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Transcript of Economic Bulletin (Vol. 35 No. 6)
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7/28/2019 Economic Bulletin (Vol. 35 No. 6)
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ECONOMIC
BULLETIN
Republic of Korea
June 2013Vol.35 No.6
ISSN 2287-7266
| Economic Inormation and Education Center
The Green Book:Current Economic Trends
Policy IssuesCampaign Pledge Funding Plan to Carry Out Park Geun-hye
Administration AgendaRoadmap to Achieve 70% Employment
Economic News BriefngCreative Economy Action Plan Announced
Korea Grows 0.8% in Q1
Government Announces Plan to Enhance SME Productivity
Deputy Prime Minister Holds IR Conference in London
Statistical Appendices
03
47
59
63
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Economic BulletinRepublic o Korea
June 2013Vol.35 No.6
The Green Book: Current Economic TrendsOverview
1. External economic situation
2. Private consumption
3. Facility investment
4. Construction investment5. Exports and imports
6. Mining and manufacturing production
7. Service sector activity
8. Employment
9. Financial markets
9.1 Stock market
9.2 Exchange rate
9.3 Bond market
9.4 Money supply & money market
10. Balance of payments
11. Prices and international commodity prices
11.1 Prices
11.2 International oil and commodity prices
12. Real estate market
12.1 Housing market
12.2 Land market
13. Composite indices of business cycle indicators
Policy IssuesCampaign pledge funding plan to carry out Park Geun-hye administration
agenda
Roadmap to achieve 70% employment
Economic News Briefng
Statistical Appendices
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Contents
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3The Green Book |
Te Green BookCurrent Economic Trends
Te Korean economy has seen mining & manuacturing production and service output improve,
led by exports, real estate and construction investment, while ination has remained stable.
However, consumption and acility investment have shown instability.
In April, the economy added 345,000 jobs year-on-year, an increase rom 249,000 in the previous
month, while both the employment and unemployment rates slightly improved.
Consumer price ination ell to 1.0 percent in May rom 1.2 percent a year ago, staying stable in
the 1.0 percent range, due to a all in agricultural and petroleum product prices.
Mining and manuacturing production rose by 0.8 percent month-on-month in April backed
by an increase in other transportation equipment and audio-visual communications equipment,
while service output increased by 0.2 percent, led by an improvement in real estate & renting and
proessional, scientic & technical services.
Despite strong durable goods sales, retail sales ell 0.5 percent month-on-month in April, as semi-
durable and nondurable goods sales went down.
Facility investment in April ell 4.0 percent rom the previous month due to a all in transportation
equipment investment, while construction investment jumped by 9.4 percent as both building
construction and civil engineering works increased.
Exports went up by 3.2 percent year-on-year in May, led by strong I related exports and exports
to China, despite a drop in steel and vessel exports and shipments to Japan. Te trade balance
remained in the black at US$6.03 billion.
Te cyclical indicator o the coincident composite index increased 0.2 points month-on-month in
April, and the leading composite index rose 0.1 points.
In May, stock prices rose in line with bullish global stock markets and as oreign capital owed
in. Te won weakened against the dollar, which strengthened due to improving US economic
indicators and the possibility that the Fed will taper its quantitative easing.
Housing prices grew at a aster rate in May, rom 0.2 percent to 0.3 percent month-on-month,
while the upward trend in rental prices slowed down rom 0.7 percent to 0.4 percent.
Overview
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4 | The Green Book
Te global economic recovery continues, led by the US and China, but the paceo the recovery is weak as the economic recession in the eurozone continues. TeOECD orecast the global economy would continue a muted and multiple speedrecovery seen over the last our years, and downgraded its growth rate orecast or2013 rom 3.4 percent in November 2012 to 3.1 percent in May.
Real economic indicators continue to be stagnant due to scal austerity andpoor condence, and there are worries that the eurozone recession will spread toGermany and France as the crisis extends over a long period o time. Te EuropeanCentral Bank (ECB) revised down its eurozone growth rate orecast or 2013 rom-0.5 percent in March to -0.6 percent in June.
Economic growth(q-o-q, %, Q3 2012[Q4[Q1 2013)eurozone (-0.1[ -0.6[ -0.2), Germany (0.2[ -0.7[ 0.1), France (0.1[ -0.2[ -0.2)
World GDP growth
6
5
4
3
2
1
0
-1
(%)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
1.External
economic
situation
Despite strong exports and improving construction investment, the Korean economy may continue
to grow slowly as consumption and acility investment remain weak amid lingering uncertainties
due to the struggling eurozone economy and risks rom major countries loose monetary policies.
Te Korean government will closely watch the global and domestic economic situations and
reinorce its monitoring o global and domestic markets, while continuing to pursue policies tostimulate the economy.
At the same time, the government will ocus on securing the lives o the low- and middle income
classes through job creation and by stabilizing the prices o necessities, while continuing to adopt
policies to improve the health o the economy.
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5The Green Book |
Te US economy grew 2.4 percent (revised, annualized q-o-q) in the rst quarter o2013, a 0.1 percentage point decrease rom the advanced estimate o 2.5 percent,and economic indicators since March have been somewhat mixed.
Growth in the rst quarter o 2013 was marginally revised downward dueto decreases in inventory investment and government spending, despite an
improvement in consumption growth.
Contribution to growth rate(advanced estimates[ revised, %p)2.24 [ 2.40 (private consumption), 0.22 [ 0.23 (business investment), 0.31 [ 0.30 (housinginvestment), 1.03 [ 0.63 (inventory investment), -0.50 [ -0.21 (net exports), -0.80 [ -0.97(government spending)
Industrial production turned negative in April, alling 0.5 percent month-on-month, and the ISM manuacturing index, which orecasts corporate sentiment,ell below its baseline o 50.
ISM Manuacturing Index(base=50)
51.6 (Sep 2012)[ 51.7 (Oct)[ 49.9 (Nov)[ 50.2 (Dec)[ 53.1 (Jan 2013)[ 54.2 (Feb)[51.3 (Mar)[ 50.7 (Apr)[ 49.0 (May)
Retail sales changed to positive, increasing by 0.1 percent, and consumer sentimentgreatly improved, posting its largest increase since July 2007.
University o Michigan Consumer Sentiment Index78.3 (Sep 2012)[ 82.6 (Oct)[ 82.7 (Nov)[ 72.9 (Dec)[ 73.8 (Jan 2013)[ 77.6 (Feb)[78.6 (Mar)[ 76.4 (Apr)[ 84.5 (May)
Te housing market continued to recover as housing sales indicators improved(In April existing home sales increased by 0.6 percent month-on-month, and newhome sales by 2.3 percent), and housing prices rose or 12 consecutive months.
Case-Shiller Home Price Index(q-o-q, %)-0.4 (Q1 2012)[ 2.2 (Q2)[ 1.7 (Q3)[ 1.9 (Q4)[ 3.2 (Q1 2013)1.1 (Jan 2013)[ 1.3 (Feb)[ 1.1 (Mar)
US
US GDP growth and industrial productionSource: US Department o Commerce & US Federal Reserve Board
10
8
6
4
2
0
-2
-4
-6
-8
-10
GDP (q-o-q, annualized rate) Industrial production (q-o-q)
2001. Q1 2002. Q1 2003. Q1 2004. Q1 2005. Q1 2006. Q1 2007. Q1 2008. Q1 2009. Q1 2010. Q1 2011. Q1 2012. Q1 2013. Q1
(%)
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6 | The Green Book
(Percentage change from previous period)
2011 2012 2013
Annual Annual Q1 Q2 Q3 Q4 Q1 Jan Feb Mar Apr May
Real GDP 1.8 2.2 2.0 1.3 3.1 0.4 2.4 - - - - -
- Personal consumption expenditure 2.5 1.9 2.4 1.5 1.6 1.8 3.4 - - - - -
- Corporate ixed investment 8.6 8.0 7.5 3.6 -1.8 13.2 2.2 - - - - -
- Housing construction investment -1.4 12.1 20.5 8.5 13.5 17.6 12.1 - - - - -
Industrial production 4.1 3.8 1.4 0.6 0.0 0.6 1.1 -0.1 0.9 0.3 -0.5 -
Retail sales 8.0 5.0 1.7 -0.3 1.3 1.5 1.0 0.1 1.1 -0.3 0.1 -
Existing home sales 2.4 9.9 5.5 -2.0 5.1 3.3 0.8 1.0 0.8 -0.2 0.6 -
Unemployment rate 9.0 8.1 8.3 8.2 8.1 7.8 7.7 7.9 7.7 7.6 7.5 7.6
Consumer prices 3.2 2.1 2.8 1.9 1.7 1.9 1.7 1.6 2.0 1.5 1.1 -
1. Preliminary
2. Annualized rate (%)
3. Seasonally adjusted
Source: US Department of Commerce
US nonarm payroll growth and unemployment rate
Sourse : US Department o Labor
800
600
400
200
0
-200
-400
-600
-800
-1,000
12
10
8
6
4
2
0
US nonfarm payroll growth (m-o-m, left) Unemployment rate (right)
2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1
(%)(thousand)
New Home Sales(m-o-m, %)-4.9 (Oct 2012)[ 9.0 (Nov)[ -0.5 (Dec)[ 15.7 (Jan 2013)[ -6.3 (Feb)[ 3.5 (Mar)[ 2.3 (Apr)
Te employment market showed mixed signs as the unemployment rate in Maymarginally increased rom the previous month to 7.6 percent while the nonarmsector added 175,000 jobs, exceeding the orecast o 163,000.
Nonarm payroll increase(m-o-m, thousand)138 (Sep 2012)[ 160 (Oct)[ 247 (Nov)[ 219 (Dec)[ 148 (Jan 2013)[ 332 (Feb)[ 142(Mar)[ 149 (Apr)[ 175 (May)
Nonarm payroll increase in May by industry(Out o 175,000 jobs added, thousand)178 (private sector): 0 (mining), -8 (manuacturing), 7 (construction), 179 (service)-3 (public sector)
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7The Green Book |
Chinese economic growth ell below the market expectation to 7.7 percent in therst quarter o 2013, and recent indicators have been mixed.
Exports and investment grew avorably, but weak consumption growth caused bythe cutting o lavish government spending, anticorruption policies and worries
about ood product sanitation led to weaker than expected growth.
Te Chinese economy is expected to gradually recover as the promotion ourbanization boosts investment and quantitative easing begins to have eects,but actors that constrain recovery remain, such as the lower than expectedmanuacturing PMI* and excessive housing market regulations.
* Te manuacturing PMI in April was 50.6, alling below market orecasts o 50.7 and below the2005-2012 April average o 56.0.
China
(Percentage change from same period in previous year)
2011 2012 2013
Annual Q3 Q4 Annual Q1 Q2 Q3 Q4 Dec Q1 Mar Apr
Real GDP 9.3 9.1 8.9 7.8 8.1 7.6 7.4 7.9 - 7.7 - -
Industrial production 13.9 13.8 12.8 10.1 11.6 9.5 9.1 10.0 10.3 9.5 8.9 9.3
Fixed asset investment (accumulated) 24.8 24.9 23.8 20.6 20.9 20.4 20.5 20.6 20.6 20.9 20.9 20.6
Retail sales 17.1 17.3 17.5 14.3 14.9 13.9 13.5 14.9 15.2 12.4 12.6 12.8
Exports 20.7 20.7 14.4 8.3 8.8 10.5 4.5 9.5 14.1 18.4 10.0 14.7
Consumer prices 5.4 6.3 4.6 2.6 3.8 2.8 1.9 2.1 2.5 2.4 2.1 2.4
Producer prices 6.0 7.1 3.1 -1.7 0.1 -1.4 -3.3 -2.3 -1.9 -1.7 -1.9 -2.6
1. Preliminary
2. Quarterly change: average of monthly change
Source: China National Bureau of Statistics
Chinas GDP growth and xed asset investment
Source: National Bureau o Statistics o China
18
16
14
12
10
8
6
4
70
60
50
40
30
20
10
0
(%) (%)
2001. Q1 2002. Q1 2003. Q1 2004. Q1 2005. Q1 2006. Q1 2007. Q1 2008. Q1 2009. Q1 2010. Q1 2011. Q1 2012. Q1 2013. Q1
GDP (y-o-y, left) Fixed asset investment (accumulated, y-o-y, right)
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8 | The Green Book
A recovery in the Japanese economy is maniesting, led by consumption andexports, as the economy grew 0.9 percent in the rst quarter o 2013, an increaseo 0.6 percent rom 0.3 percent in the previous quarter.
However, recovery signs remain weak as corporate acilities investment continuedto all, shedding 0.7 percent in the rst quarter.
Deation continued in April as consumer prices ell 0.7 percent despite importprices increasing 9.5 percent month-on-month.
Japan
(Percentage change from previous period)
2011 2012 2013
Annual Q3 Q4 Annual Q1 Q2 Q3 Q4 Q1 Mar Apr
Real GDP -0.6 2.5 0.1 2.0 1.5 -0.2 -0.9 0.0 0.9 - -
Industrial production -2.4 4.3 -0.4 -0.3 1.2 -2.0 -4.2 -1.9 2.2 0.2 0.9
Retail sales -1.2 0.5 -0.5 1.6 1.2 0.3 -0.9 -0.2 0.6 -1.5 0.7
Exports (y-o-y) -2.7 0.5 -5.5 -2.8 -1.6 4.8 -8.2 -5.5 1.2 1.1 3.8Consumer prices (y-o-y) -0.2 0.0 -0.2 -0.1 0.5 -0.2 -0.3 -0.1 -0.6 -0.9 -0.7
1. Preliminary
Sources: Japan's Cabinet Office, Ministry of Economy, Trade and Industry, Ministry of Finance, Statistics Bureau of Japan
Japans GDP growth and industrial production
Source: Japans Cabinet Ofce, Ministry o Economy, Trade and Industry
6
4
2
0
-2
-4
-6
25
20
15
10
5
0
-5
-10
-15
-20
-25
(%) (%)
2001. Q1 2002. Q1 2003. Q1 2004. Q1 2005. Q1 2006. Q1 2007. Q1 2008. Q1 2009. Q1 2010. Q1 2011. Q1 2012. Q1 2013. Q1
GDP (q-o-q, left) Industrial production (q-o-q, right)
Te eurozone economic recession continues as the unemployment rate in April hita record high at 12.2 percent, and the manuacturing PMI ell below the baselineo 50 or the 22nd consecutive month.
Unemployment rate(%)11.4 (Jul 2012)[ 11.5 (Aug)[ 11.6 (Sep)[ 11.7 (Oct)[ 11.8 (Nov)[ 11.8 (Dec)[ 12.0 (Jan2013)[ 12.1 (Feb)[ 12.1 (Mar)[ 12.2 (Apr) (youth unemployment: 24.4)
Manuacturing PMI(base = 50)45.1 (Aug 2012)[ 46.1 (Sep)[ 45.4 (Oct)[ 46.2 (Nov)[ 46.1 (Dec)[ 47.9 (Jan 2013)[47.9 (Feb)[ 46.8 (Mar)[ 46.7 (Apr)[ 48.3 (May)
Eurozone
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9The Green Book |
(Percentage change from previous period)
2011 2012 2013
Annual Q4 Annual Q1 Q2 Q3 Q4 Q1 Jan Feb Mar Apr
Real GDP 1.4 -0.3 -0.5 0.0 -0.2 -0.1 -0.6 -0.2 - - - -
Industrial production 3.5 -2.1 -2.4 -0.5 -0.5 0.4 -2.4 0.2 -0.6 0.3 1.0 -
Retail sales -0.5 -1.2 -1.7 -0.3 -0.8 0.0 -1.5 0.3 0.9 -0.2 -0.1 -Exports (y-o-y) 12.7 8.3 7.4 8.6 8.1 7.4 5.5 1.3 5.2 -1.1 0.1 -
Consumer prices (y-o-y) 2.7 2.9 2.1 2.7 2.7 2.5 2.3 1.9 2.0 1.8 1.7 1.2
1. Preliminary
Source: Eurostat
Eurozones GDP growth and industrial production
Source: Eurostat
3
2
1
0
-1
-2
-3
10
8
6
4
2
0
-2
-4
-6
-8
-10
(%) (%)
2001. Q1 2002. Q1 2003. Q1 2004. Q1 2005. Q1 2006. Q1 2007. Q1 2008. Q1 2009. Q1 2010. Q1 2011. Q1 2012. Q1 2013. Q1
GDP (q-o-q, left) Industrial production (q-o-q, right)
Private consumption in the rst quarter o 2013 (preliminary GDP) ell 0.4 percent
quarter-on-quarter while increasing 1.5 percent year-on-year
2.
Privateconsumption
(Percentage change from previous period)
2011 2012 2013
Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Q1
Private consumption 2.4 0.7 0.6 0.1 -0.2 1.7 0.8 0.4 0.7 0.8 -0.4
(y-o-y) - 3.2 3.1 2.1 1.2 - 1.3 1.0 1.7 2.7 1.5
1. Preliminary
2. National accountsSource: The Bank of Korea
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10 | The Green Book
Retail sales in April ell 0.5 percent month-on-month as sales o semi-durablegoods, such as clothing, and nondurable goods, such as automobile uel, ell,despite an increase in durable goods sales, such as communications equipmentand computers. Year-on-year, the index increased 2.2 percent.
(Percentage change from previous period)2011 2012 20131
Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Q1 Mar1 Apr1
Retail sales 4.5 1.4 0.8 0.5 0.0 2.3 1.0 0.3 1.2 0.4 -1.3 1.6 -0.5
(y-o-y) - 5.3 6.2 4.0 2.6 - 2.8 1.4 2.6 2.5 0.1 1.7 2.2
- Durable goods 10.6 3.8 0.5 0.7 -0.9 5.3 2.5 1.9 2.8 2.3 -4.5 -3.2 2.1
Automobiles 7.0 5.2 -3.3 4.6 -11.3 2.4 2.4 9.4 -1.6 9.0 -9.0 4.1 -2.6
- Semi-durable goods 3.7 0.9 1.4 1.7 -2.7 -1.1 -0.4 0.3 -1.1 1.7 1.0 5.5 -4.3
- Nondurable goods 2.1 0.4 0.6 -0.1 1.6 2.3 0.9 -0.6 1.5 -1.1 -0.5 2.5 -0.1
1. Preliminary
2. Durable goods: Automobiles, electronic appliances, furniture, telecommunications devices, etc.
3. Semi-durable goods: Clothing, footwear, etc.
4. Nondurable goods: Food, medicine, cosmetics, fuel, tobacco, etc.
Source: Statistics Korea
Tere is a possibility that retail sales in May will somewhat improve compared toApril due to an increase in home appliances and seasonal clothing sales.
Domestic car sales turned negative due to poor sales o mid-sized and ull-sizedsedans.
Department store sales turned positive in May as hotter-than-usual temperatures
spurred clothing sales, while sales at large discounters slowed a all due to a rise inhome appliances sales and without a high base eect rom a year ago, when the twoday monthly mandatory closure started.
Gasoline sales turned negative, or renery acility repairs by some companies ledto a all in sales volume, despite the domestic price o gasoline continuing to drop.
Gasoline prices(won/liter)1,915 (5th week Apr), 1,915 (1st week May), 1,904 (2nd week), 1,898 (3rd week), 1,896 (4th week),1,896 (5th week)
Credit card use rose at a slower pace compared to the previous month, but
maintained its positive trend.
(y-o-y, %)
2012 2013
Oct Nov Dec Jan Feb Mar Apr May
Credit card sales 9.2 14.2 7.1 6.2 3.4 5.6 4.5 3.6
Department store sales -0.4 9.1 -0.2 -8.2 1.7 7.5 -1.9 1.7
Large discount store sales -6.6 -1.7 -5.0 -24.6 8.9 -4.4 -9.8 -4.4
Domestic sales o gasoline 7.9 3.7 -2.8 2.9 -8.0 7.6 6.5 -1.2
Domestic sales o cars 4.3 13.2 7.5 1.6 -13.5 -1.0 0.8 -1.9
Sources: Credit Finance Association of Korea, Ministry of Trade, Industry and Energy, Korea National Oil Corporation, Korea Automobile Manufacturers
Association, Ministry of Strategy and Finance (for May data)
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11The Green Book |
Private consumption
Source: The Bank o Korea (national accounts)
14
12
10
8
6
4
2
0
-2
-4
-6
(%)
2001. Q1 2002. Q1 2003. Q1 2004. Q1 2005. Q1 2006. Q1 2007. Q1 2008. Q1 2009. Q1 2010. Q1 2011. Q1 2012. Q1 2013. Q1
Private consumption (y-o-y) Private consumption (q-o-q)
Retail sales
Source: Statistics Korea (industrial activity trend)
25
20
15
10
5
0
-5
-10
(%)
2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1
Consumer goods sales (m-o-m)Consumer goods sales (y-o-y)
2010. 1 2011. 1 2012. 1 2013. 1
Retail sales by type
Source: Statistics Korea (industrial activity trend)
50
40
30
20
10
0
-10
-20
-30
(y-o-y, %)
2001. 1
Durable goods Semi-durable goods Nondurable goods
2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1
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12 | The Green Book
Facility investment (preliminary GDP) increased 2.6 percent quarter-on-quarter
and decreased 11.9 percent year-on-year in the rst quarter o 2013.
(Percentage change from previous quarter)
2011 2012 2013
Annual Q3 Q4 Annual Q1 Q2 Q3 Q4 Q1
Facility investment 3.6 -1.8 -3.6 -1.9 10.4 -7.8 -5.2 -1.8 2.6
(y-o-y) - 1.1 -3.6 - 8.8 -3.5 -6.9 -5.2 -11.9
- Machinery 4.2 -2.3 -1.8 -1.1 11.3 -8.5 -6.0 -3.2 1.1
- Transportation equipment 1.4 -0.1 -10.8 -5.0 6.7 -5.2 -1.7 3.7 7.8
1. Preliminary
2. National accounts
Source: The Bank of Korea
3.Facility
investment
Facility investment
Source: The Bank o Korea (national accounts)
40
30
20
10
0
-10
-20
-30
(%)
2001. Q1 2002. Q1 2003. Q1 2004. Q1 2005. Q1 2006. Q1 2007. Q1 2008. Q1 2009. Q1 2010. Q1 2011. Q1 2012. Q1 2013. Q1
Facility investment (q-o-q) Facility investment (y-o-y)
Facility investment by type
Source: The Bank o Korea (national accounts)
50
40
30
20
10
0
-10
-20
-30
-40
(y-o-y, %)
2001. Q1
Transportation equipment Machinery
2002. Q1 2003. Q1 2004. Q1 2005. Q1 2006. Q1 2007. Q1 2008. Q1 2009. Q1 2010. Q1 2011. Q1 2012. Q1 2013. Q1
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13The Green Book |
Facility investment declined 4.0 percent month-on-month in April, despite an
increase in machinery investment, due to poor equipment investment. Te index
ell 12.4 percent year-on-year.
(Percentage change from previous quarter)2011 2012 2013
Annual Annual Q1 Q2 Q3 Q4 Q1 Feb Mar Apr
Facility investment index 4.0 -2.0 6.4 -5.0 -6.8 0.8 -4.6 1.0 - 0.4 - 4.0
(y-o-y) - - 10.7 -2.7 -8.2 -6.9 -15.4 -22.5 - 8.1 -12.4
- Machinery 2.7 -2.2 8.1 -5.5 -6.9 -3.8 -5.8 0.2 - 3.4 0.7
- Transportation equipment 9.8 -1.1 -1.0 -1.8 -6.7 22.0 0.3 5.2 7.9 -17.9
1. Preliminary
Source: Statistics Korea
(Percentage change from same period in previous year)
2011 2012 2013
Annual Annual Q1 Q2 Q3 Q4 Q1 Feb Mar Apr
Domestic machinery orders 7.6 -13.4 -1.1 -19.8 -10.4 -21.5 -10.7 -34.1 14.1 2.7
(q-o-q, m-o-m) - - -5.3 -18.7 -2.0 3.9 5.2 -5.8 0.1 2.8
- Public -2.6 -11.0 126.1 -59.7 86.7 -54.6 -46.2 -75.8 103.0 77.0
- Private 8.8 -13.6 -8.7 -15.1 -16.0 -15.1 -5.5 -18.4 10.9 0.4
Machinery imports 7.1 -3.0 15.3 -4.3 -12.2 -8.2 -11.8 -23.1 -7.2 -7.2
Average manuacturing operation ratio 80.2 78.1 79.6 79.0 76.2 77.8 77.1 77.2 75.5 75.9Facility investment adjustment pressure 1.1 -1.4 0.7 -1.3 -3.0 -1.5 -2.9 -10.9 -4.0 0.9
1. Preliminary
2. Production growth rate minus production capacity growth rate in the manufacturing sector (%p)
Sources: Statistics Korea, Korea International Trade Association
Improving key leading indicators, such as corporate sentiment, machinery orders
and acility investment adjustment pressure, may bode well or acility investment,
but the low average manuacturing operation ratio may act as a negative actor.
Business survey index or manuacturing sector(Bank o Korea)75 (Sep 2012)[ 72 (Oct)[ 70 (Nov)[ 67 (Dec)[ 70 (Jan 2013)[ 72 (Feb)[ 76 (Mar)[
80 (Apr)[ 81 (May)[ 82 (Jun)
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14 | The Green Book
Machinery orders and machinery imports
Source: Korea International Trade Association (KITA), Statistics Korea
10
9
8
7
6
5
4
3
2
70
60
50
40
30
20
10
0
-10
-20
-30
-40
-50
(trillion won) (y-o-y, %)
2001. Q1 2002. Q1 2003. Q1 2004. Q1 2005. Q1 2006. Q1 2007. Q1 2008. Q1 2009. Q1 2010. Q1 2011. Q1 2012. Q1 2013. Q1
Machinery orders (left) Machinery imports (right)
Construction investment (preliminary GDP) in the rst quarter o 2013 increased
4.1 percent quarter-on-quarter and 2.4 percent year-on-year.
(Percentage change from previous quarter)
2011 2012 2013
Annual Q3 Q4 Annual Q1 Q2 Q3 Q4 Q1
Construction investment -4.7 -0.4 0.1 -2.2 -1.5 -1.3 0.7 -1.2 4.1
(y-o-y) - -3.6 -1.7 - -0.4 -3.1 -0.3 -4.2 2.4
- Building construction -2.7 -0.3 -1.0 -1.7 0.3 -2.6 0.1 -0.3 4.6
- Civil engineering works -7.3 -0.7 1.5 -2.9 -3.9 0.4 1.5 -2.4 3.5
1. Preliminary
2. National accountsSource: The Bank of Korea
4.Construction
investment
Te value o construction completed (constant) in March improved 9.4 percent
month-on-month and 19.2 percent year-on-year, backed by strong building
construction and civil engineering works.
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Construction investment by type
Source: The Bank o Korea (national accounts)
50
40
30
20
10
0
-10
-20
-30
(y-o-y, %)
2001. 1
Building construction Residential buildings Civil engineering works
2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1
Construction investment
Source: The Bank o Korea (national accounts)
20
15
10
5
0
-5
-10
-15
(%)
2001. Q1 2002. Q1 2003. Q1 2004. Q1 2005. Q1 2006. Q1 2007. Q1 2008. Q1 2009. Q1 2010. Q1 2011. Q1 2012. Q1 2013. Q1
Construction investment (y-o-y)Construction investment (q-o-q)
(Percentage change from previous quarter)
2011 2012 2013
Annual Annual Q1 Q2 Q3 Q4 Dec Q1 Feb Mar Apr
Construction completed (constant) -6.4 -5.8 -5.6 -0.9 1.0 1.4 2.1 4.4 5.5 -2.4 9.4
(y-o-y) - - -4.9 -9.7 -2.3 -5.6 -8.3 5.2 3.6 3.8 19.2
- Building construction -6.9 -7.6 -4.5 -4.8 1.0 1.8 3.0 7.6 5.4 1.6 8.2- Civil engineering works -5.6 -3.5 -6.9 4.1 0.9 1.0 1.1 0.6 5.7 -7.4 11.0
1. Preliminary
Source: Statistics Korea
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(Percentage change from same period in previous year)
2011 2012 2013
Annual Annual Q1 Q2 Q3 Q4 Dec Q1 Feb Mar Apr
Construction orders (current value) 6.1 -8.9 33.3 -0.7 -13.6 -33.1 -43.0 -41.2 -47.0 -20.7 -20.6
(q-o-q, m-o-m) - - 15.1 -14.8 -6.1 -20.4 -10.8 -5.9 57.7 -13.5 -5.6
- Building construction 14.0 -8.7 27.4 -7.0 -7.1 -27.4 -37.5 -33.6 -8.8 -13.7 -26.7
- Civil engineering works -6.0 -9.3 42.0 12.5 -26.3 -43.7 -51.6 -51.3 -72.5 -33.1 -7.3
Building permit area 9.9 -0.5 8.7 1.2 -7.3 -2.3 9.2 -12.4 -17.6 -14.2 -40.6
1. Preliminary
Sources: Statistics Korea, Ministry of Land, Infrastructure and Transport
Despite some positive actors, such as new home sales expected in new towns and
the possibility that the Housing Market Normalization Measures will stimulate the
housing market, construction investment has yet to pick up as construction orders
and other leading indicators continue to be weak.
Leading indicators o construction investment
Source: Statistics Korea (construction orders)
Ministry o Land, Inrastructure and Transport (building construction permit area)
340
290
240
190
140
90
40
-10
-60
-110
(y-o-y, %)
2001. 1
Construction orders Building permit area
2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1
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5.Exports and
imports
Exports in May increased 3.2 percent (preliminary) year-on-year to US$48.37billion.
Exports grew at a aster pace in May, as weak steel and vessel exports and allingshipments to Japan were oset by strong I, rising exports to China and the US,and an increase in days worked by 0.5 days.
Export growth by item(y-o-y, %)62.5 (mobile phones), 17.4 (semiconductors), 6.2 (automobiles), -5.1 (petroleum products),-13.0 (steel), -33.3 (vessels)
Export growth by region(y-o-y, %)
16.6 (China), 11.8 (ASEAN countries), 21.6 (US), -11.6 (Japan), -14.6 (EU), -13.4 (Middle East)
Average daily exports, an indicator adjusted to days worked, amounted to US$2.10billion, increasing 1.0 percent year-on-year and picking up rom the previous
month.
Average daily export growth(y-o-y, %)3.9 (Nov 2012)[ 7.1 (Dec)[ 1.7 (Jan 2013)[ 2.5 (Feb)[ 4.7 (Mar)[ -8.0 (Apr)[ 1.0 (May)
Average daily exports(US$ billion)2.08 (May 2012), 1.90 (Jan 2013)[ 2.07(Feb)[ 2.11 (Mar)[ 1.93 (Apr)[ 2.10 (May)
Te eects o the weakening yen on the economy are continuing; exports toJapan keep slowing down and exports o items in competition with Japan, such asautomobiles and steel, continue to be poor.
Exports by item
Source: Korea Customs Service, Ministry o Trade, Industry and Energy (export and import trend)
160
140
120
100
80
60
40
20
0
-20
-40
-60
-80
(y-o-y, %)
2001. 1
Export growth rate Automobiles Semiconductors Steel
2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1
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Imports in May dropped 4.8 percent (preliminary) year-on-year to US$42.34billion.
Despite an increase in capital and consumer goods imports, imports continued adownward trend year-on-year as shrinking oil imports due to low oil prices led toa sharp decrease in commodities imports.
Import growth by category(May 1-31, preliminary, y-o-y, %)-14.6 (commodities), 5.8 (consumer goods), 4.2 (capital goods)
Imports by type
Source: Korea Customs Service, Ministry o Trade, Industry and Energy (export and import trend)
100
80
60
40
20
0
-20
-40
-60
-80
(y-o-y, %)
2001. 1
Import growth rate Commodities Capital goods
2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1
(US$ billion)
2012 2013
Annual May Q1 Q2 Q3 Q4 Q1 Mar Apr May
Exports 547.87 46.87 134.85 140.13 133.13 139.77 135.47 47.44 46.27 48.37
(y-o-y, %) -1.3 -1.0 2.9 -1.7 -5.8 -0.4 0.5 0.2 0.4 3.2
Average daily exports 2.00 2.08 1.97 2.09 1.90 2.04 2.02 2.11 1.93 2.101. Preliminary
Source: Korea Customs Service
(US$ billion)
2012 2013
Annual May Q1 Q2 Q3 Q4 Q1 Mar Apr May
Imports 519.58 44.48 133.67 130.43 125.65 129.83 129.68 44.15 43.82 42.34
(y-o-y, %) -0.9 -1.8 7.8 -2.9 -6.9 -1.1 -3.0 -2.0 -0.3 -4.8
Average daily imports 1.90 1.98 1.95 1.96 1.79 1.89 1.94 1.96 1.83 1.84
1. Preliminary
Source: Korea Customs Service
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Exports and imports
Source: Korea Customs Service, Ministry o Trade, Industry and Energy (export and import trend)
60
50
40
30
20
10
0
-10
(US$ billion)
2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1
Exports Imports
2010. 1 2011. 1 2012. 1 2013. 1
Trade balance
Mining and manuacturing production in April increased 0.8 percent month-on-
month and 1.7 percent year-on-year, led by strong other transportation equipmentand processed metals, despite a all in rened petroleum and electrical equipment.
Compared to the previous month, production o other transportation equipment(up 8.8%), processed metals (up 3.4%) and chemical products (up 1.4%) rose, whilerened petroleum (down 8.1%), electrical equipment (down 6.1%) and clothing &ur (down 3.8%) ell.
Compared to a year ago, production o semiconductors & parts (up 9.9%) andchemical products (up 6.4%) increased, while audio-visual communicationsequipment (down 14.6%), mechanical equipment (down 3.9%) and renedpetroleum (down 7.2%) went down.
6.
Mining andmanuacturing
production
(US$ billion)
2012 2013
Annual May Q1 Q2 Q3 Q4 Q1 Mar Apr May
Trade balance 28.29 2.39 1.18 9.70 7.47 9.94 5.78 3.29 2.45 6.03
1. Preliminary
Source: Korea Customs Service
Te trade balance (preliminary) in May posted a surplus o US$6.03 billion.
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Industrial production
Source: Statistics Korea (industrial activity trend)
50
40
30
20
10
0
-10
-20
-30
(%)
2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1
Industrial production (m-o-m) Industrial production (y-o-y)
2010. 1 2011. 1 2012. 1 2013. 1
Te manuacturing inventory-shipment ratio declined by 0.7 percentage pointsmonth-on-month as inventories decreased 0.6 percent and shipments stayed at.
Inventories o primary metals (up 1.1%), tobaccos (up 46.1%) and chemicalproducts (up 0.6%) rose month-on-month, while rened petroleum (down 13.4%),
automobiles (down 1.6%) and semiconductors & parts (down 0.6%) declined.
Shipments o other transportation equipment (up 8.7%), chemical products (up3.1%) and processed metals (up 3.0%) climbed, while rened petroleum (down7.8%), electrical equipment (down 5.9%) and clothing & ur (down 7.8%) slipped.
Te average operation ratio o the manuacturing sector rose by 0.4 percentagepoints month-on-month to 75.9 percent.
Shipment and inventory
Source: Statistics Korea (industrial activity trend)
10
8
6
4
2
0
-2
-4
-6
-8
-10
(m-o-m, %)
Shipment growth Inventory growth
2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1
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(Percentage change from previous quarter or month)
2012 2013
Annual Q1 Q2 Q3 Q4 Apr Q1 Feb Mar Apr
Mining and
manuacturing
activity2
Mining production (q-o-q, m-o-m) - 1.7 -0.5 -2.2 2.9 0.5 -0.9 -1.0 -2.4 0.8
(y-o-y) 0.8 3.6 1.1 -1.0 -0.1 -0.4 -1.7 -9.5 -2.9 1.7
Manuacturing production (q-o-q, m-o-m) - 1.7 -0.5 -2.3 3.0 0.4 -0.9 -1.3 -2.3 0.7
(y-o-y) 0.8 3.8 1.0 -1.1 -0.2 -0.5 -1.8 -9.8 -3.0 1.8
Shipment 0.7 1.8 -0.3 -2.4 2.0 0.4 -0.5 -1.5 -1.5 0.0
- Domestic demand -1.1 0.7 -0.3 -1.4 1.0 1.8 -0.8 -0.8 -2.8 0.2
- Exports 3.0 3.2 -0.3 -3.6 3.2 -1.1 -0.2 -2.2 0.3 -0.3
Inventory3 2.3 1.6 -1.8 -3.0 2.3 -0.5 0.8 -0.1 0.8 -0.6
Manuacturing
activity
Average operation ratio (%) 78.1 79.6 79.0 76.2 77.8 79.0 77.1 77.2 75.5 75.9
Production capacity4 2.2 3.1 2.3 1.9 1.3 2.3 1.1 1.1 1.0 0.9
1. Preliminary
2. Including mining, manufacturing, electricity, and gas industry
3. End-period
4. Percentage change from same period in previous year
Source: Statistics Korea
Mining and manuacturing production is expected to increase as strong exportso mobile phone parts ollowing the launch o new models have boosted the
communications and semiconductor sectors, and production disruptions in theautomobile industry have eased due to the resumption o working weekends.
Growth o mobile phone exports(y-o-y, %)16.3 (Oct 2012)[ 23.4 (Nov)[ 12.6 (Dec)[ 32.3 (Jan 2013)[ 15.1 (Feb)[ 21.8 (Mar)[47.9 (Apr)[ 62.5 (May)
Growth o semiconductors exports(y-o-y, %)6.7 (Oct 2012)[ 12.9 (Nov)[ 1.0 (Dec)[ 7.2 (Jan 2013)[ 0.9 (Feb)[ 6.6 (Mar)[12.5 (Apr)[ 17.4 (May)
Growth o automobile exports(y-o-y, %)-4.4 (Oct 2012)[ 1.3 (Nov)[ -6.3 (Dec)[ 23.2 (Jan 2013)[ -16.3 (Feb)[ -11.5 (Mar)[-2.6 (Apr)[ 6.2 (May)
Average manuacturing operation ratio
Source: Statistics Korea (industrial activity trend)
100
90
80
70]
60
50
( %)
2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1
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Service output in April grew 0.2 percent month-on-month and 2.6 percent year-on-year, as growth in proessional, scientic & technical services and real estate &renting oset weaknesses in educational services and wholesale & retail.
Service output grew 0.4 percent in the rst quarter o 2013, showing a slightimprovement rom the previous quarter, when output remained unchanged.
Wholesale & retail ell 0.6 percent month-on-month as retail sales decreased dueto declining clothing and car uel sales.
Real estate & renting rose 3.9 percent, with housing transactions increasing rom67,000 in March to 80,000 in April.
Proessional, scientic & technical services rose 5.8 percent as an increase inconstruction investment led to growth in construction technology and engineeringservices.
Publishing & communications services and healthcare & social welare servicesrecovered rom the previous months slump, growing 1.7 percent and 1.3 percent,respectively.
7.Service sector
activity
Service output is expected to improve in May, led by real estate & renting andwholesale & retail, while nancial & insurance services may decline due to allingstock transactions.
Average daily stock transactions(trillion won)7.9 (Sep 2012)[ 6.8 (Oct)[ 6.2 (Nov)[ 5.8 (Dec)[ 6.3 (Jan 2013)[ 5.5 (Feb)[ 6.0 (Mar)[ 6.9 (Apr)[ 6.5 (May)
(Percentage change from previous period)
Weight2011 2012 20131
Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Q11 Mar1 Apr1
Service activity index 100.0 3.2 1.2 0.5 1.2 0.0 1.6 0.5 0.1 0.9 0.0 0.4 -0.8 0.2
- Wholesale & retail 21.6 3.8 1.6 1.0 0.4 -0.3 0.7 -0.1 0.6 0.1 0.7 -1.0 1.2 -0.6
- Transportation services 8.5 4.5 2.6 -0.4 1.1 -1.3 1.2 1.2 0.2 0.9 0.6 0.7 -0.8 0.5
- Hotels & restaurants 7.2 -1.3 -0.4 2.2 -2.7 -1.4 -1.2 -0.1 0.9 1.3 -1.9 -0.6 0.0 -1.0
- Publishing & communications services 8.4 5.1 0.7 0.7 3.3 1.0 3.0 -0.4 0.6 1.6 -0.6 1.2 -3.7 1.7
- Financial & insurance services 14.7 6.8 2.9 -0.5 3.9 -0.8 2.8 2.3 -2.6 3.1 0.5 1.8 -1.7 -0.2
- Real estate & renting 5.3 -7.6 -0.5 -0.6 0.9 -2.9 -4.3 -4.0 2.3 -1.3 1.6 -2.8 1.1 3.9
- Proessional, scientiic & technical services 5.6 0.5 -3.7 2.7 1.1 4.1 4.0 -0.6 0.8 0.4 -0.7 -1.5 -7.2 5.8
- Business services 3.3 5.2 1.2 1.2 0.5 0.3 3.5 2.9 1.2 -1.7 -0.2 2.3 0.0 -1.1
- Educational services 10.9 2.2 0.5 -1.0 1.1 1.0 0.9 0.6 -1.4 0.0 0.9 1.0 -0.1 -1.5
- Healthcare & social welare services 7.5 6.4 3.0 0.9 1.4 1.5 5.8 1.4 2.5 1.0 0.2 1.2 -0.5 1.3
- Entertainment, cultural & sports services 2.9 2.7 0.4 3.0 -1.0 1.4 2.8 0.9 2.7 -1.5 -3.0 -0.1 2.0 -1.9
- Membership organizations 3.6 1.6 0.4 0.0 -0.2 -1.2 -1.4 -0.8 -0.4 1.9 -0.6 2.4 -2.6 -2.3
- Sewerage & waste management 0.6 3.3 -3.2 8.6 0.8 2.9 -0.3 -7.3 5.8 0.3 -4.8 -1.0 6.5 1.81. Preliminary
Source: Statistics Korea
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Service industry
Source: Statistics Korea (service industry activity trend)
20
15
10
5
0
-5
-10
(%)
2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1
Service industry activity (m-o-m)Service industry activity (y-o-y)
2010. 1 2011. 1 2012. 1 2013. 1
Wholesale & retail
Source: Statistics Korea (service industry activity trend)
20
15
10
5
0
-5
-10
(%)
2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1
Wholesale & retail (m-o-m)Wholesale & retail (y-o-y)
2010. 1 2011. 1 2012. 1 2013. 1
April 2013 service industry by business
Source: Statistics Korea (service industry activity trend)
7
5
3
1
-1
-3
-5
(y-o-y, %)
Sewe
rage,w
astem
anag
ement,
material
recov
ery&rem
ediation
activitie
s
Memb
ership
organiz
ations,r
epair
&
otherperso
nalse
rvices
Enter
tainm
ent,c
ultural&
sportss
ervice
s
Healthc
are&social
welare
servi
ces
Educati
onalser
vices
Busin
essacilityma
nageme
nt&b
usiness
supports
ervice
s
Proes
sional,s
cientifc
&techn
ical
servic
es
Real
estate
&ren
ting
Finan
cial&
insur
anceser
vices
Publi
shing
&com
munic
ationss
ervice
s
Hotels&
resta
urants
Transporta
tions
ervice
s
Wholesal
e&retail
Totalind
ex
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24 | The Green Book
Te number o workers on payroll in April increased by 345,000 rom a year earlierto 25,100,000 and the employment rate rose 0.1 percentage point rom the previousyear to 59.8 percent.
Month-on-month employment growth improved, with the number o employed
persons increasing in the 300,000 range or the rst time in three months and theemployment rate rising or the rst time in six months.
Workers in the manuacturing and service sectors grew by a larger margin,while growth in the number o workers in the construction sector slowed andemployment growth in the agriculture, orestry & sheries sector turned negative.
By status o workers, regular workers continued to increase while sel-employedworkers declined or the ourth straight month.
8.Employment
2010 2011 2012 2013
Annual Annual Q3 Q4 Annual Apr Q1 Q2 Q3 Q4 Q1 Mar Apr
Number o employed (million) 23.83 24.24 24.48 24.46 24.68 24.76 23.93 25.00 24.99 24.80 24.18 24.51 25.10
Employment rate (%) 58.7 59.1 59.5 59.4 59.4 59.7 57.8 60.2 60.0 59.4 57.7 58.4 59.8
(Seasonally adjusted) 58.7 59.1 59.1 59.2 59.4 59.4 59.3 59.4 59.5 59.3 59.2 59.2 59.5
Employment growth (y-o-y, thousand) 323 415 363 474 437 455 467 430 506 342 257 249 345
(Excluding agriculture, orestry & isheries) 405 440 414 497 451 484 498 454 504 344 266 244 367
- Manuacturing 191 63 -12 -75 14 -80 -102 -66 85 140 119 123 165
- Construction 33 -2 -35 71 22 53 79 33 17 -40 -64 -51 -10
- Services 200 386 472 514 416 525 541 491 397 236 199 156 186
- Agriculture, orestry & isheries -82 -25 -51 -23 -14 -29 -31 -24 2 -2 -9 5 -22
- Wage workers 517 427 392 374 315 322 360 281 317 303 329 322 466
Regular workers 697 575 572 500 436 339 413 379 485 469 554 611 659
Temporary workers -34 -78 -76 -10 -2 167 110 73 -79 -109 -152 -228 -202
Daily workers -146 -70 -104 -115 -120 -185 -163 -171 -89 -57 -73 -61 9
- Non-wage workers -194 -11 -29 100 121 133 108 150 189 39 -71 -73 -120
Self-employed workers -118 1 34 125 124 163 149 173 143 33 -28 -48 -90- Male 181 238 208 257 234 245 238 242 284 172 123 148 189
- Female 142 177 155 216 203 210 230 188 223 170 135 101 156
- 15 to 29 -43 -35 -1 -18 -36 25 1 -8 -57 -80 -117 -128 -133
- 30 to 39 -4 -47 -83 -56 -31 -75 -65 -80 33 -10 -15 -1 34
- 40 to 49 29 57 46 47 11 2 28 8 12 -3 12 -26 1
- 50 to 59 294 291 270 315 270 252 326 260 273 220 196 213 264
- 60 or more 47 149 131 185 222 251 178 251 245 215 181 191 179
Source: Statistics Korea
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Number o persons employed and employment growth
Source: Statistics Korea (employment trend)
Share o persons employed by industry
Source: Statistics Korea (employment trend)
Share o persons employed by status o workers
Source: Statistics Korea (employment trend)
1,200
1,000
800
600
400
200
0
-200
-400
26
25
24
23
22
21
(thousand) (million)
2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1
Number of employed (seasonally adjusted, right)Employment growth (y-o-y, left)
100
80
60
40
20
0
(%)
2011. 1 2 3 4 5 6 7 8 9 10 11 12 2 23 34 45 6 7 8 9 10 11 122012. 1 2013. 1
Services Construction Manufacturing Agriculture, forestry & fisheries
69.0
7.2
16.9
6.5
70.4
7.2
17.1
4.9
70.9
6.9
17.4
4.3
71.1
6.7
17.3
4.6
69.4
7.1
16.7
6.3
70.2
6.9
16.9
5.6
68.7
7.3
16.7
6.9
69.0
7.1
16.6
6.8
69.2
7.1
16.5
6.8
69.3
7.1
16.4
6.8
69.1
7.2
16.3
7.0
69.2
7.2
16.2
7.0
69.7
7.2
16.3
6.5
70.3
7.2
16.6
5.6
70.8
7.1
17.1
4.7
71.0
7.2
17.0
4.4
70.2
7.6
16.9
5.0
69.2
7.5
16.5
6.5
68.7
7.4
16.4
7.1
69.1
7.1
16.5
7.0
68.9
7.3
16.5
7.0
69.1
7.1
16.6
6.9
68.4
7.3
16.7
7.2
68.4
7.2
16.8
7.2
68.8
7.1
16.9
6.8
69.2
7.0
17.3
6.1
69.9
7.0
17.8
4.9
70.3
7.0
17.9
4.4
100
80
60
40
20
0
(%)
2011. 1 2 3 4 5 6 7 8 9 10 11 12 2 23 34 45 6 7 8 9 10 12112012. 1 2013. 1
Unpaid family workers Self-employed workers Daily workers Temporary workers Regular workers
46.2
20.0
6.6
22.7
4.5
47.3
19.7
6.0
22.8
4.2
46.3
19.5
6.5
22.8
5.0
47.0
19.5
6.0
23.0
4.7
46.9
19.9
6.2
22.7
4.2
45.2
19.9
6.8
22.9
5.2
45.1
19.8
6.7
23.1
5.3
45.2
19.8
6.4
23.2
5.4
45.1
19.9
6.4
23.3
5.3
44.4
20.2
6.7
23.4
5.3
44.4
20.3
6.7
23.2
5.4
44.0
20.5
6.8
23.3
5.4
44.3
20.6
6.6
23.4
5.1
44.9
20.6
6.3
23.4
4.8
45.4
20.5
6.5
23.1
4.5
45.4
20.5
6.5
23.1
4.5
44.9
20.7
7.0
22.9
4.6
44.1
20.5
7.2
23.0
5.2
43.8
20.6
7.0
23.2
5.4
44.3
20.8
6.4
23.4
5.1
43.7
20.5
7.2
23.2
5.3
43.5
20.9
7.4
23.0
5.3
43.3
20.7
7.6
22.9
5.5
43.4
20.5
7.5
23.0
5.6
43.7
20.3
7.5
23.2
5.4
44.2
20.1
7.3
23.3
5.1
44.5
20.5
7.2
23.0
4.8
44.4
20.9
7.2
22.8
4.7
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26 | The Green Book
Te number o unemployed persons in April decreased by 70,000 year-on-year to
825,000, while the unemployment rate ell 0.3 percentage points rom the previous
year to 3.2 percent.
Te unemployment rate ell year-on-year in all age groups excluding the 40s.
Te economically inactive population in April was up 269,000 rom a year earlier
to 16,070,000, while the labor orce participation rate decreased 0.2 percentage
points to 61.7 percent.
Te economically inactive population increased in all categories, including
education (up 164,000), rest (up 71,000) and housework(up 41,000).
2010 2011 2012 2013
Annual Annual Q3 Q4 Annual Apr Q1 Q2 Q3 Q4 Q1 Mar Apr
Number o persons unemployed (thousand) 920 855 786 740 820 895 947 841 770 722 907 883 825
Unemployment growth (y-o-y, thousand) 31 -65 -88 -68 -35 -41 -82 -23 -16 -18 -40 -62 -70
- Male -7 -48 -48 -41 -26 -35 -54 -19 -16 -13 -7 -42 -46
- Female 38 -17 -40 -27 -9 -6 -28 -4 0 -6 -33 -20 -24
Unemployment rate (%) 3.7 3.4 3.1 2.9 3.2 3.5 3.8 3.3 3.0 2.8 3.6 3.5 3.2
(Seasonally adjusted) 3.7 3.4 3.2 3.1 3.2 3.4 3.5 3.3 3.1 3.0 3.3 3.2 3.1
- 15 to 29 8.0 7.6 6.7 7.1 7.5 8.5 8.2 8.1 6.8 7.0 8.4 8.6 8.4- 30 to 39 3.5 3.4 3.2 2.9 3.0 3.3 3.2 3.2 2.8 2.7 3.3 3.2 3.1
- 40 to 49 2.5 2.1 2.0 1.9 2.0 2.1 2.4 2.0 2.0 1.8 2.1 2.3 2.2
- 50 to 59 2.5 2.1 2.1 1.8 2.1 2.3 2.3 2.0 2.2 1.8 2.3 2.2 1.9
- 60 or more 2.8 2.6 2.1 1.8 2.4 2.3 4.4 2.0 1.9 1.6 3.4 2.3 1.3
Source: Statistics Korea
2010 2011 2012 2013
Annual Annual Q3 Q4 Annual Apr Q1 Q2 Q3 Q4 Q1 Mar Apr
Economically inactive population (million) 15.84 15.95 15.85 16.01 16.08 15.81 16.50 15.67 15.90 16.26 16.83 16.56 16.07
Labor orce participation rate (%) 61.0 61.1 61.5 61.1 61.3 61.9 60.1 62.3 61.8 61.1 59.9 60.5 61.7
(seasonally adjusted) 61.0 61.1 61.0 61.1 61.3 61.5 61.4 61.4 61.4 61.1 61.2 61.2 61.3
Growth in economically inactive population(y-o-y, thousand)
143 112 191 53 128 92 103 110 57 244 336 359 269
- Childcare -125 -5 17 23 -2 5 - 4 -7 -3 0 17 6
- Housework 201 101 143 103 123 163 85 181 101 126 143 117 41
- Education 12 -51 -78 -69 -12 -82 -28 -64 5 39 118 136 164
- Old age 80 -45 -22 2 148 173 76 174 156 186 154 129 4
- Rest -56 182 193 131 -53 -60 126 -71 -142 -125 -106 -68 71
Source: Statistics Korea
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27The Green Book |
Employment rate
Source: Statistics Korea (employment trend)
Unemployment rate
Source: Statistics Korea (employment trend)
Labor orce participation rate
Source: Statistics Korea (employment trend)
64
63
62
61
60
59
58
57
56
55
(%)
2001. 1
Original rate Seasonally adjusted rate
2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1
6
5
4
3
2
(%)
2001. 1
Original rate Seasonally adjusted rate
2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1
65
64
63
62
61
60
59
58
57
(%)
2001. 1
Original rate Seasonally adjusted rate
2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1
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30 | The Green Book
9.3 Bond market
3-year reasury bond yields rose 29 basis points in May to 2.78 percent rom theprevious months 2.49 percent. Te yields rose by a large margin due to risingreasury bond yields in the US and oreign investors selling o reasury bondutures.
9.4 Money supply & money market
M2 (monthly average) in March expanded 5.0 percent rom a year earlier.
M2 growth slowed as money supply in the private sector declined, resultingrom a decrease in bank loans and securities investment rom asset managementcompanies (AMC).
Interest rates
Source: The Bank o Korea
10
9
8
7
6
5
4
3
2
1
(monthly average, yearly, %)
2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1
Overnight call rate (daily)3-yr corporate bonds yield 3-yr treasury bonds yield
2010. 1 2011. 1 2012. 1 2013. 1
(End-period, %)
2007 2008 2009 2010 2011 2012 2013
Dec Dec Dec Dec Dec Dec Apr May Change1
Call rate (1 day) 5.02 3.02 2.01 2.51 3.29 2.77 2.78 2.50 -28
CD (91 days) 5.82 3.93 2.88 2.80 3.55 2.89 2.81 2.69 -12
Treasury bonds (3 yrs) 5.74 3.41 4.44 3.38 3.34 2.82 2.49 2.78 29
Corporate bonds (3 yrs) 6.77 7.72 5.56 4.27 4.21 3.29 2.85 3.14 29
Treasury bonds (5 yrs) 5.78 3.77 4.98 4.08 3.46 2.97 2.56 2.90 34
1. Basis point, changes from the previous month
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Deposits in nancial institutions
Source: The Bank o Korea
30
20
10
0
-10
-20
(y-o-y, end of monthly balance, trillion won)
2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1
Koreas current account (preliminary) in April posted a surplus o US$3.97 billion,
staying in the black or 15 consecutive months.
Despite robust exports o I products, such as mobile phones, the goods account
surplus narrowed rom US$4.16 billion in March to US$3.59 billion in April as
exports o automobiles, steel and vessels dropped along with exports to Japan.
Goods exports(US$ billion)47.99 (Mar 2013)[ 47.56 (Apr)
Goods imports(US$ billion)43.78 (Mar 2013)[ 43.97 (Apr)
Export growth by item(y-o-y, %)29.2 (mobile phones), 12.8 (semiconductors), -2.1 (automobiles), -8.0 (steel), -45.9 (vessels)
Export growth by region(y-o-y, %)16.1 (China), 8.2 (Southeast Asia), 1.9 (US), -11.3 (Japan), 4.8 (EU)
Despite deteriorating travel and transportation, the service account surplus
widened rom US$0.91 billion to US$1.45 billion, helped by business services and
intellectual properties.
10.Balance o
payments
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33The Green Book |
Te capital and nancial account (preliminary) in April posted a net outow o
US$2.61 billion.
Capital & nancial account balance(US$ billion)-0.91 (Jan 2013)[ -3.27 (Feb)[ -6.72 (Mar)[ -2.61 (Apr)
Te direct investment account swung to a net inow o US$0.30 billion rom a
net outow o US$1.87 due to an increase in oreign direct investment.
Net outow in portolio investment narrowed to US$1.92 billion rom US$3.39
billion due to a decrease in overseas equity investment.
Financial derivatives switched to a net outlow o US$0.31 billion rom a netinow o US$0.15 billion, while the net outow o the other investment account
widened to US$1.59 billion rom US$0.13 billion.
Te current account is expected to maintain a surplus, helped by a goods account
surplus resulting rom a trade surplus in May.
Service account(US$ billion, March[ April)-0.43[ -0.45 (travel), 0.90[ 0.77 (transportation), 1.16[ 1.18 (construction), -0.47[ -0.14(business service), -0.40[ -0.09 (intellectual property)
Te primary income account decit widened rom US$0.22 billion to US$1.09
billion due to cross-border dividend payments by rms whose scal year endedin December. Te secondary income account surplus contracted rom US$0.09
billion to US$0.02 billion.
(US$ billion)
2012 2013
Annual Apr Q1 Q2 Q3 Q4 Q1 Feb Mar Apr1
Current account 43.14 1.73 2.56 11.19 14.56 14.94 10.02 2.71 4.93 3.97
- Goods balance 38.34 1.75 2.61 8.52 13.34 13.98 9.39 2.56 4.21 3.59
- Service balance 2.68 0.55 -0.65 2.31 0.65 0.36 -0.48 -0.46 0.91 1.45
- Primary income balance 4.89 -0.42 1.49 0.82 1.04 1.54 1.38 0.63 -0.22 -1.09
- Secondary income balance -2.76 -0.14 -0.89 -0.47 -0.47 -0.93 -0.26 -0.02 0.09 0.02
1. Preliminary
Source: The Bank of Korea
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34 | The Green Book
Travel account balance
Source: The Bank o Korea (balance o payments trend)
4
3
2
1
-1
-2
-3
(US$ billion)
2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1
Travel paymentTravel revenue
2010. 1 2011. 1 2012. 1 2013. 1
Travel balance
Current account balance
Source: The Bank o Korea (balance o payments trend)
8
6
4
2
0
-2
-4
-6
(US$ billion)
2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1
Current account
2010. 1 2011. 1 2012. 1 2013. 1
Goods account Service account
Capital & nancial account balance
Source: The Bank o Korea (balance o payments trend)
15
10
5
0
-5
-10
-15
(US$ billion)
2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1
Capital & financial account
2010. 1 2011. 1 2012. 1 2013. 1
Portfolio investment Direct investment Financial derivatives
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35The Green Book |
Prices
Source: Statistics Korea (consumer price trend) & The Bank o Korea (producer prices)
16
13
10
7
4
1
-2
-5
(y-o-y, %)
2001. 1
Consumer price inflation Producer price inflationCore inflation
2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1
11.1 Prices
Consumer prices in May rose 1.0 percent year-on-year, staying stable at the 1.0percent range or seven consecutive months. Prices were unchanged rom theprevious month.
Core consumer prices, which exclude oil and agricultural products, rose 1.6percent year-on-year. Core consumer prices based on the OECD method, whichexclude ood and energy, rose 1.3 percent year-on-year. Consumer prices or basicnecessities, a barometer o perceived consumer prices, were up 0.2 percent year-on-year but down 0.4 percent month-on-month.
Te average expected annual ination ell 0.2 percentage points rom the previousmonth and the import prices declined 9.7 percent year-on-year.
Expected ination(%, over the next 12 months)3.5 (Aug 2012)[ 3.3 (Sep)[ 3.3 (Oct)[ 3.2 (Nov)[ 3.1 (Dec)[ 3.2 (Jan 2013)[ 3.2 (Feb)
[ 3.2 (Mar)[ 3.1 (Apr)[ 2.9 (May)
Import price increases(y-o-y, %, won base)-6.4 (Oct 2012)[ -7.9 (Nov)[ -9.0 (Dec)[ -10.6 (Jan 2013)[ -8.6 (Feb)[ -10.8 (Mar)[ -9.7 (Apr)
11.Prices and
international
commodity
prices
(%)
2012 2013
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
Month-on-Month 0.0 0.2 -0.1 -0.2 0.4 0.7 -0.1 -0.4 0.2 0.6 0.3 -0.2 -0.1 0.0
Year-on-Year 2.5 2.5 2.2 1.5 1.2 2.0 2.1 1.6 1.4 1.5 1.4 1.3 1.2 1.0
Consumer prices excluding oil and agriculturalproducts (y-o-y) 1.8 1.6 1.5 1.2 1.3 1.4 1.5 1.3 1.2 1.2 1.3 1.5
1.4 1.6
Consumer prices excluding ood and energy (y-o-y) 1.6 1.5 1.4 1.2 1.2 1.4 1.4 1.4 1.4 1.4 1.2 1.4 1.4 1.3
Consumer prices or basic necessities (y-o-y) 2.0 2.2 1.8 0.8 0.6 1.7 1.6 1.0 0.7 0.8 0.8 0.8 0.7 0.2
Source: Statistics Korea
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Domestic oil product prices continued to decrease due to stable international oilprices, but bounced back slightly helped by rising exchange rates.
Gasoline prices(won/liter)1,915.1 (1st week May)[ 1,904.1 (2nd week)[ 1,898.1 (3rd week)[ 1,896.3 (4th week)[ 1,896.4(5th week)
Exchange rate(won/$)1,104.8 (1st week May)[ 1,092.5 (2nd week)[ 1,110.1 (3rd week)[ 1,116.3 (4th week)[ 1,127.6(5th week)
Dubai crude prices and import prices
Source: Korea National Oil Corporation
160
140
120
100
80
60
40
20
160
140
120
100
80
60
40
20
(thousand won/B) ($/B)
2004. 1
Dubai crude (import prices, won, left) Dubai international prices (dollar, right)
2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1
(US$/barrel, period average)
2010 2011 2012 2013
Annual Annual Annual Nov Dec Jan Feb Mar Apr May
Dubai crude 78.1 105.9 109.0 107.3 106.4 107.9 111.1 105.6 101.7 100.3
Brent crude 79.7 111.0 111.7 109.3 109.2 112.7 116.2 109.0 102.8 102.8WTI crude 79.5 95.1 93.8 86.6 88.2 94.8 95.3 92.9 92.0 94.7
Source: Korea National Oil Corporation
(won/liter, period average)
2010 2011 2012 2013
Annual Annual Annual Nov Dec Jan Feb Mar Apr May
Gasoline prices 1,710.4 1,929.3 1,985.8 1,956.0 1,935.6 1,924.6 1,952.5 1,986.5 1,949.4 1,899.9
Diesel prices 1,502.8 1,745.7 1,806.3 1,777.7 1,760.0 1,749.6 1,766.7 1,786.0 1,745.2 1,699.4
Source: Korea National Oil Corporation
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Te prices o international grain rose slightly due to concerns over unstable supply,while nonerrous metal prices ell, led by slowing demand.
International grain prices were high as temperatures were unusually low and theplanting o wheat and corn was delayed in the US, but the rise slowed towards theend o May due to expectations o improved supply.
World grain supply outlook or 2012-13(US Department o Agriculture, May, m-o-m)Production (8.3%), demand (5.1%), stocks-to-use ratio (0.8%p)
International grain prices in May(m-o-m, %)Corn (1.7), soybean (3.4), wheat (0.4)
Nonerrous metal prices continued to all due to improvements in production andweak demand as a result o poor economic indicators in major countries.
Nonerrous metal prices in May(m-o-m, %)
in (-4.3), lead (-0.7), nickel (-4.3), copper (0.3), zinc (-1.4), aluminum (-1.4)
International commodity pricesSource: Bloomberg (CRB), The Bank o Korea (Reuters index)* CRB demonstrates a utures price index o 21 commodities listed on the US Commodity Transaction Market, including beans and other
crops, crude oil and jewelry.
470
430
390
350
310
270
230
190
150
4,000
3,000
2,000
1,000
0
1997. 1 1998. 1 1999. 1
CRB (left) Reuters index (right)
2005. 12004. 12003. 12002. 12001. 12000. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1
(Period average)
2010 2011 2012 2013
Annual Annual Annual Oct Nov Dec Jan Feb Mar Apr May
2,553 3,062 3,006 3,110 3,067 3,037 2,996 2,990 2,947 2,880 2,828
* A weighted average index of 17 major commodities
Source: KOREA PDS
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41The Green Book |
Apartment sales transactions in April increased 17.0 percent rom the previousmonths 47,375 to 55,442, and were up 23.0 percent rom a year earlier (45,079).
Apartment rental prices by region
Source: Kookmin Bank
4
3
2
1
0
-1
-2
(m-o-m, %)
2009. 1 7 7 7 7
Nationwide Metropolitan citiesSeoul metropolitan area
2010. 1 2011. 1 2012. 1 2013. 1
Nationwide apartment rental prices continued to rise in May (up 0.4%, m-o-m).Rental prices in the Seoul metropolitan area and ve metropolitan cities rose 0.3percent and 0.5 percent each.
Apartment rental price increase in major districts in Seoul(m-o-m, %)Gangnam (-0.1), Seocho (-0.3), Songpa (-0.6), Gangdong (-0.9), Seongbuk (1.2)
(Percentage change from previous period)
2012 2013
Jul Aug Sep Oct Nov Dec Jan-May Jan Feb Mar Apr May May 131 May 201 May 271 Jun 31
Nationwide -0.2 -0.1 0.3 0.4 0.4 0.3 2.1 0.3 0.3 0.5 0.7 0.4 0.14 0.11 0.10 0.07
Seoul -0.5 -0.3 0.6 0.8 0.7 0.2 2.2 0.4 0.6 0.7 0.4 0.2 0.05 0.02 0.02 0.01
Gangnam2 -0.6 -0.4 0.8 1.0 0.9 0.3 1.9 0.5 0.6 0.6 0.2 0.1 0.04 0.01 0.00 0.01
Gangbuk
3
-0.4 -0.1 0.4 0.6 0.4 0.1 2.6 0.3 0.6 0.8 0.6 0.4 0.07 0.04 0.04 0.01Seoul metropolitan area -0.4 -0.2 0.4 0.5 0.4 0.1 2.1 0.2 0.3 0.5 0.7 0.3 0.10 0.08 0.06 0.06
5 metropolitan cities -0.1 -0.2 0.2 0.3 0.4 0.4 2.3 0.3 0.3 0.4 0.8 0.5 0.20 0.13 0.15 0.11
1. Weekly trends
2. Upscale area of Southern Seoul
3. Northern Seoul
Source: Korea Appraisal Board
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42 | The Green Book
12.2 Land marketNationwide land prices in April rose 0.13 percent month-on-month, and were 0.23
percent higher than the pre-crisis peak reached in October 2008.
Land prices in the Seoul metropolitan area (up 0.13%, m-o-m) continued to rise,
led by Seoul (up 0.16%, m-o-m).
Land price increases in Seoul metropolitan area(m-o-m, %)
-0.01 (Aug 2012)[ -0.02 (Sep)[ 0.03 (Oct)[ 0.04 (Nov)[ 0.06 (Dec)[ -0.01 (Jan 2013)[
0.05 (Feb)[
0.10 (Mar)[
0.13 (Apr)
Land prices continued to rise in areas excluding the Seoul metropolitan area (up
0.13%, m-o-m), with Sejong (up 0.62%, m-o-m) posting the highest growth rate in
the nation or the 14th straight month in April.
Land price increases in areas excluding Seoul metropolitan area(m-o-m, %)
0.11 (Aug 2012)[ 0.10 (Sep)[ 0.11 (Oct)[ 0.12 (Nov)[ 0.12 (Dec)[ 0.11 (Jan 2013) [
0.11 (Feb)[ 0.12 (Mar)[ 0.13 (Apr)
Monthly transaction volume
Source: Ministry o Land, Inrastructure and Transport
140
120
100
80
60
40
20
0
(thousand)
2006. 1 2007. 1 2008. 1 2009. 17 7 7 77 77
Nationwide Areas excluding the Seoul Metropolitan areaSeoul metropolitan area
2010. 1 2011. 1 2012. 1 2013. 1
(thousand)
2009 2010 2011 2012 2013
Annual1
Annual1
Annual1
Annual1 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
Nationwide 53 48 59 42 18 47 45 46 37 38 31 26 45 50 81 17 34 47 55
1. Monthly averageSource: Ministry of Land, Infrastructure and Transport
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44 | The Green Book
Land and consumer prices since 1970s
Source: Korea Appraisal Board (land prices), Statistics Korea (consumer prices)
Land trade volume
Source: Korea Land & Housing Corporation (land trade trend)
60
50
40
30
20
10
0
-10
-20
(y-o-y, %)
1975
Land price inflation Consumer price inflation
1980 1985 1990 1995 2000 2005 2010 2012
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
(thousand square meter)
2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1
Seoul metropolitan area Areas excluding the Seoul metropolitan area
2010. 1 2011. 1 2012. 1 2013. 1
(Land lot, thousand)
2009 2010 2011 2012 2013
Annual1
Annual1
Annual1
Annual1 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
Nationwide 203 187 208 170 187 182 186 163 167 150 133 172 185 224 141 142 181 206
Seoul 22 16 18 13 14 15 15 13 12 10 9 15 16 20 10 10 15 18
Gyeonggi 46 41 43 33 37 36 35 32 34 30 27 35 36 45 29 28 33 39
Incheon 10 8 10 8 7 7 8 7 7 8 8 10 9 10 5 5 8 9
1. Monthly average
Source: Korea Land & Housing Corporation
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47Policy Issues |
Policy IssuesCampaign Pledge Funding Plan to Carry Out Park Geun-HyeAdministration Agenda
Background and meaning
Te Campaign Pledge Funding Plan consists o the ruling partys April generalelection pledges (March 2012), presidential election pledges (December 2012),and 140 tasks o the Park Geun-hye administration (May 2013). Te governmentplanned to dra a scal support plan in order to ulll with ease the promises madewith the Korean people.
Te Campaign Pledge Funding Plan is the rst o its kind in Korean history, andthus is also the rst time that this kind o plan was publicized to the Korean people.Tis was done to lay the oundation or a trustworthy and responsible governmentthat keeps its promises with the Korean people and does not lay nancial burdenson uture generations. Te plan will be a standard or establishing and carrying outministerial operational plans, preparing tax reorm bills, drawing budget proposals
and draing the national scal management plan.
Prime Minister Chung Hong-won hosted the National Policy CoordinationMeeting on May 31 and announced a iscal support action plan (henceorthto be called Campaign Pledge Funding Plan) to carry out the Park Geun-hyeadministrations agenda. Te Campaign Pledge Funding Plan was developed byholding discussions with the related ministries and business proessionals andthrough the Fiscal Strategy Meeting on May 16, which was attended by the entireCabinet.
he Campaign Pledge Funding Plan consists o the plans background andmeaning, an overview o the plan, an action plan, and a management plan.
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48 | Policy Issues
(trillion won, 2013-2017 total)Amount required Funding measures
Total 134.8 Total 134.8
Economic Revitalization 33.9Revenue increase 50.7
Korean Peoples Happiness 79.3
Blooming o the Culture 6.7Expenditure cuts 84.1
Building a Foundation or a Peaceul Reuniication 17.6
(trillion won)
2013-2017Total
2013 2014 2015 2016 2017
Amount required 134.8 6.6 15.3 29.1 37.6 46.2
Funding(y-o-y, net growth)
134.87.4
(7.4)17.4
(10.0)30.5
(13.1)36.8(6.3)
42.6(5.8)
Te Campaign Pledge Funding Plan is not only about expanding tax revenuesand reducing tax expenditures, but also about upgrading Koreas tax revenue-expenditure system. By modiying tax reductions and exemptions, andlegitimizing the shadow economy, each income class will pay the appropriateamount in taxes according to the benets they receive rom society. Tegovernment will remove excess at rom the budget by cutting spending, which
will contribute to efciently reorming the structure o Koreas scal expenditures.
Overview
Te total cost or the administrations tasks rom 2013 to 2017 will be 134.8 trillionwon and thereore the government has prepared unding measures to cover theentire cost o 134.8 trillion. Te cost o the administrations tasks is split into ourpillars: economic revitalization (33.9 trillion won, 25%), Korean peoples happiness(79.3 trillion won, 59%), blooming o the Korean culture (6.7 trillion won, 5%), andbuilding a oundation or a peaceul reunication (17.6 trillion won, 13%). Teseamounts required will be nanced through a 50.7 trillion won expansion in taxrevenues and 84.1 trillion won in tax expenditure cuts.
Annual costs will gradually increase as the administrations tasks are phased-in
according to priority. Funding measures are concentrated in 2014 and 2015 inorder to have the strongest eect possible in the shortest amount o time.
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2. Expenditure side
A total o 84.1 trillion won, or 62 percent o the amount required to carry out thenational tasks, will be unded through spending cuts.
Spending cuts are being planned as a strategic and government-wide task, whichaims to provide stable public nance and improve the scal expenditure system.First, the government is pursuing permanent spending cuts rather than temporaryones based on revised regulations. In addition, discretionary spending cuts willbe reviewed rst, and cuts will be expanded to mandatory spending as well. Also,private as well as public nancial resources will be utilized through the method ogovernment paying the interest rate dierence between public unding and privateunding.
1) SOC Spending
Considering the current level o SOC stocks and increased investment* in the pastseveral years to ride out the economic crisis, there is much room or SOC spendingcuts.
* SOC budget (trillion won): 18.4 (2007)[ 25.0 (2013)
Investment in new projects will be made only when they are part o campaignpledges or urgently required, while existing investment plans will be reviewed interms o appropriateness.
However, the government will continue to maintain construction investment
at an appropriate level by utilizing private nance and investing in cultural oreducational acilities.
2) Industrial, SME and Energy Sectors
Te government will nd ways to utilize private capacity in the industrial, SMEand energy sectors.
Te government will adopt new measures to reduce electricity demand ratherthan oering nancial incentives or limiting electricity use, and public overseasresources development projects will be allowed to be invested by various investors.Similar or overlapping ministry-level projects, such as SME support, will be
adjusted through inter-governmental cooperation.
(trillion won)
Total 2013 2014 2015 2016 2017
Total 50.7 2.9 7.9 11.8 13.7 14.4
National tax revenue
- Adjusting tax breaks
- Legitimatizing shadow economy
- Increasing capital gains tax
48.0
18.0
27.2
2.9
2.9
0.1
2.7
-
7.6
1.8
5.5
0.3
11.1
4.8
6.0
0.4
12.9
5.7
6.3
0.9
13.6
5.7
6.7
1.2
Nontax revenue 2.7 - 0.3 0.7 0.8 0.9
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However, investment related to vulnerable group support, including SMEs andsmall merchants, will continue to be expanded by utilizing private unds.
3) Agriculture, Forestry and Fishery Sectors
Considering the recent rise in investment* in the agriculture and orestry sectors,
investment priorities will be adjusted.
* Agriculture and orestry budget (trillion won): 15.7 (2007)[ 18.9 (2013)
Te government will review projects in terms o perormance and rearrangepriorities, while streamlining similar or overlapping projects.
However, the government will increase nancial support to help householdsengaging in the agriculture or shery industries stabilize their income and businessoperation. Te support will include item-specic nancial aid oered directlyby the government and arming or shery-related disaster insurance paymentsupport.
4) Welare Sector
Welare programs prioritized in the administrations tasks, such as the NationalHappiness Fund and ree education, will receive increased investment, and thegovernment will renew its eorts to improve welare investment efciency andoer the most satisactory programs.
Te government will streamline the welare delivery system in order to preventscal resources rom being wasted, and this includes upgrading the social securityinormation system. Welare beneciaries will be made more responsible as theywill be required to take more share o payment or welare programs.
Welare benets or vulnerable groups will not be reduced as the government willadopt rules that allow the welare program to continue or a certain period o timeaer it expires, and will introduce temporary emergency welare programs.
5) Utilizing Private Finance by Paying Interest Rate Diference
Te amount o public loans* in 2013 will be 29.3 trillion won, or 8.4 percent o totalexpenditures.
* Mostly consists o Housing loan (50.5%), SME Startup & Development loan (14.9%),
Private eachers Pension Fund (5.7%), Agriculture Stabilization Fund (6.4%), GovernmentEmployees Pension Fund (4.8%)
O the loans, 3.5 trillion won will be nanced by the private sector through themethod o government paying the interest rate dierence between public loansand private nancing.
Loans utilizing private sector nance will be phased in up to 5.5 trillion wonbetween 2014 and 2017, and the eligibility o the loans will be decided accordingto the situations o both policy recipients and private nancial institutions.
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Management plan
Te government will consistently gather public opinion through various discussionsand local government scal councils, and reect them in improving the plan.
Annual spending and nancing plans included in the Campaign Pledge FundingPlan will be a basis or drawing up the years budget plan, tax revision proposalsand scal management plan.
Te Campaign Pledge Funding Plan will be implemented as a rolling plan, which
will consistently be reecting changes in economic and scal situations.
Te government will regularly review the implementation o the Campaign PledgeFunding Plan and continue to develop issues regarding scal restructuring throughjoint public-private committees* and inter-governmental cooperation.
* Te ax Reorming Committee and Fiscal Restructuring Committee
(trillion won)
Total 2013 2014 2015 2016 2017
Total 84.1 4.5 9.5 18.7 23.1 28.1
Mandatory spending cuts 3.0 - 0.5 0.7 0.8 0.9
Discretionary spending cuts- SOC
- Industry
- Agriculture & Forestry
- Welare
(Housing)
- Others
34.811.6
4.3
5.2
12.5
(9.5)
1.2
--
-
-
-
-
-
5.81.7
0.9
0.8
2.2
(2.1)
0.2
9.62.7
1.3
1.3
4.0
(2.9)
0.3
9.53.5
1.0
1.3
3.4
(2.5)
0.3
9.93.7
1.1
1.8
2.9
(2.0)
0.4
Government paying interest rate dierencemethod
5.5 - 0.7 1.4 1.7 1.7
Adjusting overlapping investment withprevious administration
40.8 4.5 2.5 7.0 11.2 15.6
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Policy IssuesRoadmap to Achieve 70% Employment
Background
Te Korean economy has seen growth without employment since the 1990s.Furthermore, the growth rate has gradually slowed, and the employment rate hasstayed in the 63 to 64 percent range since 2003.
Te export and manuacturing-oriented economic structure weakened jobcreating capacities, and SMEs and service industries, which account or most othe employment, have suered rom low productivity. Most jobs are dominated bymales working long hours, and this has been an obstacle to job creation.
Factors negatively aecting employment are difculties aced by emale workerswhen they want to be reemployed, youths receiving higher education and earlyretirement o baby boomers. Tese actors make it undamentally difcult to
achieve 70 percent employment. Since economic growth prospects are uncertain,the Korean economy needs to bring up a new paradigm or job creation.
Against this backdrop, the Korean government has drawn up the 70 percentEmployment Roadmap. Te roadmap has been designed to move the main axis oemployment rom the male labor orce working long hours in large manuacturersto the emale labor orce employed by SMEs or working in the service sector. Teroadmap has been designed to create a amily-riendly environment where reducedwork hours are possible along with part time employment and other various typeso employment. Te roadmap has been designed to induce tripartite job creationeorts by government, industry and labor.
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Te government will gradually increase the number o the Smart Work Centers topromote exible working; public employees are able to work at the closest SmartWork Center rom their home.
3. Women, youths and seniors participating in job markets together
Te government will help increase job market participation by removing obstaclesand supporting employee-specic programs.
1) Connecting employment with welare
Te government will reorm the National Basic Living Security Entitlement Systeminto a system which provides more benet to those working, while expandingsel-sustenance and rehabilitation benet recipients to those earning 50 percento the median income. o receive the benet, participating in sel-sustenance andrehabilitation programs is mandatory, and negligent participants will not be madeeligible or the benet.
Tere will be employment service or social security benet recipients, and theexisting employment service package will be improved to enhance recipientscapabilities to work. Support or career-interrupted women will be expanded,such as consultation programs designed to develop abilities to adapt to jobs, housework and childcare services, and programs to make them experience workplacesituations in advance.
Te government will launch a gateway, a center to provide on-the-spotemployment and welare services, to help the working poor and economicallyinactive population. Te government will also increase the number o proessionalconsultants at public employment centers. Private employment services will bepromoted as its operation will be made possible without getting a license.
2) Women
Childcare leave, public daycare service and daycare service at the workplace will besignicantly improved.
Childcare leave will be allowed or mothers with a child younger than nine yearsold, and companies will be obliged to oer childcare leave in addition to maternityleave. Mothers will be able to apply or childcare leave at the time when they applyor maternity leave, and this will help make childcare leave a regular practice.
A database or maternity leave substitutes will be expanded, and the governmentwill provide nancial support or maternity leave substitutes.
Daycare service at the workplace will be subject to relaxed regulations, and publicdaycare centers will cover 30 percent o total daycare children by 2017.
Te government will announce measures in June to create jobs in the social servicesector and develop the social service sector into an industry, along with a guidelineto improve the quality o social services, in particular care-giving service. Temeasures and guidelines will be a oundation to create as many as 250,000 jobs inthe social service sector, and contribute to increasing emale employment
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Expected efects
Te employment increase is projected to gain speed rom 2015, ollowing theestablishment o policy oundations including laws and regulations in 2013-2014.
Female employment is expected to greatly improve, particularly led by thosereturning to work, while youth employment is projected to jump by more than 7.3percentage points.
O the 2.38 million newly created jobs, 1.63 million are likely to be produced inthe creative economy section, such as culture, science & technology and health &welare.
Part time jobs are projected to account or 38.7 percent o the total jobs increased.
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60 | Economic News Briefng
Korea grows 0.8% in Q1 (Preliminary)
Koreas real gross domestic product (GDP) expanded by 0.8 percent in the rstquarter o 2013 compared to the previous quarter, according to preliminary datareleased by the Bank o Korea (BOK) on June 7. Te gures were revised downrom an earlier estimate o 0.9 percent. Te year-on-year growth rate was 1.5percent, matching the BOKs previous orecast.
On the production side, agriculture, orestry & sheries contracted by 4.4 percent
quarter-on-quarter, with output in the shery sector in particular declining by 8.1percent. Manuacturing grew by 1.3 percent, as the production o petrochemicals,electrical & electronic instruments and vessels increased. Construction grewby 4.0 percent, led by housing construction and civil engineering works, whileservices grew by 0.7 percent, due to growing output in transportation & storage,communications services and healthcare & social services.
Private consumption decreased by 0.4 percent, led by alling expenditures indurable and semi-durable goods. Facility investment increased by 2.6 percentdue to a rise in both machinery and transportation equipment investment, andconstruction investment rose by 2.5 percent, led by housing construction and
civil engineering works. Exports rose by 3.0 percent,