and
consulting services. The framework act on service industry development will be enacted, on
the basis of which the service sector will be able to become more sophisticated.
The government will help to fully utilize FTAs and seek to pass more FTAs so that Koreaseconomic capabilities can continue to expand, as it will continue trying to complete the
ongoing FTA negotiations with Turkey and Columbia, and provide information regarding the
FTAs in effect and related consulting services. To diversify exports to emerging economies,
the government will help with overseas marketing activities and reducing risks in those
countries. There will be government support for building marketing infrastructure in
emerging economies, in particular opening joint logistics centers, while exporters will face
reduced risks with raised insurance payment ceilings, which will be applied to trades with
African and Latin American countries.
The 2012 policies include measures to help create an environment where green growth
related industries will continuously be nurtured, and the measures include promoting the
use of new renewable energies and exports of them. With the Renewable Portfolio Standard
(RPS) and the Renewable Fuel Standard (RFS) to be introduced in 2012, energy companies
will have to plan in detail their use of new renewable energies, along with meeting the bio
diesel requirement. The government will financially support the exports of green growth-
related industries, and there will be financing of such exports through the Economic
Development Cooperation Fund (EDCF). To foster new growth engines, over 50 percent of
the R&D budget will be invested in basic science researches and core technology
development.
Future risks such as of the low birth rate, of the ageing population and depleting resources
should be addressed in advance. The government will provide daycare for children aged five
or under, while key measures for the ageing population, such as tax revision of pension and
retirement allowance, will be adopted as planned.
There will be an emphasis on shared growth between large enterprises and SMEs, while
unfair trade among subsidiaries of large enterprises will be strictly treated. Sharing and
social responsibility will also be stressed so that trust can grow with increasingconsideration for others, resulting in a healthier economy and warm society. There will be
closer public and private partnership in volunteering, while a variety of means of donation
will be invented to help make donation placed firmly in the society. The financial sector will
be obliged to more transparently manage its businesses, and increase social contribution.
2. Improving living quality
To secure basic livelihood, the government will renew its efforts to stabilize basic necessities
prices through steady supply and fair competition, while helping to expand youth
employment and reduce living costs with stronger social safety nets.
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The government will stabilize the supply of agricultural products by improving the
production forecasting system, expanding contract framing, and increasing inventory. To
make the effect of lowered tariffs form the Korea-EU and Korea-US FTAs reflected early in
prices, the government will examine the distribution system of the affected products and
improve it.
Public service fee increases will be controlled, while other service fees will be required to be
posted, which is expected to expand choices as well as stabilize prices. Public firms will be
obliged to cut cost as a way to minimize their service fee increases, and the timing of the
increases will be carefully planned. There will be a cut in public administrative service fees
and the new mobile phone service charge plan is expected to lower household
communications charges. Consumers will be provided with accurate dining out costs as
restaurants will be required to post total charges in and outside restaurants.
The government will more strictly treat unfair practices including price-fixing, while making
available online regularly updated consumer price information. To boost real estate
transactions, the three districts in Southern Seoul, once designated as overheated
speculation zones, will be delisted from the zones, and high progressive taxes on home
transactions by those owning more than two houses will be lifted.
The government put a high priority on improving youth employment, and will facilitate
starting business by youths and encourage employment of high school graduates. The
related government measures include business startup funds exclusive for young
entrepreneurs with adjustable repayment plans and more internship and employment
opportunities in public firms and government agencies for high school graduates. The
government will try hard to root out discrimination against high school graduates in work
places, such as less chances of promotion, and high school graduate employees will be
financially supported when they go to college.
There will be an increase in the job creation budget to give vulnerable groups more job
opportunities and adopt an employment-friendly system. The government will extend
community job programs, while expanding jobs in social security service areas. Measures to
facilitate senior, baby boomer and woman employment involve retraining programs,governments job creation projects for seniors and improved substitute programs for
maternity leave. The industrial accident compensation insurance will be made to cover more
workers, while irregular workers will be under better protection. The government will
increase support for companies maintaining employment. To increase job market flexibility,
public institutions will have to adopt performance-based salary and flexible work hours,
while employing more part-timers and shift workers.
To ease the burden of education, housing and medical service costs, there will be increased
support of college tuition, middle school fees and after-school vouchers, more income tax
deduction for housing expenses and expanded supply of rental homes, long-term mortgage
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loans with low interest rates and special financial support for first-time home buyers, and
customized national health insurance payment to each income bracket, free compulsory
vaccination for children, expanded long-term care for seniors with Alzheimers or paralysis
and special medical expense support during pregnancy.
The welfare system will be redirected toward encouraging working. To encourage low
income groups to work, the coverage of the Earned Income Tax Credit (EITC) will be
expanded to the level next to the currently eligible level, with increased tax credits. Those
with work capabilities will be encouraged to work instead of receiving basic livelihood
security subsidies, with increased compensation after being delisted from the basic
livelihood support recipients. More people will be eligible for the preferential savings
account, which is designed to help low income families accumulate assets with favorable
conditions and governments financial support. Self-employed small businesses and low
income households will be covered by the national social security insurance plan, which will
reduce the number of those left out of social security insurance.
To minimize the number of those in need of social security being left out of it, the
government will revise the social security ins