Economic Bulletin November 2012

The Green Book: Current Economic Trends

Overview

The Korean economy has seen inflation and employment remain stable, but major indicators appear tepid due, in part, to temporary factors such as labor strikes and typhoons.

In August 364,000 jobs were added on a yearly basis mainly in manufacturing and service jobs, leading to a stable employment rate and jobless rate.

Though typhoons drove up the prices of agricultural products, consumer prices in September stabilized within a 2 percent range on the back of stable core inflation (1.4%) and lower expected inflation (3.6% - 3.4%).

Mining and manufacturing production slid 0.7 percent in August month-on-month due to auto industry worker strikes while service output was down 0.3 percent compared to the previous month due to a decrease in wholesale & retail sales.

In August, retail sales were down 3.0 percent from a month ago due to a decrease in durable goods sales as well as semi-durable and non-durable goods sales.

The facility investment index in August fell 13.9 percent compared to the previous month due to a decrease in machinery and transportation equipment investment. Construction investment declined 6.6 percent month-on-month as both building construction and civil engineering works decreased.

Exports in September fell 1.8 percent from a year earlier due to the eurozone debt crisis, but Korea ran a US$3.15 billion current account surplus.

The cyclical indicator of the coincident composite index in August dropped 0.5 points from a month ago, while the leading composite index fell 0.2 points month-on-month.

In September, domestic financial markets somewhat stabilized with stock prices going up and the won appreciating on the back of monetary easing of major economies and sovereign credit ratings upgrades.

Housing prices continued to decline, registering another 0.2 percent drop in September after in August, in particular led by Seoul metropolitan areas while month-on-month rental price increase accelerated (0.1% → 0.4%).

Amid concerns over a weakening global economy, external and domestic conditions face considerable uncertainty coupled with a delayed recovery in domestic consumption and investment confidence.

The Korean government will closely monitor the global and domestic economy, while reinforcing policy responses to stimulate the economy.

At the same time, the government will focus on stabilizing the lives of low- and middleincome classes through job creation and by stabilizing the prices of necessities, while continuing to carry out policy actions to improve the health of the economy.