Economic Bulletin May 2012

The Green Book: Current Economic Trends

Overview

The Korean economy has seen employment steadily increase, inflation slightly slow down, and real economic indicators improve, but volatility has increased in financial markets due to external destabilizing factors. 

Employment stayed in good shape in April, increasing by more than 400,000 mainly in the service sector helped by full-time job increases. The unemployment rate fell to 3.5 percent from 3.7 percent in the previous month. 

Consumer prices in May increased 2.5 percent, staying within a 2 percent range for three successive months with a 2.5 percent increase in April and 2.6 percent in March, backed by core inflation which slowed down to 1.6 percent from 1.8 percent in the previous month and a decrease in the prices of agricultural, livestock & fishery products and oil. 

Mining and manufacturing production rose 0.9 percent month-on-month in April due to an increase in pharmaceutical and machinery equipment production while service output was 0.2 percent up compared to the previous month, helped by an increase in hotels & restaurants and wholesale & retail sales. 

In April, retail sales climbed 1.0 percent month-on-month despite a slip in semi-durable and non-durable goods sales, since durable goods sales rose led by strong automobile sales. 

Facility investment in April rose 4.5 percent from a month before due to an increase in machinery investment while construction investment dropped 5.2 percent compared to the previous month due to a decrease in building construction and civil engineering works. 

May exports fell 0.4 percent year-on-year due to a base effect, but the current account balance continues to post a surplus of more than US$ 2.0 billion with US$ 2.40 billion in May and US$ 2.12 billion a month earlier. 

The cyclical indicator of the coincident composite index in April fell 0.2 points from a month ago as the value of construction completion decreased. The leading composite index remained unchanged from the previous month. 

In May, Korea’s stock prices and other financial indexes fluctuated, as anxieties surrounding the eurozone crisis, especially in Greece and Spain, have spread into the global financial market. 

In May, housing prices remained flat compared to the previous month, while rent prices increased 0.2 percent, decelerating from the previous month’s 0.5 percent. 

External uncertainties are mounting due to the possibility that the eurozone crisis may deteriorate and that the US and other advanced economies may likely suffer an economic slowdown. 

The Korean government will closely monitor any changes in domestic and global economic situations and their subsequent outcomes, while reinforcing policy actions to improve the economy and keep prices stable. At the same time, the government will accelerate efforts to secure the livelihoods of citizens through job creation and stabilization of necessity prices, and to promote economic restructuring.

Economic News Briefing : 

- Korea Grows 0.9% in Q1
- Korea pledges US$15 Billion to IMF
- Korea, China and Japan to Negotiate FTA
- Korea and China launch FTA negotiations