The Korean economy continued an upward trend as real economic indicators such asproduction, investment and exports stayed in a recovery phase, while financial marketsremained stable.Mining and manufacturing production in November rose 1.4 percent month-on-month and17.8 percent year-on-year. Service output fell 1.2 percent month-on-month, affected by theH1N1 flu pandemic. On a year-on-year basis, however, the index rose 3.3 percent.Consumer goods sales slightly declined month-on-month by 0.9 percent in November due todrops in semi-durable and non-durable goods sales, while the indicator accelerated a year-on-year rise from 9.8 to 10.0 percent, backed by a low base effect and growing durable goodssales.Facilities investment increased in November by 7.0 percent month-on-month and 10.3percent year-on-year, helped by recovering machinery investment. Construction completed,thanks to the private sector posting a year-on-year rise in nine months, grew both month-on-month and year-on-year by 1.2 percent and 4.2 percent, respectively.Exports in December jumped 33.7 percent year-on-year, positively affected by a rise in majorexports including liquid crystal devices and a low base effect. Imports soared 24.0 percentyear-on-year, as imports of raw materials and capital goods rose and the low base lifted theindex.The total number of workers hired shed 10,000 year-on-year in November, as hiring in theagriculture, forestry & fishery significantly dropped. The unemployment rate slightlyincreased month-on-month from 3.2 to 3.3 percent.Consumer prices in December remained in the 2 percent range, despite rising prices of agriculture, livestock & fishery products, of which the shipments declined due to a cold wave.In December, financial markets continued to be stable, as worries over Dubai World’spossible default eased, a Korea’s consortium won a contract to export nuclear facilities to theUnited Arab Emirate (UAE), and the stock market rallied reflecting expectations over aneconomic recovery, while the interest rate reversed to a slight increase.To sum up, although the Korean economy passed the critical stage and has continued toimprove, the recovery does not seem to be firmly entrenched, as the private sector is notstrong enough to drive consumption, investment and employment, and externaluncertainties including oil prices are still lingering.The Korean government, to secure economic recovery, will keep pursuing expansionary fiscalpolicies and spend budgets as planned, and at the same time it will continue to create jobsand support the working class. On the other hand, the government will step up its efforts toreform the economy through corporate restructuring and nurture growth potential, in orderto found a basis for a future economic take-off.
The Green Book
Current Economic Trends