200702 by KOCIS

Vol. 29 | No. 2

Republic of Korea

Economic Bulletin The Green Book : Current Economic Trends Overview

1. Global economy

2. Private consumption

3. Facility investment

4. Construction investment

5. Exports and imports (customs clearance basis)

6. Industrial activity

7. Service sector activity

8. Employment

9. Financial markets

9.1 9.2 9.3 9.4

Stock market Exchange rate Bond market 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 indexes of business cycle indicators

Policy Issues

New measures to upgrade the KTB market

Economic News Briefing

Statistical Appendices

The Green Book Current Economic Trends

Overview The Korean economy in 2006 expanded 5 percent as initially forecasted. In the second half of 2006, momentum for domestic demand including consumption moderated. Robust exports however balanced out the weakening momentum for domestic demand. Private consumption had recovered at a faster pace than income since 2005. However, the pace has been under adjustment since the third quarter of 2006. Facility investment kept recovering before growth slightly slowed in the fourth quarter of the year. However, construction investment reversed course to a modest rise during the same period. Exports were buoyant throughout the year backed up by strong overseas demand arising from the robust global economy. Export growth remained double-digit in January 2007. The current account kept registering surplus on goods sales surplus driven by export rise. However, the widening services account deficit emerged as uncertainty to the current account surplus trend. Employment was dull due to decreasing hiring in manufacturing. However, more jobs were available in the service sector. Prices remained stable in the 2 percent band on the support of stable agricultural prices. January 2007 prices were also stabilized in the 1 percent range led by oil price fall and stable agricultural prices as the Lunar New Year falls in February this year whereas it fell in January last year. The Korean economy in 2007 is expected to expand a mid 4 percent, mostly in line with growth and employment potential. As for the quality of growth, domestic demand such as consumption is estimated to keep moderating. The economic growth is projected to be stronger in the second half than in the first half. The government will focus on macroeconomic and fine-tuning measures to compensate the domestic economy, so as to support sustainable growth and ease difficulties of ordinary people. The government will continue its endeavor to expand growth engines by improving the business environment to cope with the weakening momentum in consumption and investment and strengthening competitiveness of the service industry. The government will also enhance efforts to compensate the sluggish construction investment.

Economic Bulletin

1. Global economy The global economy maintained solid growth, despite moderation of the US economy, on the back of high growth in China and economic recovery in Japan and the eurozone. Nonetheless, interest rate hikes of major economies and the timing may serve as risk factors in the global economy and the international financial market.

US The US economy in the fourth quarter of 2006 (advance) posted a substantial growth (q-o-q, annualized) of 3.5 percent, up from 2.0 percent in the previous quarter. Further expansion in personal consumption expenditures on the back of robust employment and improvement in trade balance arising from weak dollar and falling oil prices pushed up the pace of growth higher than expected. Net export contribution to GDP growth (%p) -0.19 (Q3 2006) ďż˝ 1.64 (Q4)

Although corporate fixed investment and investment in residential construction decreased by 0.4 percent and 19.2 percent respectively, housing construction, which undermined the growth, has been recently stabilizing. The Federal Open Market Committee (FOMC) decided to keep its target interest rate unchanged for 5 consecutive terms, citing that recent indicators have suggested somewhat firmer economic growth while inflation pressures seem to moderate over time. (Percentage change from previous period) 2005 Annual Real GDP

2006 Q4

Annual

2007 Q3

Dec

Jan

3.2

1.8

3.4

5.6

2.6

2.0

3.5

- Personal consumption expenditures

3.5

0.8

3.2

4.8

2.6

2.8

4.4

- Corporate fixed investment

6.8

5.2

7.4

13.7

4.4

10.0

-0.4

- Residential purpose construction investment

8.6

-0.9

-4.2

-0.3

-11.1

-18.7

-19.2

Industrial production

3.2

4.7

4.0

5.0

6.5

4.0

-0.5

0.4

Retail sales

7.2

0.7

6.3

3.1

0.8

0.9

0.1

0.9

1,981

536

1,838

529

346

556

407

167

111

New home sales

6.8

-1.3

-17.3

-13.3

-1.0

-8.4

5.4

4.8

Core consumer prices (y-o-y, %)

2.2

2.1

2.5

2.1

2.5

2.8

2.6

New non-farm payroll employment (thousand)

1. Annualized rate

February 2007

1-1

US GDP (q-o-q, annualized rate) Source: US Department of Commerce

1-2

US non-farm payroll employment (m-o-m change) Source: US Department of Labor

1-3

US federal funds rate and consumer prices Source: US Federal Reserve Board & Department of Labor

Economic Bulletin

China

The Chinese economy maintained high growth despite slight moderation in the fixed asset investment growth, which was led by recent tightening measures against overheated investment. The Chinese stock market posted the highest record ever on January 24, 2007. However, concerns on the possibility of stock market bubble and alerts on restraining measures against overheated stock market have resulted in a substantial drop in the stock market later on. In specific, the Shanghai composite stock price index witnessed a 13.9 percent drop during January 24-February 5, 2007 period, from 2,975.13 points to 2,612.54 points. (Percentage change from same period in previous year) 2005

2006

Annual

Nov

Dec

Real GDP

10.2

9.9

10.7

10.3

11.3

10.4

Fixed asset investment (accumulated)

27.2

24.5

29.8

31.3

28.2

24.5

26.6

24.5

Retail sales

12.9

12.6

13.7

12.8

13.9

13.8

14.3

14.1

14.6

17.6

16.9

18.8

18.4

16.8

16.9

16.8

16.9

Japan

Employment is improving in line with the economic recovery in Japan. However, private consumption has moderated reflecting changes in the employment structure and corporate efforts to keep labor costs lower. The Bank of Japan (BOJ) decided to keep the target overnight call rate unchanged on January 18, 2007 despite expected price inflation, citing lack of evidence supporting the growth trend of household consumption. (Percentage change from previous period) 2005

2006

Annual

Nov

Dec

Real GDP

1.9

0.5

0.7

0.3

0.2

Mineral production

1.1

2.8

4.6

0.6

0.9

1.0

2.6

0.8

0.7

Retail sales

1.1

-0.1

0.2

1.7

-0.3

-0.9

-0.8

0.0

-0.2

Exports (y-o-y, %)

7.0

3.7

14.6

17.6

14.7

15.6

11.1

12.1

9.8

Consumer prices (y-o-y, %)

-0.3

-0.5

0.3

-0.1

0.2

0.6

0.3

Eurozone

The eurozone economy continued the recovery supported by balanced growth of domestic demand and exports. However, growth in retail sales in December 2006 stood below the expectation. (Percentage change from previous period) 2005

2006

2007

Annual

Nov

Dec

Jan

Real GDP

1.4

0.4

0.8

1.0

0.5

Industrial production

1.2

0.9

1.0

1.2

0.7

0.2

Retail sales

1.3

0.4

0.2

0.5

0.6

0.5

0.3

Exports (y-o-y, %)

7.8

9.8

15.8

9.3

8.0

13.2

Consumer prices (y-o-y, %)

2.2

2.3

2.4

2.2

1.9

February 2007

1-4

Chinaâ&#x20AC;&#x2122;s GDP and fixed asset investment Source: National Bureau of Statistics of China

1-5

Japan's GDP growth Source: Cabinet Office & Ministry of Economy, Trade and Industry, Japan

1-6

Eurozone GDP growth and industrial production Source: Eurostat

Economic Bulletin

2. Private consumption The pace of private consumption growth continued to moderate in the fourth quarter of 2006 (preliminary GDP) from the beginning of 2006. It gained on-year 3.6 percent or onquarter 0.8 percent.

Private consumption (y-o-y, %): 4.2 (Q4 2005) � 4.8 (Q1 2006) � 4.4 (Q2) � 4.0 (Q3) � 3.6 (Q4) (SA*, q-o-q, %): 1.1 (Q4 2005) � 1.3 (Q1 2006) � 0.9 (Q2) � 0.6 (Q3) � 0.8 (Q4) * SA: seasonally adjusted

Consumer goods sales in December posted a mere 2.7 percent growth year-on-year, moderating its growth pace from the previous month. The slowdown was led by moderation in durable goods sales. In particular, automobile sales turned to a negative growth reflecting the high comparison base set in the same month of the previous year at 29.0 percent. (Percentage change from same period in previous year) 2005

2006

Dec

Annual

Q41

Nov1

Dec1

Annual1

Consumer goods sales

9.6

6.8

3.9

5.0

5.5

2.2

3.8

4.3

2.7

4.2

(Seasonally adjusted)

3.0

2.2

-1.3

2.3

-1.1

4.2

1.4

1.0

11.1

7.5

5.9

10.8

8.9

10.1

7.6

9.3

6.4

9.3

- Durable goods

�Automobiles

29.0

18.5

9.5

22.6

8.1

4.2

1.3

1.5

-0.6

8.1

- Semi-durable goods4

18.3

11.7

7.9

7.4

6.8

2.9

3.5

6.8

3.8

5.1

- Non-durable goods

4.3

3.8

1.3

1.2

3.0

-1.8

2.0

0.3

-0.1

1.1

1. Preliminary 2. Percentage change from previous period 3. Durable goods (25.4%): Automobiles, electronic appliances, furniture, telecommunications devices, etc. 4. Semi-durable goods (24.0%): Clothing, footwear, etc. 5. Non-durable goods (50.5%): Food, medicine, cosmetics, fuel, tobaccos, etc.

Sales growth in large discount stores in December gained momentum on the back of brisk sales during the Christmas holidays. Meantime, growth in department store sales moderated due to the high comparison base set in the same month last year at 19.8 percent. (Percentage change from same period in previous year) 2005 Dec

Annual

Q41

Nov1

Dec1

Annual1

- Department stores

19.8

8.2

3.1

7.9

5.6

0.0

0.2

2.3

0.4

3.3

- Large discount stores

13.9

11.6

8.3

6.4

9.0

5.4

10.5

8.0

7.9

7.8

- Other retail stores

1.6

0.1

-0.1

-3.0

-0.2

-0.9

0.1

0.8

-0.8

-1.0

1. Preliminary

2006

February 2007

2-1

Private consumption Source: The Bank of Korea (national accounts)

2-2

Consumer goods sales Source: Korea National Statistical Office (industrial activity trend)

2-3

Consumer goods sales by type Source: Korea National Statistical Office (industrial activity trend)

Economic Bulletin

Preliminary consumption indicators in January 2007 appear to be under adjustment as the Lunar New Year falls in February in 2007 whereas it fell in January in 2006. The value of credit card use expanded. Sales growth at department stores and discount stores turned to a negative territory affected by the shift in the Lunar New Year to February. Value of credit card use (y-o-y, %) 20.8 (Sep 2006) � 8.0 (Oct) � 13.5 (Nov) � 10.0 (Dec) � 11.5 (Jan 2007) Source: The Credit Finance Association

Department store sales (y-o-y, %) 2.6 (Sep 2006) � 0.2 (Oct) � 4.4 (Nov) � 1.0 (Dec) � -6.9 (Jan 2007)

Discount store sales (y-o-y, %) -9.9 (Sep 2006) � 10.1 (Oct) � -0.7 (Nov) � 1.8 (Dec) � -18.4 (Jan 2007) Source: Ministry of Commerce, Industry and Energy Ministry of Finance and Economy (January 2007, monitoring results on current sales volume basis)

Domestic sales of home-manufactured automobiles in January 2007 increased due to the low comparison base set in January 2006 when the demand had decreased due to the expiry of the special excise tax cut. Domestic sales of home-manufactured automobiles (thousand units): 115 (Sep 2006) � 98 (Oct) � 105 (Nov) � 122 (Dec) � 95 (Jan 2007) (y-o-y, %): 40.3 (Sep 2006) � 1.2 (Oct) � -3.9 (Nov) � -4.9 (Dec) � 13.5 (Jan 2007)

Consumer expectations index weakened from the previous month affected by the falling exchange rate and a slight increase in oil prices. Consumer expectations index (base=100) 103.4 (Mar 2006) � 100.6 (Apr) � 98.0 (May) � 97.4 (Jun) � 94.3 (Jul) � 93.7 (Aug) � 94.8 (Sep) � 93.9 (Oct) � 95.2 (Nov) � 93.7 (Dec) Source: Korea National Statistical Office

Sustainable trend growth of private consumption is likely to be determined by income and employment conditions. Although the real GNI in the fourth quarter of 2006 slightly expanded, it hovered below the GDP due to the deteriorating terms of trade. On the other hand, employment conditions such as the number of new employees on payrolls have not improved as much, likely to restrain private consumption increase.

Income and employment indicators (Growth rate, %)

2006 2004

2005

2006

Real GNI

3.9

4.0

Real household income (urban workers)

2.3

Changes in number of employed (y-o-y, thousand)

418

1. Gross Domestic Income

February 2007

2.0

1.3

2.1

2.2

3.01

1.3

2.8

1.9

2.4

1.1

5.4

299

295

331

283

288

278

2-4

Department store and discount store sales (current value) Source: Ministry of Commerce, Industry and Energy (monthly retail sales)

2-5

Domestic automobile sales Source: Korea Automobile Manufacturers Association (monthly automobile industry trend)

2-6

Consumer expectations index and present situation index Source: Korea National Statistical Office (monthly consumer survey index)

Economic Bulletin

3. Facility investment Facility investment in the fourth quarter of 2006 (preliminary GDP) went up a mere 0.1 percent from the previous quarter. The moderation was attributable to the conclusion of advance investment in the IT sector. It expanded 5.8 percent from the same period of the previous year. (Percentage change from same period in previous year) 2005

Facility investment

(Seasonally adjusted)3 - Machinery - Transportation equipment 1. Preliminary

2. National accounts

20061

Annual

2.9

2.7

4.3

10.2

5.1

6.9

7.4

2.3

2.4

0.8

4.2

-0.4

2.5

7.2

6.0

4.7

9.3

6.8

3.2

9.7

-14.4

-10.5

2.4

15.1

-2.7

25.7

-3.6

Annual

9.9

5.8

7.5

3.5

0.1

11.9

0.2

3. Percentage change from previous period

Facility investment in December (estimated index) moderated to post an on-year 2.1 percent growth led by decrease in investment in telecommunications equipment. Domestic machinery shipments registered a mere 6.8 percent growth year-on-year as well. Facility investment might witness a downward trend factoring in machinery orders being in negative growth while the pace of machinery imports moderating. Domestic machinery orders (current value) in December decreased 4.9 percent on-year led by sluggishness in orders from the public sector and a mere increase of the private sector orders. (Percentage change from same period in previous year) 2006

2005

Estimated facility investment2 - Domestic machinery shipments Domestic machinery orders - Public - Private 1. Preliminary

Dec

Annual

Q31

Nov1

Dec1

Annual1

12.6

7.0

3.4

4.3

4.2

10.0

4.5

5.4

2.1

5.6

6.2

1.8

0.6

4.9

4.0

6.1

7.5

11.4

6.8

5.7

42.8

17.5

1.5

11.2

20.8

15.6

12.5

11.3

-4.9

14.9

26.2

17.1

-3.1

-57.9

43.3

16.1

21.0

-50.3

-34.1

1.3

47.1

17.6

2.0

19.9

19.3

15.5

11.2

16.3

1.5

16.5

2. Industrial activity

Machinery imports (%) 43.2 (Sep 2006) � 22.5 (Oct) � 13.7 (Nov) � 13.7 (Dec) � 8.9 (Jan 1~20, 2007)

The Business Survey Index (BSI) for facility investment result in the manufacturing sector compiled by the Bank of Korea remained unchanged from the previous month while BSI for facility investment prospect decreased from the previous month.

Business Survey Index (base=100) Manufacturing facility investment result Manufacturing facility investment prospect Source: The Bank of Korea

February 2007

2006

2007

Sep

Oct

Nov

Dec

Jan

Feb

98 98

97 98

97 97

96 97

96 99

3-1

Facility investment by type Source: The Bank of Korea (national accounts)

3-2

Machinery orders and estimated facility investment (3-month average) Source: Korea National Statistical Office (industrial activity trend)

3-3

Machinery imports Source: Korea International Trade Association (KITA)

Economic Bulletin

4. Construction investment Construction investment in the fourth quarter of 2006 (preliminary GDP) increased 2.9 percent year-on-year, derailing from the negative growth trend. (Percentage change from same period in previous year) 20051 Q1

-2.2

1.6

0.4

1.8

- Building construction

-6.4

0.6

- Civil engineering works

6.8

3.1

Construction investment

(Seasonally adjusted)3

1. Preliminary

2. National accounts

20061 Q4

Annual

0.3

0.9

0.4

-0.8

0.0

-0.5

1.3

-1.0

1.5

0.4

2.4

Annual

1.2

-3.9

-0.6

2.9

-0.1

0.6

-3.9

2.9

2.6

2.0

-5.9

-2.1

-0.3

-1.2

1.5

3. Percentage change from previous period

Construction completed (current value) in December registered an on-year 7.9 percent growth on the back of robust performance in residential and non-residential construction. (Percentage change from same period in previous year) 2006

2005

Construction completed2 - Construction - Civil engineering works Construction orders

Building construction permit area 1. Preliminary

2. Industrial activity

Dec

Annual

Q41

Nov1

Dec1

Annual1

6.5

6.9

5.7

5.8

1.4

6.4

7.6

7.3

7.9

5.3

1.1

5.3

5.1

6.5

0.2

5.3

7.6

8.3

9.6

4.8

15.3

9.8

7.3

4.4

4.1

8.9

7.2

5.0

4.7

6.2

-17.0

-17.9

9.5

-9.7

-14.1

36.2

27.2

44.2

29.5

8.8

-8.0

-8.2

-5.1

13.0

7.4

75.7

-2.8

26.0

-8.3

21.0

3. Current value basis

Construction investment-related leading indicators such as construction orders and building construction permit area were slightly sluggish in the fourth quarter after a surge in the third quarter. Domestic construction orders in December rose 29.5 percent driven by civil engineering sector. However, building construction permit area dropped 8.3 percent due to the sluggishness in residential construction. The construction sector is expected to reverse course to post a slight growth derailing from the decreasing trend due to the low comparison base set in the previous year. However, improvement in large scale seems unlikely.

February 2007

4-1

Construction investment Source: The Bank of Korea (national accounts)

4-2

Construction completed and housing construction Source: Korea National Statistical Office (construction completed) Ministry of Construction and Transportation (housing construction)

4-3

Leading indicators of construction investment Source: Korea National Statistical Office (construction orders) Ministry of Construction and Transportation (building construction permit area)

Economic Bulletin

5. Exports and imports (customs clearance basis) Export growth in January expanded 21.4 percent to US$28.23 billion driven by increased days operated from 22.5 in January 2006 to 24 in the same month in 2007 and the low comparison base of 3.6 percent set in the previous year. By export category (estimated, Ministry of Commerce, Industry and Energy), shipbuilding (up 77.3 percent), steel (up 48.2 percent), LCD panel (up 21.5 percent) and petroleum products (up 19.5 percent) made solid gains. By region (from Jan 1 to Jan 20), exports increased, concentrating on exports bound for ASEAN (up 31.7 percent) and China (up 18.3 percent). (US$ billion) 2006

Exports (y-o-y, %)

2007

Jan

Oct

Nov

Dec

Annual

Jan

23.26

28.05

30.66

29.17

325.98

28.23

3.6

10.7

18.7

13.8

14.6

21.4

Average daily exports

1.03

1.37

1.28

1.3

1.19

1.18

Imports

23.06

25.64

26.76

27.53

309.33

28.02

18.6

13.2

12.2

13.8

18.4

21.5

1.03

1.25

1.12

1.22

1.13

1.17

(y-o-y, %) Average daily imports

Imports in January rose 21.5 percent to US$28.02 billion led by capital goods imports. Raw materials import growth moderated backed up by stabilizing oil prices. On the contrary, capital goods imports expanded due to increasing import of chemical machinery and semiconductor equipment. Raw materials (%) 30.1 (Jan 2006) � 16.1 (Oct)� 14.0 (Nov) � 17.1 (Dec 1-20) � 15.8 (Jan 1-20, 2007)

Capital goods (%) 3.6 (Jan 2006) � 11.0 (Oct) � 7.7 (Nov) � 6.9 (Dec 1-20) � 15.4 (Jan 1-20, 2007)

Consumer goods (%) 12.1 (Jan 2006) � 14.0 (Oct) � 24.4 (Nov) � 24.9 (Dec 1-20) � 16.4 (Jan 1-20, 2007)

Trade surplus in January narrowed to US$0.21 billion on both exports and imports expansion. (US$ billion) 2006

Trade balance

2007

Jan

Oct

Nov

Dec

Annual

Jan

0.2

2.42

3.90

1.65

16.65

0.21

Meantime, February export growth may slow from January affected by reduced days operated as the Lunar New Year falls in February in 2007 as opposed to January in 2006.

February 2007

5-1

Exports (customs clearance basis) Source: Ministry of Commerce, Industry and Energy (export and import trend)

5-2

Imports (customs clearance basis) Source: Ministry of Commerce, Industry and Energy (export and import trend)

5-3

Trade balance Source: Ministry of Commerce, Industry and Energy (export and import trend)

Economic Bulletin

6. Industrial activity Industrial production in December was below the growth trend due to reduced days operated and the base effect. By sector, upward adjustment of semiconductors inventory led the output slowdown. Partial strikes and the base effect also drove industrial output moderation. Automobile sales and production surged 29.0 percent and 7.9 percent, respectively, in December 2005 affected by the expiry of the special excise tax cut in January 2006. Moderation of exports of semiconductors and automobiles is assessed to have affected industrial production. Shipment for both domestic demand and exports moderated from the previous month in December affected by reduced days operated. Inventory growth also slightly fell from the previous month. (Percentage change from same period in previous year) 2005 Annual Production

2006 Dec

Annual

Oct

Nov1

Dec1

6.3

10.3

11.3

9.4

10.6

4.5

4.8

6.5

2.3

6.9

11.7

11.8

10.0

9.8

8.4

12.0

6.4

6.9

5.5

-2.7

1.1

3.7

2.8

-1.4

-3.9

6.2

10.4

11.0

9.8

10.9

4.8

5.1

6.6

2.5

â&#x20AC;˘ Heavy & chemical industry

8.4

13.1

13.6

11.7

13.0

6.2

7.5

7.9

3.3

â&#x20AC;˘ Light industry

-2.8

-1.0

-0.2

0.6

1.8

-2.4

-6.4

0.6

-1.5

Shipment

5.6

8.6

9.7

7.1

8.5

3.0

2.3

4.4

2.4

- Domestic demand

2.3

5.5

7.3

4.1

3.3

1.5

-0.5

3.9

1.1

(days operated reflected) (q-o-q) - Manufacturing

- Exports

10.3

12.9

13.2

11.5

15.4

5.1

5.8

5.3

4.3

Inventory

2.4

6.4

6.8

6.4

7.3

7.5

6.4

Average operation ratio (%)

79.8

80.2

79.4

81.1

80.5

81.2

81.5

82.5

79.7

1. Preliminary

January industrial production is expected to have surged due to increased days operated with the Lunar New Year falling in February this year as opposed to January last year. Meantime, indicators in February may be volatile with relatively large moderation due to the high comparison base set in the same month last year.

February 2007

6-1

Industrial production Source: Korea National Statistical Office (industrial activity trend)

6-2

Average manufacturing operation ratio Source: Korea National Statistical Office (industrial activity trend)

6-3

Inventory Source: Korea National Statistical Office (industrial activity trend)

Economic Bulletin

7. Service sector activity Service activity in December 2006 expanded 5.4 percent from a year earlier, achieving a similar growth rate to the previous month (up 5.5 percent). In seasonally adjusted terms, it grew 1.7 percent from the previous month. All eleven business categories in the service sector were up in December, with wholesale and retail sales, real estate and rental services, transportation services, and entertainment, cultural and sports services leading the upward trend. Real estate services expanded 16.5 percent in December from a 15.1 percent rise in the previous month. The rise was more attributable to brokerage commission increase fueled by rising real estate prices than to a gain in real estate transactions. Nationwide real estate prices climbed 13.8 percent in December, up from 11.7 percent in November, while the prices in Seoul jumped 24.1 percent accelerating from a 20.4 percent increase in the previous month. (Percentage change from same period in previous year) Weight

2006

2005 Dec

Annual

Q41

Oct

Nov1

Dec1

100.0

6.5

3.6

6.1

5.3

4.3

4.8

3.3

5.5

5.4

Contri-2 bution -

(Seasonally adjusted)

1.2

1.3

0.7

0.5

2.7

-0.3

1.6

1.7

- Wholesale & retail

27.6

4.1

1.9

3.3

3.8

4.0

3.5

2.6

4.2

3.5

0.97

- Hotels & restaurants

7.7

4.5

0.3

3.9

2.4

-0.2

-4.2

0.6

2.3

0.18

- Transportation services

8.8

2.5

4.2

6.4

6.3

5.9

6.9

4.2

6.5

10.2

0.90

- Communication services

5.8

5.4

4.1

2.3

2.9

3.2

2.6

0.9

4.8

2.1

0.12

- Financial & insurance services

17.6

16.3

7.3

13.2

9.1

4.9

4.8

4.6

6.8

3.0

0.53

- Real estate & renting

5.4

10.2

8.5

10.5

8.4

7.4

14.1

8.4

15.5

17.6

0.95

- Business services

8.5

6.0

2.8

5.8

6.2

6.4

5.8

6.0

7.0

0.60

- Educational services

8.6

1.9

0.7

1.3

2.2

1.3

4.2

7.3

3.1

2.3

0.20

- Healthcare & social welfare services

4.0

7.2

7.3

11.2

8.1

11.9

8.9

5.8

11.6

9.3

0.37

- Entertainment, cultural and sports services

3.5

5.0

3.0

4.9

2.9

-0.7

3.6

-2.3

2.2

11.5

0.40

- Other public & personal services

2.6

2.7

1.9

4.7

4.1

3.9

2.5

-1.6

2.8

5.6

0.15

Service industry activity index 3

1. Preliminary 2. Contribution to December growth (%p) 3. Percentage change from previous period

Service activity is estimated to have stayed on an upward track in January 2007, although the pace of growth may have moderated slightly. The growing trend of real estate related services backed by real estate price rise is expected to continue to help overall service activity expansion for the time being. However, domestic demand moderation is likely to incrementally affect service activity.

February 2007

7-1

Service industry Source: Korea National Statistical Office (service industry activity trend)

7-2

Wholesale and retail sales Source: Korea National Statistical Office (service industry activity trend)

2006 service industry by business

serv ices Hea l t h serv care ices & s ocia l we lfar e Ente spo rtainm rts s en ervi t, cu ces ltura l& Oth & p er pub erso lic, nal repa serv ir ices

Edu cati ona l

Com mun icat ion serv ices Fina serv ncial & ices insu ranc e Rea l es tate & re ntin g Bus ines s se rvic es

Tran spo rtat ion

rest aura nts Hot els &

Wh oles ale &

reta il

Source: Korea National Statistical Office (service industry activity trend)

Tota l ind ex

7-3

Economic Bulletin

8. Employment The number of workers on the payroll increased 290,000 from a year earlier in December 2006, maintaining the recent trend growth of around 300,000. In 2006, it expanded 295,000 year-on-year. Employment growth in services moderated slightly to register 293,000 in December due to the high comparison base of 415,000 set in the same month of the previous year. Employment growth slowed in wholesale and retail sales, resulting from the distribution industry becoming larger and going on-line. Hiring in manufacturing slipped 67,000 in December sustaining the downward trend. The fall is attributable to the widening gap between employment in manufacturing and the trends of industrial production and exports. The gap is stemming from informatization and labor-saving technological progress. Employment in agriculture, forestry and fisheries reversed course to post a growth of 11,000 while employment growth in construction accelerated to register a 48,000 increase. The expansion was backed up by favorable employment conditions thanks to 7 to 8 degrees Celsius rise of average temperature year-on-year. As for the quality of employment, employment increases were led by wage workers (up 449,000) and full-time workers (up 365,000). However, full-time employment growth has slightly moderated in December. The unemployment rate fell 0.2 percentage point year-on-year to 3.3 percent as employment growth exceeded the growth of economically active population (up 247,000). Youth unemployment remained unchanged from a year earlier at 7.9 percent. (Change from same period in previous year, thousand) 2005

2006

Dec

Annual

Oct

Nov

Dec

Annual

205

293

299

331

283

288

293

278

267

290

295

- Agriculture, forestry and fishery

-91

-36

-9

-34

-65

-28

-36

-7

-31

- Manufacturing

-41

-77

-56

-72

-77

-57

-77

-58

-60

-67

- Construction

-78

-32

-5

-32

- Services

415

436

368

403

419

358

436

305

313

293

371

3.5

3.7

3.9

3.4

3.3

3.2

3.3

3.2

3.3

3.5

Employment growth

Unemployment rate (%)

February 2007

8-1

Number of employed and employment growth Source: Korea National Statistical Office (employment trend)

8-2

Share of employed by industry Source: Korea National Statistical Office (employment trend)

8-3

Unemployment rate and number of unemployed Source: Korea National Statistical Office (employment trend)

Economic Bulletin

9. Financial markets 9.1 Stock market The KOSPI closed in January 2007 at 1,360.23 points slipping 74.23 points, or 5.2 percent, from the end of the previous month, after fluctuating throughout the month along with the program selling in early January, as well as mounting concerns on global liquidity tightening and expected deterioration of corporate earnings in IT industry. The KOSDAQ fell 29.78 points or 4.9 percent from the end of the previous month to wrap up the month at 576.37 points due to the negative outlook for IT industry amid marginal effects on the index from program trading. In January, net buying by foreign and individual investors amounted to 50.4 billion won and 754.1 billion won respectively, while net selling by institutional investors recorded 1,613.9 billion won. (End-period, point, trillion won) KOSPI

Stock price index Market capitalization

KOSDAQ

2006

Jan 2007

Change1

2006

Jan 2007

Change1

1,434.5

1,360.2

-74.3 (-5.2%)

606.2

576.4

-29.8 (-4.9%)

704.6

668.6

-36.0 (-5.1%)

72.1

69.5

-2.6 (-3.6%)

3.4

2.6

-0.8 (-23.5%)

1.7

1.8

0.1 (5.9%)

Average daily trade value 1. Change from the end of previous year

9.2 Exchange rate The won/dollar exchange rate closed higher at the 941 won range in January 2007 on the back of global dollar strength and offshore buying of dollars. The won/dollar exchange rate fell to the 925 won range on January 2, mainly affected by exports carried forward from the end of previous year. However, it turned to rise on the strong dollar, which reflected improvement in US economic indicators, and expected measures to curb the won rise. After fluctuating within the narrow band of the upper 930 to lower 940 won level from January 12 to 31, the won/dollar exchange rate closed the month at 941 won. (End-period) 2004

2005

2006

2007

Dec

Oct

Nov

Dec

Jan

Change1

Won/Dollar

1,035.1

1,011.6

942.3

929.5

929.8

941.0

-1.2

Yen/Dollar

102.5

117.8

117.3

116.1

118.7

121.4

-2.2

1. Appreciation from the end of previous year (%); the value of Korean won is based on closing price at 3:00 p.m.

February 2007

9-1

Stock prices

9-2

Foreign exchange rate (month-end)

9-3

Recent foreign exchange rate

Economic Bulletin

9.3 Bond market Bond yields such as Treasury bond yields indicated a downward trend in early January 2007 due mainly to bargain hunting after a short-term jump of the yields at the end of last year. Later in the month, however, the yields bounced back supported by expectations over the Bank of Koreaâ&#x20AC;&#x2122;s further tightening monetary policy along with a pick-up in the US Treasury bond yields. Yields on 91-day CDs, which are short-term interest rates, rose slightly compared to the previous month. (End-period) 2005

2006

2007

Jun

Sep

Dec

Sep

Oct

Nov

Dec

Jan

Change1

Call rate (1 day)

3.30

3.28

3.76

4.48

4.49

4.60

4.61

CD (91 day)

3.53

3.93

4.09

4.59

4.58

4.67

4.86

4.96

Treasury bonds (3 yr)

4.02

4.60

5.08

4.57

4.71

4.82

4.92

5.02

Corporate bonds (3 yr)

4.41

5.00

5.52

4.89

5.01

5.16

5.29

5.38

Treasury bonds (5 yr)

4.25

4.83

5.36

4.61

4.79

4.88

5.00

5.03

1. Basis point change from end December 2006

9.4 Money supply & money market Driven by the private sector credit rise centering on bank loans, the M2 growth in December 2006 continued to expand. The M1 growth maintained an upward trend as settlement accounts including instant access accounts surged. (Percentage change from same period in previous year, average) 2005

2006

Annual

Nov

Dec

Annual

Nov

Dec

M12

8.5

9.9

2.6

-1.1

-0.5

-0.9

-0.6

-2.8

-5.5

5.9

10.0

10.4

6.9

7.1

6.7

6.6

7.0

8.3

7.0

7.2

8.1

10.9

11.1

11.4

7.0

6.8

7.1

7.2

7.3

7.9

7.2

7.4

7.5

9.0

9.4

9.63

1. Excludes corporate MMF which is redeemable on and after the next business day following the transaction date from November 2005. 2. Liquidity aggregates of financial institutions (mostly identical with M3) 3. Estimates 4. Preliminary

In December, bank deposits increased substantially, boosted by rise in instant access accounts due to the year-end fiscal execution and settlement funds deposits for the beginning of the next year. Asset management company (AMC) receipts turned to a decline as bond funds decreased due to interest rates rise, while equity funds growth slowed on repurchase for profit-taking. (Monthly change, end-period, trillion won) 2005

2006

Dec

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Bank deposits

5.4

2.3

2.1

6.2

10.9

-7.2

4.3

13.6

-7.3

3.7

17.4

AMC receipts

2.1

6.9

1.3

9.9

-11.7

0.3

-1.8

4.0

5.8

4.7

-0.8

February 2007

9-4

Interest rates Source: The Bank of Korea

9-5

Total money supply Source: The Bank of Korea

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.

Economic Bulletin

10. Balance of payments The current account surplus in 2006 amounted to US$6.09 billion, due to the narrowed goods account surplus and the widened service account deficit. It posted US$14.98 billion in the previous year. Despite robust exports, the goods account surplus slipped US$3.47 billion from the previous year in 2006 due to import surge led by raw materials including crude oil. The service account deficit widened US$5.1 billion with narrowing transportation account surplus and widening travel account deficit. The travel account deficit surged US$3.32 billion due to the increased payments of overseas travel and education/training expenses, while the transportation account surplus narrowed US$1.27 billion from the previous year affected by increased payment of ocean freight expenses. Travel balance (US$ billion) -4.74 (2003) � -6.28 (2004) � 9.60 (2005) � -12.92 (2006)

Transportation balance (US$ billion) 3.57 (2003) � 4.87 (2004) � 3.73 (2005) � 2.46 (2006)

The income account deficit narrowed from the previous year to US$0.54 billion on the back of increased interest income. Meantime, the current account surplus recorded US$0.15 billion in December 2006 dragged on by the smaller goods account surplus. (US$ billion) 2005

2006

Oct

Nov

Dec

Jan-Dec

Oct

Nov

Dec

Jan-Dec

2.83

2.06

0.28

14.98

1.76

4.24

0.15

6.09

- Goods balance

3.48

3.19

1.67

32.68

2.69

5.71

1.95

29.21

- Service balance

-0.61

-0.88

-1.44

-13.66

-1.19

-1.43

-1.88

-18.76

- Income balance

0.06

-0.08

0.34

-1.56

0.46

0.24

0.29

-0.54

Current account

Despite retrieval of investments in domestic stocks by foreign investors (US$13.35 billion) and more overseas securities investments by domestic investors, the capital and financial account balance saw a net inflow of US$18.62 billion in 2006 backed by increased shortterm loans from overseas. Capital & financial account balance (US$ billion) 13.91 (2003) � 7.60 (2004) � 4.76 (2005) � 18.62 (2006)

For 2007, the current account surplus is forecasted to narrow further due to a decrease in the goods account surplus amid the global economic slowdown and widening service account deficit. Maintaining current account surplus is likely to be dependent on the level of service account deficit including travel account.

February 2007

10-1 Current account balance Source: The Bank of Korea (balance of payments trend)

10-2 Travel balance Source: The Bank of Korea (balance of payments trend)

10-3 Capital & financial account balance Source: The Bank of Korea (balance of payments trend)

Economic Bulletin

11. Prices and international commodity prices 11.1 Prices Consumer prices were up 1.7 percent year-on-year in January 2007, the slowest pace in 6 years and 8 months.

Consumer price inflation 2007

2006 Jan

Sep

Oct

Nov

Dec

Jan

Month-on-Month (%)

0.6

0.3

-0.5

0.3

0.2

Year-on-Year (%)

2.2

2.5

2.2

2.1

1.7

Prices of agricultural, livestock and fishery products in January downwardly stabilized centering on vegetables compared with a year earlier, while personal service fees were also stable compared with the previous years. Meantime, public utility charges recorded a relatively sharp increase due to rises in medical service fees including outpatient treatment fees and local public utility charges such as water supply and drainage charges.

Consumer price inflation in major sectors Total

(Percentage change from same period in previous year)

Agricultural, livestock & fishery products

Industrial products

Oil products

Housing rents

Public utility

Personal services

Jan 2007 (Contribution ratio, %p)

1.7

-0.8 (-0.07)

0.5 (0.16)

-3.0 (-0.17)

1.5 (0.14)

2.9 (0.47)

2.9 (0.99)

Jan average 2002-2006

3.1

5.9

-0.1

0.6

2.6

2.0

3.7

Consumer price increases of major items in Jan 2007 (y-o-y, %) Onion (79.5), watermelon (57.6), outpatient treatment (2.2), water supply (2.6), water drainage (3.0)

Consumer price decreases of major items in Jan 2007 (y-o-y, %) Radish (-48.0), Chinese cabbage (-53.8), mobile phone (-27.4), mobile contents services (-12.9)

Year-on-year core inflation was up 2.1 percent in January and consumer prices for basic necessities rose 1.9 percent in January from a year earlier. (Percentage change from same period in previous year) 2006

2007

Jan

Sep

Oct

Nov

Dec

Jan

Core inflation

1.3

2.0

2.1

Consumer prices for basic necessities

3.4

3.5

2.7

2.6

1.9

Consumer prices in February are forecast to maintain the stable 2 percent level year-on-year although they are expected to rise driven by price rise in certain agricultural, livestock and fishery products used for the ancestral ceremonies for the upcoming Lunar New Year holidays.

February 2007

11-1 Prices Source: Korea National Statistical Office (consumer prices, core inflation) & The Bank of Korea (producer prices)

11-2 Consumer price inflation Source: Korea National Statistical Office (consumer price trend)

11-3 Contribution to consumer price inflation Source: Korea National Statistical Office (consumer price trend)

Economic Bulletin

11.2. International oil and commodity prices International oil prices dropped relatively sharply from a month earlier in January due to mild weather conditions in the key heating oil-consuming regions such as the US. Sufficient oil stocks also contributed to the price fall. International oil prices in February are likely to be influenced by weather conditions and the OPECâ&#x20AC;&#x2122;s progress on output cut. (US$/barrel, period average) 2004

2005

2006

2007

Annual

Oct

Nov

Dec

Jan

Dubai crude

33.6

49.4

61.6

56.6

56.8

58.7

51.8

Brent crude

38.2

54.3

65.1

57.5

58.8

62.6

53.6

WTI crude

41.4

56.5

66.0

58.8

59.1

62.0

54.2

Record high oil prices (spot prices, US$/barrel) Dubai crude (72.2), Brent crude (78.7), WTI crude (77.0)

Prices of domestic oil products including gasoline and diesel went down from a month earlier fueled by international oil prices fall. (Won/liter, period average)

Gasoline prices Diesel prices

2004

2005

2006

2007

Annual

Oct

Nov

Dec

Jan

1,295

1,365

1,543

1,441

1,415

1,411

908

1,080

1,295

1,209

1,187

1,182

1,170

Source: Korea National Oil Corporation

International commodity prices in January were up from the previous month as prices of nonferrous metals such as nickel and tartar, and those of agricultural products such as soybean, corn and raw rubber all climbed. Prices of electrolytic copper and zinc slid due to the selling of investment funds while prices of nickel and tartar rose month-on-month as production in some refineries was disrupted. While wheat prices declined on expectations on farm enlargement, prices of corn and soybean climbed due to the US plan to expand recycled fuel, and those of raw rubber rose as well on bad weather. Price increases in Jan (monthly average, m-o-m, %) Nickel (3.6), tartar (2.2), corn (3.8), soybean (4.9), raw rubber (20.2)

Price decreases in Jan (monthly average, m-o-m, %) Electrolytic copper (-14.6), zinc (-14.4), wheat (-6.3), raw sugar (-6.4)

Reuters index*

(Period average)

2004

2005

Annual

Nov

Dec

Jan

1,618

1,680

2,019

2,153

2,182

2,223

* A weighted average index of 17 major commodities

February 2007

2006

2007

11-4 International oil prices Source: Korea National Oil Corporation

11-5 International oil prices (Dubai crude) and import prices Source: Korea National Oil Corporation & Korea Customs Service

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.

Economic Bulletin

12. Real estate market 12.1 Housing market Apartment prices nationwide decelerated from the previous month in January 2007.

Apartment sales prices 2003

(Percentage change from previous period)

2004

2005

Annual Annual Annual

2006

2007

Aug

Sep

Oct

Nov

Dec

Jan

Jan 1

Jan 81 Jan 151 Jan 221 Jan 291

Nationwide

9.6

-0.6

5.9

0.2

0.4

1.5

3.8

2.1

1.0

0.2

0.1

Seoul

10.2

-1.0

9.1

0.3

0.6

2.2

6.2

3.7

1.8

0.3

0.1

0.0

14.3

-1.3

13.5

0.3

0.7

2.5

6.5

2.4

1.1

0.2

0.1

0.0

-3.7

7.6

0.5

1.0

3.3

8.2

3.6

1.6

0.3

0.1

Gangnam

Gyeonggi

1. Weekly trends 2. Upscale area of southern Seoul Source: Kookmin Bank

Apartment rental prices remained on a stable trajectory.

Nationwide apartment rental prices 2003

2004

(Percentage change from previous period)

2005

Annual Annual Annual

2006

2007

Aug

Sep

Oct

Nov

Dec

Jan

Jan 11 Jan 81 Jan 151 Jan 221 Jan 291

Nationwide

-0.4

-2.7

5.7

0.2

0.8

1.2

0.6

0.5

0.1

0.0

Seoul

-3.2

-4.4

6.2

0.4

1.2

1.7

0.6

0.7

0.1

0.2

0.1

0.0

Gangnam

Gyeonggi

-2.3

-5.2

8.6

0.2

1.2

1.5

1.6

0.5

0.7

0.0

0.1

0.0

-5.5

10.6

0.4

1.5

2.1

1.0

0.8

0.1

0.2

0.0

1. Weekly trends 2. Upscale area of southern Seoul Source: Kookmin Bank

Apartment sales transactions in December 2006 slowed from the previous month.

Apartment sales transactions 2004

Annual Annual 64

(Monthly average, thousand)

2005

February 2007

2006 Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

104

107

100

110

152

116

12-1 Real estate prices Source: Kookmin Bank (national housing price trend)

12-2 Weekly apartment sales prices and monthly transaction volume Source: Kookmin Bank (weekly APT price trend) & Korea Land Corporation (monthly land trade trend)

12-3 Apartment prices by region Source: Kookmin Bank (national housing price trend)

Economic Bulletin

12.2 Land market Nationwide land prices in December 2006 rose 0.49 percent from the previous month. Only 58 areas out of 248 cities, counties and districts stayed above the nationwide average while the rest stood at below average.

Land prices by region

(Percentage change from previous period)

2004

Nationwide

2005

2006

Annual

Nov

Dec

3.86

4.98

0.76

1.90

1.13

1.11

5.61

1.31

1.43

1.25

1.5

0.51

0.49

Seoul

4.09

6.56

0.74

2.65

1.44

1.59

9.17

1.78

2.37

2.19

2.5

0.86

0.81

Gyeonggi

6.12

5.69

0.96

2.40

1.41

0.81

5.07

1.12

1.29

1.05

0.5

0.51

0.49

S. Chungcheong

11.65

8.32

2.16

2.52

1.28

2.12

5.54

2.77

1.31

0.69

0.67

0.21

0.24

Nationwide land transactions in December stayed on the upward track except for the Seoul metropolitan area.

Land sales transactions 2004

(Monthly average, thousand)

2005

Annual Annual

2006 Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Nationwide

218

248

153

197

261

231

249

211

182

178

236

239

330

372

Gyeonggi

102

100

N. Chungcheong

S. Chungcheong

February 2007

12-4 Land and consumer prices since 1970s Source: Korea Land Corporation (land prices) & Korea National Statistical Office (consumer prices)

12-5 Land prices by region Source: Korea Land Corporation (land price trend)

12-6 Land trade volume Source: Korea Land Corporation (land trade trend) 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0

Economic Bulletin

13. Composite indexes of business cycle indicators The cyclical indicator of coincident composite index, a barometer of current economic conditions, fell 0.2 percentage point from a month earlier in December 2006. Despite robust service activities, the fall was mainly due to moderation in some components of the index including the manufacturing operation ratio and the industrial production index. The on-year leading composite index in December, which foresees the future economic conditions, remained stagnant from the previous month. Some components of the index including the ratio of job vacancies to job seekers and commodity terms of trade index made solid gains. However, the value of domestic construction and machinery orders received slackened to some extent. The Korean economy grew 5 percent in 2006 as initially forecasted. As for the quality of growth, robust exports balanced out slow recovery in domestic demand including consumption toward the second half of the year. Growth in 2007 is projected to be lower in the first half and higher in the second, amid continued sluggishness of domestic demand, particularly consumption.

2006

Cyclical indicator of coincident composite index (m-o-m, p) Leading composite index

(m-o-m, %p) 1. Preliminary 2. y-o-y, %

February 2007

May

Jun

Jul

Aug

Sep

Oct1

Nov1

Dec1

99.9

99.8

99.0

99.1

99.6

100.8

101.1

101.0

-0.1

-0.8

0.1

0.4

1.2

0.3

-0.2

5.3

4.8

4.3

3.9

4.1

4.4

4.6

4.8

-0.5

-0.4

0.2

0.3

0.2

0.0

13-1 Cyclical indicator of coincident composite index Source: Korea National Statistical Office

13-2 Leading composite index Source: Korea National Statistical Office

13-3 Coincident and leading composite indexes Source: Korea National Statistical Office

Economic Bulletin

Policy Issues New Measures to Upgrade the KTB Market

The Ministry of Finance and Economy unveiled the schedule of the Korean Treasury bond (KTB) issuance and the KTB market stimulus plans and issuance plan for inflation-linked Korean Treasury bonds on January 11, 2007.

I. Korean Treasury bond (KTB) market: 2007 issuance schedule and market stimulus plans 2007 issuance schedule The Ministry of Finance and Economy is scheduled to issue 62.1 trillion won of government bonds in 2007. This amount will comprise 50.6 trillion won of KTBs and 11.5 trillion won of National Housing Bonds (NHBs). Of the 50.6 trillion won to issue KTBs, 25.2 trillion won will be used to fund rollover of existing KTBs, while 25.4 trillion won will be used to finance new government projects.

New projects to be financed (25.4 trillion won) Foreign Exchange Stabilization Fund

(Trillion won)

16.1*

General Account

8.0

Rice Income Stabilization Fund

0.5

United States Forces in Korea Institution Relocation Special Account

0.3

Science and Technology Promotion Fund

0.3

Others/miscellaneous

0.2

Total

25.4

* 5.1 trillion won for redemption of won-denominated Foreign Exchange Stabilization Bonds

In FY 2007, the government will issue 3-year, 5-year, 10-year and 20-year KTBs in proportion of 20:40:30 (fixed-rate 25 & inflation-linked 5):10, respectively, as opposed to 25:40:25:10 in 2006.

February 2007

Bidding dates for fixed-rate KTBs are Mondays of 1st, 2nd, 3rd and 4th week of each month while bidding date for inflation-linked KTBs is Wednesday of the 3rd week of the issuing month. The government will keep the monthly issuance evenly spread throughout the year to ensure transparency and predictability in the market. Meantime, the government will issue 11.5 trillion won of National Housing Bonds (NHBs). Of the 11.5 trillion won set aside for issuance of NHBs, 7.4 trillion won will go toward rolling over existing Housing Bonds; 4.1 trillion won will be used to meet new demands, such as for housing construction and housing loan funds. NHBs are sold through a mandatory purchase mechanism in relation to specific economic activities such as acquisition of real estate business licenses and title registration of real estate. They are classified into Types 1, 2 and 3 according to issuance conditions and purposes. Currently, only Types 1 and 2 are issued.

KTB market stimulus plan In order to broaden and deepen the KTB market, the government plans to take the following policy initiatives this year. Upgrading the KTB issuance system and securing a stable base for financing ( i ) The government will diversify the debt portfolio by issuing inflation-linked KTBs. This will facilitate financing fiscal deficit even during periods of inflation by providing a tool to hedge risk as well as maximize investors’ reach. (ii) The Ministry of Finance and Economy will set up an administrative division solely responsible for KTB to promote professional debt management by recruiting financial experts from the private sector. It is expected to study and review various government bonds related institutions toward the development of the Treasury bond markets. (iii) The government will encourage healthy competition between Primary Dealers. This will be accomplished by improving the PD incentive system, for example by increasing the amount given to the Non-competitive Bids Option II for PDs, and abolishing the preliminary PD system.

Boosting demand for government bonds and improving transparency of the secondary market ( i ) The government will consider the introduction of “When-Issued Market” for KTBs. The “When-Issued Market” refers to a market where unissued securities are traded on the condition of future issuance.

Economic Bulletin

(ii) Through open forum discussions, the government will devise measures to introduce an Electronic Trading System for KTBs in order to improve the transparency of the secondary market. Strengthening dialogue channels with the market The government will host IRs at home and abroad. â&#x20AC;&#x153;A Guide to KTBsâ&#x20AC;? will be made available in Korean and English. It will also host regular government bond-related discussion meetings to gather market views and opinions on current policy issues.

II. Issuance plan for inflation-linked Korean Treasury bonds After extensive research and surveys as well as meetings with experts in various sectors, the Ministry of Finance and Economy has finalized its plan for issuing inflation-linked Korean Treasury bonds (KTBis). Details of the issuance plan for KTBis, which goes into effect from 2007, are as follows.

Inflation-linked bonds Inflation-linked bonds are a type of medium to long term marketable security whose interest payments and principal are adjusted semi-annually, based upon changes in the Consumer Price Index. Investment is always protected from inflation because the interest rate is applied to the adjusted principal; so if inflation occurs, interest earned increases. Inflation-linked bonds, often called linkers, were first introduced in the 1960s by Brazil. The market has grown tremendously since then with the UK (1981), Australia (1985), Canada (1991), Sweden (1994), US (1997), France (1998), Japan (2004), and Germany (2006) all issuing linkers.

February 2007

How to calculate cash flows with inflation-linked bonds Suppose you made a purchase on an inflation-linked bond with the principal of 10 billion won, the coupon rate of 4 percent, and the maturity of 10 years that pays its coupon payment semi-annually. The semi-annual interest payment is calculated using the mathematical formula as follows: Principal amount x Reference CPI applicable to the date of payment Reference CPI applicable to the date of issuance x Coupon rate x 1/2 The diagram below illustrates the cash flows that investors receive under the assumption described above. Note that the amount of coupon payments and principles moves in lockstep with increases in CPI, hedging the risk against loss of value that would have otherwise occurred in fixed cash flows. Cash flow of inflation-linked bonds with different maturities

Rationale for issuing KTBis The Ministry of Finance and Economy expects that issuance of KTBis will further widen and deepen the Korean economy in the following three aspects. Fiscal operations aspect (i) Reducing interest costs Since KTBis provide investors with means of hedging the risks of price fluctuation, they can be issued at costs that are lower than for nominal KTBs by the amount of the inflation risk premium. This means a decrease in interest costs for the government.

Economic Bulletin

(ii) Securing a stable base for fiscal funds With the introduction of KTBis guaranteeing purchasing power, the government is likely to reach investors who would not buy nominal government bonds, and also to tap new money that would not have been allocated into nominal debt. In addition, on the back of diversified debt portfolio, fiscal funds are to be financed in a stable manner in the event of unexpected economic occasions such as inflation. (iii) Enhancing stability of the government asset and liability management Considering the strong positive correlation between tax revenues and prices, issuance of KTBis will strengthen stability of fiscal operations, through the matching of cash flows between assets (tax revenues) and liabilities. The effect will be remarkable given the fact that value-added tax and income tax, both are directly influenced by prices account for 65 percent of internal taxes in Korea. Financial market aspect The introduction of the new investment instrument is expected to enhance the stability and profitability of investment portfolios. KTBis serve as benchmark rates when private companies issue inflation-linked bonds, thereby encouraging smooth price discovery processes. Issuance of KTBis stimulates globalization of the financial market in Korea by encouraging development of various derivatives products such as inflation swaps and futures. It will also help Korea brace for the opening of the financial market including Korea-US FTA. Macroeconomic aspect Issuance of KTBis eliminates unnecessary inflation expectations in the market by communicating the government's strong will to stabilize prices. By making use of the differences between nominal KTB rates and the real rates of KTBis, inference of expected inflation can be drawn, which is useful in monetary policy implementation.

KTBis issuance plan Issuance volume Reflecting market demand, KTBis will make up 5 percent of the total KTB issuance volume for 2007. The government will issue 3-year, 5-year, 10-year and 30-year KTBs in proportion of 20:40:30 (fixed-rate 25 & inflation-linked 5):10.

February 2007

Structure Linked Index

Consumer Price Index (CPI)1

Linkage Method

‘Canadian Model’2

No “floors”3 Maturity

10-year4

1. CPI is published by the Korea National Statistical Office at the beginning of each month. 2. Canadian Model adjusts the par value of bonds according to price fluctuations, with a 3-month time lag.* * For example, the CPI for June 2007, which is announced in early July, applies to calculations of changes in the principal around September. This means that price fluctuations are reflected in the principal, with a 3-month time lag. 3. There are no floors* to promote proper functioning of KTBis in the economy. * Floors guarantee the par amount of principal during deflation. 4. With a view to encouraging early settlement of KTBis, maturity is the same as for 10-year nominal KTBs, the long-term benchmark interest rates.

Issuance method KTBis will be issued through a syndicate in the early stages, when price discovery is difficult. Thereafter, KTBis will be issued through Primary Dealer auctions. Meantime, the KTBis will be issued once each quarter in order to prevent deterioration of liquidity due to excessive segmentation.

Economic Bulletin

Economic News Briefing GDP grew on-year 5% in 2006 (preliminary) Koreaâ&#x20AC;&#x2122;s real GDP growth in 2006 expanded 5.0 percent year-on-year in line with the initial forecast. It increased 4.0 percent in the previous year. The steady expansion of the economy was mainly attributable to robust gains in manufacturing output (up 8.3 percent), goods exports (up 13.0 percent) and facility investment (up 7.5 percent).

GDP by production and expenditure*

(Percentage change from same period in previous year)

20051

20061

Annual

GDP

2.7

3.2

4.5

5.3

4.0

6.1

5.3

4.8

4.0

5.0

Agriculture, forestry and fishery

-2.1

2.6

-0.2

-0.9

-0.1

4.4

-1.5

-5.4

-1.8

-1.9

Manufacturing

5.1

5.0

7.4

10.2

7.0

9.9

9.3

8.8

5.7

8.3

Electricity, gas and water

8.8

7.3

5.7

9.9

8.0

4.5

3.6

5.6

0.5

3.6

Construction

-2.6

1.0

0.7

0.4

0.1

1.8

-3.2

0.3

1.9

0.1

Services

2.2

2.5

3.4

3.9

3.0

4.3

3.7

4.0

4.1

Private consumption

1.6

3.0

4.0

4.2

3.2

4.8

4.4

4.0

3.6

4.2

Facility investment

2.9

2.7

4.3

10.2

5.1

6.9

7.4

9.9

5.8

7.5

Construction investment

-2.2

1.6

0.3

0.9

0.4

1.2

-3.9

-0.6

2.9

-0.1

Goods exports3

7.7

6.3

13.1

11.4

9.7

11.6

16.2

13.4

11.0

13.0

3.0

3.9

10.5

7.0

6.1

11.8

14.3

11.8

7.6

11.3

Goods imports

Domestic demand GDI

1.5

2.8

3.5

4.3

3.1

4.6

3.3

4.2

4.3

4.1

0.6

0.5

0.6

1.6

0.8

1.6

1.8

1.9

3.0

2.1

*At 2000 constant prices, original 1. Preliminary 2. Wholesale and retail sales, hotels and restaurants, transportation and storage, communication services, financial and insurance services, real estate, business services, public administration, defense and social security, educational services, healthcare and social welfare services and other services are included. 3. FOB basis 4. Inventories are excluded.

February 2007

In the fourth quarter of 2006, the real GDP grew 4.0 percent from a year earlier, slowing from a 4.8 percent advance in the third quarter, mainly due to weak growth in manufacturing and exports despite further expansion in construction and services.

Wage increases stabilized downwards Wage increase agreed by employees and employers at Korean companies recorded an average of 4.8 percent in 2006, up 0.1 percentage point from a year earlier. The wage increase posted an average of 7.6 percent in 2000, 6.7 percent in 2002 and 5.2 percent in 2004. Meanwhile, Korea’s labor productivity was up 12.2 percent from a year earlier in the third quarter of 2006, continuing a double digit growth for the fourth straight quarter, as industrial output increased 10.9 percent year-on-year while labor input dipped 1.1 percent. The unit labor cost, obtained by dividing hourly nominal wages by labor productivity, fell 6.6 percent year-on-year in the third quarter, compared with 5.9 percent decline in the previous quarter.

Positive outlook for Korea’s key industries Semiconductors, shipbuilding, machinery and display are forecast to extend their growth streak this year, according to a report on 12 key industries’ 2006 performances and 2007 outlook, published by the Ministry of Commerce, Industry and Energy. The key industries continued an upward trend in 2006 driven by the robust export led by flagship export items such as shipbuilding and semiconductors in spite of unfavorable external circumstances including the rising won and oil prices. Most items in the key industries are expected to sustain their growth this year, although a bit slower than last year, due to the factors such as sluggish recovery of domestic demand and the decelerated export growth following the slowdown of the world economy.

Korea’s outward FDI more than doubled in 2006 Korea’s foreign direct investment (FDI) outflow (notification basis) in 2006 surged 104.4 percent year-on-year to US$18.46 billion. The increase was driven by investment in overseas resource development, global management strategy and eased regulations on overseas investment. In particular, the recent investment in resource development surged on the back of government assistance such as strengthening resource diplomacy, expanding financial source for resource development and training skilled manpower.

Economic Bulletin

(US$ billion)

2005

FDI outflow (notification basis) Notified cases

20061

Annual

9.03

2.45

18.46

3.82

3.32

5.41

5.91

(14.3)*

(7.8)

(104.4)

(87.2)

(80.0)

(100.9)

(141.1)

4,555

1,219

5,250

1,198

1,370

1,311

1,371

(16.1)

(18.5)

(15.3)

(23.6)

(17.4)

(9.3)

(12.5)

* Figures in parenthesis refer to percentage change from same period in previous year.

By company size, investment by large companies surged by 150.8 percent while that by SMEs increased 64.3 percent. By industry, FDI outflow to real estate, construction and mining rose considerably. By country, FDI outflow to Vietnam and the Czech Republic substantially increased as Korea National Oil Corporation invested US$410 million in Vietnam for resource development and Hyundai Motors made US$1 billion investment to build an auto plant in Czech. Growth in Korea's overseas direct investment was also led by investments in real estate development in Malaysia, housing construction in Kazakhstan, communications industry in Singapore and resource development in Canada and Nigeria. On the other hand, FDI inflow (notification basis) in 2006 decreased 2.9 percent year-on-year to US$11.23 billion, slightly higher than early estimate of US$11 billion by the Ministry of Commerce, Industry and Energy, topping the US$11 billion mark for three consecutive years. The on-year decline was mainly due to sluggish M&A investment activity despite a rise in greenfield-type investments.

New disclosure measures for foreign securities issuers Amid growing interest among foreign companies to make public offerings or list in Korea, the Korean government took steps to fine-tune disclosure regulations on foreign securities issuers toward global standards. The government will adopt several globally accepted investor protection measures in response to public stock offering plans by foreign entities that are incorporated as holding companies offshore in places such as Bermuda and Cayman islands. According to new measures, financial and non-financial disclosures are to be provided on a consolidated basis for the subsidiary units of offshore holding companies. This is designed to ensure appropriate disclosures on the business activities of subsidiary units that effectively represent the activities of the holding company. In addition, disclosures on the corporate governance structure of offshore holding companies (including applicable laws and key provisions of the articles of incorporation), differences with local governance systems and practices, and major activities of the board of directors of the subsidiary units and related information are to be provided to investors.

February 2007

Moreover, explanations on key legal and regulatory provisions relating to the places of the incorporation of offshore holding companies and the subsidiary units along with legal risks the companies face are to be disclosed. These disclosures are to be accompanied by separate legal opinions from licensed local and offshore attorneys as to the accuracy of the disclosures and the legality and the suitability of securities issuance in Korea.

Dual futures trading systems to be merged into single trading system The Financial Supervisory Commission (FSC) announced a proposal to integrate the dual futures trading systems of Korea Exchange into a single trading system in order to facilitate trading in futures and improve market efficiency. Currently, two different futures trading systems - KOSPI futures trading system and Korea Treasury Bond (KTB) futures trading system - that were used by Korea Stock Exchange (KSE) and Korea Futures Exchange (KOFEX) before they were brought under the Korea Exchange are in use. Under the FSC proposal, tentatively set to be implemented by end of June this year, the KOSPI futures trading system is to be adopted at the Korea Exchange for all futures and options trading as it already effectively handles nearly all of the futures and options trading, including KOSPI 200 futures, KOSPI 200 options, Star index futures, and stock options. The KOSPI futures trading system also has the advantages of familiarity to investors, significant cost-effectiveness, and locally developed technologies.

Key changes under integrated futures trading at the Korea Exchange Current trading system KTB futures trading Trading hours

Types of orders

KOSPI futures trading

Proposed integrated trading system

9:00 a.m.-3:00 p.m.

9:00 a.m.-3:15 p.m. Limit order

Limit order

Market order

9:00 a.m.-3:15 p.m.

Conditional limit order

Best limit order

Continuous auction for closing price Closing/settlement prices

Weighted average (for the last one minute before market closing) for settlement price

Periodic call auction

Margin requirement

Fixed amount (per contract)

Fixed percent (per contract)

Fixed percent (per contract) Initial margin to be required for all futures and options products

Initial margin requirement

No initial margin required

Initial margin required

Temporary exemption to be given to trading accounts for KTB futures, options on KTB futures, interest rate futures, currency futures & options, and gold futures

Economic Bulletin

When the integration is completed, investors and traders are expected to benefit from simpler and more consistent trading rules while the Korea Exchange is expected to save 2.2 billion won in system maintenance cost a year.

Banks’ bad loans ratio fell to the lowest 0.84% as of end-2006 The ratio of bank loans classified as substandard and below (SBLs) compared to the total outstanding loans fell from 1.22 percent of the end of 2005 to 0.84 percent as of end-2006; the lowest since the Financial Supervisory Commission (FSC) began compiling statistics on banks’ non-performing loans in 1999. During the last year, the disposal of SBLs (14.4 trillion won) surpassed new SBLs (12.5 trillion won) and the total outstanding loans surged to 136.1 trillion won, which mainly contributed to the drop in SBL ratio.

Bad loans ratio of domestic banks

(End-period)

1999

2000

2001

2002

2003

2004

2005

2006

Bad loans ratio* (%)

12.9

8.00

3.41

2.33

2.63

1.90

1.22

0.84

Amount of bad loans (trillion won)

61.0

42.1

18.8

15.1

18.7

13.9

9.7

7.8

* The ratio of loans classified as substandard and below compared to total outstanding loans

Simplified procedures for foreigner’s equity investments The Financial Supervisory Service (FSS) opened an English DART (Data, Analysis, Retrieval and Transfer) website (http://englishdart.fss.or.kr). Foreigners now can easily search all English disclosure documents voluntarily transmitted to DART and to Korea Exchange as well as corporate information available in English at Korea Listed Companies Association.

February 2007

Statistical Appendices Tables & Figures 1. National accounts 2. Production, shipment and inventory 3. Production capacity and operation ratio 4. Consumer goods sales index 5. Consumer goods shipment index and consumer sentiment index 6. Machinery orders received, domestic machinery shipment, and estimated facility investment index 7. Value of construction completed and domestic construction orders received 8. Composite indexes of business cycle indicators and BSI 9. Balance of payments (I) 10. Balance of payments (II) 11. Prices 12. Employment and earnings 13. Financial indicators 14. Monetary indicators 15. Exchange rates

Economic Bulletin

1. National accounts (year-on-year change, %, 2000 constant prices) Real GDP Period

1996

7.0

Agri., fores. & fisheries

Manufacturing

2.3

6.4

Gross fixed capital formation

Final consumption expenditure

7.0

Construction 8.4

7.5

Facilities 9.2

1997

4.7

4.6

4.9

3.2

-2.3

2.3

-9.6

1998

-6.9

-6.4

-7.9

-10.6

-22.9

-12.4

-42.3

1999

9.5

5.9

21.8

9.7

8.3

-3.8

36.8

2000

8.5

1.2

17.0

7.1

12.2

-0.8

33.6

2001

3.8

1.1

2.2

4.9

-0.2

6.0

-9.0

2002

7.0

-3.5

7.6

6.6

5.3

7.5

2003

3.1

-5.3

5.5

-0.3

4.0

7.9

-1.2

2004

4.7

9.2

11.1

0.4

2.1

1.1

3.8

2005P

4.0

-0.1

7.0

3.4

2.3

0.4

5.1

2006P

5.0

-1.9

8.3

4.5

3.2

-0.1

7.5

3.5

-2.4

3.4

2.3

-3.7

1.0

-9.4

3.7

2.4

4.1

4.2

-3.5

0.8

-10.6

2001

2002

2003

2004

III

3.4

0.9

0.0

5.7

-0.5

9.6

-14.2

4.6

1.2

1.3

7.3

6.2

10.7

-1.3

6.5

6.7

5.2

9.4

7.7

11.0

3.3

7.0

-2.7

6.2

8.5

7.3

6.0

8.0

III

6.8

-3.2

7.4

7.3

2.4

-2.4

9.1

7.5

-5.5

11.4

5.3

9.1

8.4

9.6

3.8

-3.3

5.8

1.2

4.7

7.7

2.3

2.2

0.5

3.3

-0.6

4.2

7.9

-0.4

III

2.3

-7.8

4.2

-1.0

2.7

7.7

-4.6

4.1

-6.9

8.6

-0.9

4.3

8.3

-2.0

5.4

10.1

11.9

-0.4

2.4

4.9

-0.1

5.7

4.2

13.6

0.7

4.7

3.8

6.4

III

4.7

4.3

11.7

0.1

2.9

1.0

6.8

3.3

13.3

7.7

1.3

-1.1

-3.3

2.4

2005P I

2.7

-2.1

5.2

1.9

0.4

-2.2

2.9

3.2

2.6

5.0

3.2

2.0

1.7

2.7

III

4.5

-0.2

7.4

4.2

1.9

0.3

4.3

5.3

-0.9

10.3

4.3

4.2

0.9

10.2

2006P I

6.1

4.4

9.9

4.9

3.9

1.2

6.9

5.3

-1.5

9.3

4.6

0.8

-3.9

7.4

III

4.8

-5.4

8.8

4.4

3.8

-0.6

9.9

4.0

-1.8

5.7

4.2

4.5

2.9

5.8

P: Preliminary Source: The Bank of Korea

February 2007

Growth rate by economic activity

Growth rate by expenditure on GDP

Economic Bulletin

2. Production, shipment and inventory See graphs 6-1, 6-3, 7-1, 7-2 & 7-3 (constant prices, 2000 = 100)

Period

Production index

2002 2003 2004 2005 2006P

Y-o-Y change (%)

Shipment index

Y-o-Y change (%)

Inventory index

Y-o-Y change (%)

Service production index

Y-o-Y change (%)

108.8 114.5 126.2 134.1 146.7

8.0 5.2 10.2 6.3 9.4

109.2 114.3 124.7 131.7 141.1

7.8 4.7 9.1 5.6 7.1

104.5 110.9 121.2 124.1 132.1

-0.8 6.1 9.3 2.4 6.4

116.1 117.2 117.9 122.2 128.5

9.4 0.9 0.6 3.6 5.2

2003

I II III IV

110.2 112.7 109.7 125.5

6.4 3.4 3.3 8.1

110.0 113.1 109.4 124.8

4.9 3.3 3.1 7.3

112.1 112.6 110.7 110.9

10.0 9.5 8.4 6.1

113.5 117.8 116.6 121.0

2.0 0.8 0.5 0.6

2004

I II III IV

122.8 127.1 121.7 133.5

11.4 12.8 10.9 6.4

121.2 125.5 120.3 131.9

10.2 11.0 10.0 5.7

117.2 115.9 116.1 121.2

4.5 2.9 4.9 9.3

115.9 119.0 116.0 120.8

2.1 1.0 -0.5 -0.2

2005

I II III IV

127.1 131.6 130.4 147.3

3.5 3.5 7.1 10.3

125.6 129.9 128.0 143.2

3.6 3.5 6.4 8.6

127.6 124.3 122.8 124.1

8.9 7.2 5.8 2.4

116.8 121.9 122.3 127.8

0.8 2.4 5.4 5.8

2006

I II III IVP

142.4 146.0 144.2 154.0

12.0 10.9 10.6 4.5

137.0 140.8 138.9 147.5

9.1 8.4 8.5 3.0

132.3 133.2 131.1 132.1

3.7 7.2 6.8 6.4

123.9 128.4 127.6 133.9

6.1 5.3 4.3 4.8

2004 1 2 3 4 5 6 7 8 9 10 11 12

115.5 121.8 131.0 126.9 127.3 127.0 122.4 119.6 123.0 133.0 134.3 133.1

4.8 17.6 12.2 11.4 13.9 12.9 12.9 10.4 9.4 5.3 9.6 4.1

114.0 119.7 129.9 125.8 125.1 125.5 120.4 118.3 122.3 132.1 133.2 130.3

4.2 15.1 11.4 10.3 11.5 11.2 12.3 9.7 8.1 4.8 9.2 3.1

114.2 116.7 117.2 115.0 117.4 115.9 117.4 117.3 116.1 116.3 119.0 121.2

4.1 5.3 4.5 1.3 3.5 2.9 3.3 3.5 4.9 5.7 8.4 9.3

114.1 111.9 121.7 118.3 119.0 119.6 116.2 114.4 117.5 117.8 118.2 126.5

0.0 3.9 2.5 0.6 0.6 1.7 -0.6 -0.6 -0.2 -0.7 -0.4 0.6

2005 1 2 3 4 5 6 7 8 9 10 11 12

131.9 112.6 136.8 131.1 131.9 131.7 131.0 127.7 132.4 143.7 150.1 148.2

14.2 -7.6 4.4 3.3 3.6 3.7 7.0 6.8 7.6 8.0 11.8 11.3

128.4 112.5 135.8 129.3 129.3 131.0 128.2 126.3 129.5 140.3 146.3 142.9

12.6 -6.0 4.5 2.8 3.4 4.4 6.5 6.8 5.9 6.2 9.8 9.7

128.6 127.3 127.6 127.8 128.1 124.3 126.7 122.7 122.8 122.7 122.6 124.1

12.6 9.1 8.9 11.1 9.1 7.2 7.9 4.6 5.8 5.5 3.0 2.4

115.2 111.4 123.7 120.6 122.3 122.9 121.5 121.3 124.0 123.4 125.4 134.7

1.0 -0.4 1.6 1.9 2.8 2.8 4.6 6.0 5.5 4.8 6.1 6.5

2006 1 2 3 4 5 6 7 8 9 10 11P 12P

141.0 135.8 150.5 144.1 147.8 146.1 136.9 141.6 154.2 150.6 159.8 151.6

6.9 20.6 10.0 9.9 12.1 10.9 4.5 10.9 16.5 4.8 6.5 2.3

134.2 131.5 145.2 139.3 142.2 141.0 130.1 137.5 149.0 143.5 152.8 146.3

4.2 16.9 6.9 7.7 10.0 7.6 1.5 8.9 15.1 2.3 4.4 2.4

128.8 130.6 132.3 132.3 134.3 133.2 135.4 131.8 131.1 131.6 131.8 132.1

0.2 2.6 3.7 3.5 4.8 7.2 6.9 7.4 6.8 7.3 7.5 6.4

123.2 118.3 130.3 127.6 129.3 128.3 123.8 127.2 131.9 127.5 132.3 142.0

6.9 6.2 5.3 5.8 5.7 4.4 1.9 4.9 6.4 3.3 5.5 5.4

P: Preliminary Source: Korea National Statistical Office

February 2007

3. Production capacity and operation ratio See graph 6-2

Period

2002 2003 2004 2005 2006P

Y-o-Y change (%)

Operation ratio index (2000=100)

Y-o-Y change (%)

Average operation ratio (%)

106.3 109.8 115.1 119.0 122.7

2.7 3.3 4.8 3.4 3.1

99.7 99.7 102.5 102.1 103.1

4.0 0.0 2.8 -0.4 1.0

78.4 78.3 80.4 79.8 81.1

Production capacity index (2000=100)

2003

I II III IV

108.8 109.7 109.6 111.2

3.6 3.5 2.8 3.2

97.2 100.9 95.0 105.7

1.3 -1.6 -2.6 2.7

78.2 77.4 77.2 80.4

2004

I II III IV

113.0 115.3 115.6 116.5

3.9 5.1 5.5 4.8

101.0 104.9 98.3 105.8

3.9 4.0 3.5 0.1

81.0 80.6 79.6 80.3

2005

I II III IV

117.2 118.1 118.9 121.7

3.7 2.4 2.9 4.5

99.4 104.1 98.7 106.0

-1.6 -0.8 0.4 0.2

79.6 79.4 79.9 80.2

2006

I II III IVP

122.1 122.3 122.3 123.9

4.2 3.6 2.9 1.8

102.2 105.0 100.7 104.4

2.8 0.9 2.0 -1.5

82.0 80.5 80.5 81.2

2004 1 2 3 4 5 6 7 8 9 10 11 12

112.3 112.9 113.8 114.7 115.6 115.7 115.6 115.6 115.6 116.1 116.5 116.9

3.8 4.3 3.5 4.5 5.3 5.7 5.6 5.5 5.5 4.9 4.6 4.9

94.3 100.7 108.0 105.4 104.9 104.5 100.0 96.5 98.5 106.6 107.2 103.6

-2.7 9.6 5.0 2.3 5.2 4.6 6.4 3.0 1.2 -2.4 4.1 -1.2

79.9 82.9 80.1 80.5 81.6 79.6 79.4 79.5 79.9 79.8 81.2 79.8

2005 1 2 3 4 5 6 7 8 9 10 11 12

117.1 117.2 117.3 117.3 118.4 118.5 118.5 118.6 119.5 121.0 122.0 122.1

4.3 3.8 3.1 2.3 2.4 2.4 2.5 2.6 3.4 4.2 4.7 4.4

102.7 86.8 108.6 104.8 104.0 103.6 101.8 96.2 98.2 104.9 108.7 104.5

8.9 -13.8 0.6 -0.6 -0.9 -0.9 1.8 -0.3 -0.3 -1.6 1.4 0.9

81.2 77.2 80.5 79.1 79.0 80.0 80.9 79.4 79.3 79.0 82.1 79.4

2006 1 2 3 4 5 6 7 8 9 10 11P 12P

122.1 122.1 122.2 122.2 122.4 122.4 122.4 122.2 122.2 123.8 124.0 124.0

4.3 4.2 4.2 4.2 3.4 3.3 3.3 3.0 2.3 2.3 1.6 1.6

99.9 97.5 109.3 103.4 106.0 105.6 94.8 97.8 109.4 101.1 109.6 102.4

-2.7 12.3 0.6 -1.3 1.9 1.9 -6.9 1.7 11.4 -3.6 0.8 -2.0

83.5 80.9 81.5 79.0 80.6 82.0 76.8 80.7 84.1 81.5 82.5 79.7

P: Preliminary Source: Korea National Statistical Office

Economic Bulletin

4. Consumer goods sales index See graphs 2-2, 2-3, 2-4 & 2-5 (constant prices, 2000 = 100)

Period

Consumer goods sales index

2002 2003 2004 2005 2006P

Y-o-Y change (%)

Semi-durable goods

Y-o-Y change (%)

Non-durable goods

Y-o-Y change (%)

118.7 115.0 114.1 118.6 123.6

10.5 -3.1 -0.8 3.9 4.2

124.8 113.4 108.9 115.3 126.0

15.4 -9.1 -4.0 5.9 9.3

117.4 111.4 115.8 124.9 131.3

8.9 -5.1 3.9 7.9 5.1

116.3 117.6 115.9 117.4 118.7

8.9 1.1 -1.4 1.3 1.1

2003

I II III IV

113.7 114.0 112.9 119.5

-1.0 -3.9 -4.6 -3.0

113.1 114.4 112.1 113.8

-4.3 -11.8 -10.4 -9.8

111.6 109.3 98.4 126.3

-2.3 -7.8 -9.2 -1.7

115.1 116.0 120.2 119.1

1.6 2.7 0.6 -0.1

2004

I II III IV

112.2 113.7 111.6 118.9

-1.3 -0.3 -1.2 -0.5

102.5 107.1 109.3 116.7

-9.4 -6.4 -2.5 2.5

112.6 117.4 101.9 131.3

0.9 7.4 3.6 4.0

117.0 115.4 117.3 114.1

1.7 -0.5 -2.4 -4.2

2005

I II III IV

113.5 117.6 116.5 127.0

1.2 3.4 4.4 6.8

105.5 113.9 116.4 125.4

2.9 6.3 6.5 7.5

115.5 125.9 111.7 146.6

2.6 7.2 9.6 11.7

116.6 115.7 118.8 118.4

-0.3 0.3 1.3 3.8

2006

I II III IVP

119.2 124.1 119.1 131.8

5.0 5.5 2.2 3.8

116.9 124.0 128.1 134.9

10.8 8.9 10.1 7.6

124.1 134.4 114.9 151.8

7.4 6.8 2.9 3.5

118.0 119.2 116.7 120.8

1.2 3.0 -1.8 2.0

2004 1 2 3 4 5 6 7 8 9 10 11 12

118.0 105.7 113.0 113.4 115.0 112.8 111.6 105.2 117.9 116.6 117.3 122.9

-3.4 1.3 -1.6 -0.5 -2.3 2.4 -0.5 -3.1 0.0 -1.9 -1.3 1.9

101.6 100.5 105.5 109.6 104.4 107.2 114.3 104.7 109.0 114.4 114.7 121.1

-13.6 -5.7 -8.3 -6.7 -9.8 -2.4 -1.1 -2.1 -4.2 -2.1 2.9 7.1

116.7 106.9 114.3 119.5 124.1 108.7 104.2 88.3 113.2 130.0 132.4 131.5

-0.6 7.1 -2.9 5.3 6.3 11.4 6.4 -0.9 4.7 5.5 1.9 4.5

126.9 107.8 116.2 112.5 116.1 117.6 113.7 113.5 124.6 111.2 111.4 119.7

0.2 2.5 2.5 0.2 -2.5 0.9 -3.1 -4.4 0.0 -5.6 -5.2 -1.9

2005 1 2 3 4 5 6 7 8 9 10 11 12

113.3 109.6 117.6 116.7 119.4 116.8 117.3 112.1 120.0 120.9 125.3 134.7

-4.0 3.7 4.1 2.9 3.8 3.5 5.1 6.6 1.8 3.7 6.8 9.6

105.3 98.3 112.8 112.8 114.0 114.8 126.1 115.3 107.8 115.6 126.2 134.5

3.6 -2.2 6.9 2.9 9.2 7.1 10.3 10.1 -1.1 1.0 10.0 11.1

115.7 108.0 122.9 126.7 131.6 119.3 113.6 97.8 123.6 141.4 143.0 155.5

-0.9 1.0 7.5 6.0 6.0 9.8 9.0 10.8 9.2 8.8 8.0 18.3

116.1 116.1 117.6 114.0 116.4 116.7 114.6 117.4 124.3 113.8 116.4 124.9

-8.5 7.7 1.2 1.3 0.3 -0.8 0.8 3.4 -0.2 2.3 4.5 4.3

2006 1 2 3 4 5 6 7 8 9 10 11P 12P

123.2 110.6 123.7 122.6 126.3 123.3 115.8 116.0 125.6 126.5 130.7 138.3

8.7 0.9 5.2 5.1 5.8 5.6 -1.3 3.5 4.7 4.6 4.3 2.7

111.3 113.4 125.9 119.0 123.3 129.8 123.7 127.7 132.8 123.6 137.9 143.1

5.7 15.4 11.6 5.5 8.2 13.1 -1.9 10.8 23.2 6.9 9.3 6.4

125.6 115.9 130.8 138.0 141.2 123.9 115.7 99.7 129.2 141.4 152.7 161.4

8.6 7.3 6.4 8.9 7.3 3.9 1.8 1.9 4.5 0.0 6.8 3.8

128.1 106.6 119.2 117.2 120.7 119.7 111.9 117.9 120.3 120.8 116.7 124.8

10.3 -8.2 1.4 2.8 3.7 2.6 -2.4 0.4 -3.2 6.2 0.3 -0.1

P: Preliminary Source: Korea National Statistical Office

Durable goods

February 2007

5. Consumer goods shipment index and consumer sentiment index See graph 2-6

Period

2002 2003 2004 2005 2006P

Domestic consumer goods shipment index (2000=100) Y-o-Y change (%)

Consumer sentiment index Durable goods

Y-o-Y change (%)

Non-durable goods

Y-o-Y change (%)

Present Expectations situation index index

111.1 107.3 105.8 108.0 112.9

8.3 -3.4 -1.4 2.1 4.5

120.3 111.7 106.4 112.6 124.4

17.1 -7.1 -4.7 5.8 10.5

106.9 104.7 103.6 104.2 107.1

4.3 -2.1 -1.1 0.6 2.8

2003

I II III IV

107.0 104.6 104.2 113.3

-0.8 -5.5 -4.8 -2.8

112.9 113.0 105.4 115.5

-1.2 -8.4 -10.6 -8.2

104.2 100.6 103.2 110.8

-0.8 -4.4 -2.3 -0.9

2004

I II III IV

107.2 104.9 102.5 108.7

0.2 0.3 -1.6 -4.1

110.4 108.5 99.6 107.3

-2.2 -4.0 -5.5 -7.1

104.8 101.3 101.7 106.5

0.6 0.7 -1.5 -3.9

2005

I II III IV

102.4 105.3 107.7 116.6

-4.5 0.4 5.1 7.3

101.8 111.2 111.5 126.0

-7.8 2.5 11.9 17.4

100.6 101.3 104.7 110.4

-4.0 0.0 2.9 3.7

2006

I II III IVP

109.1 110.8 112.9 118.7

6.5 5.2 4.8 1.8

116.8 125.1 121.9 133.7

14.7 12.5 9.3 6.1

104.3 103.7 108.5 111.7

3.7 2.4 3.6 1.2

2004 1 2 3 4 5 6 7 8 9 10 11 12

106.2 103.5 112.0 107.9 103.5 103.2 102.5 100.7 104.4 108.5 108.8 108.9

-5.7 3.7 3.2 1.6 -1.4 0.7 -0.3 -1.9 -2.5 -5.5 -0.3 -6.2

103.3 112.1 115.7 112.6 106.7 106.1 102.4 96.6 99.8 108.7 109.1 104.1

-9.0 2.2 0.3 -3.0 -6.7 -2.1 -2.9 -3.0 -10.2 -8.0 -3.5 -9.9

106.8 98.5 109.0 104.2 100.0 99.8 100.7 100.9 103.6 105.6 105.3 108.6

-4.8 3.2 3.7 2.8 -0.8 0.3 -0.8 -2.5 -1.1 -5.7 -0.5 -5.2

101.2 99.0 96.4 103.0 97.1 94.1 90.8 88.3 90.1 89.1 87.8 86.5

72.6 71.9 68.5 74.9 70.7 67.3 66.2 63.1 65.0 65.1 62.8 62.2

2005 1 2 3 4 5 6 7 8 9 10 11 12

107.2 91.7 108.2 103.9 104.9 107.1 106.7 107.0 109.4 113.8 117.6 118.4

0.9 -11.4 -3.4 -3.7 1.4 3.8 4.1 6.3 4.8 4.9 8.1 8.7

102.1 91.4 112.0 107.5 110.6 115.4 116.1 108.1 110.4 122.4 128.9 126.8

-1.2 -18.5 -3.2 -4.5 3.7 8.8 13.4 11.9 10.6 12.6 18.1 21.8

106.9 90.3 104.5 100.6 101.1 102.1 101.5 105.2 107.3 107.8 110.2 113.2

0.1 -8.3 -4.1 -3.5 1.1 2.3 0.8 4.3 3.6 2.1 4.7 4.2

92.5 102.5 105.7 104.7 102.2 97.8 97.2 96.7 99.1 100.0 101.5 103.0

66.5 83.2 89.6 90.2 85.5 79.7 78.9 78.3 81.2 83.4 84.9 85.3

2006 1 2 3 4 5 6 7 8 9 10 11 12

110.2 103.0 114.1 108.3 111.6 112.5 104.4 109.9 124.3 113.7 122.1P 120.4P

2.8 12.3 5.5 4.2 6.4 5.0 -2.2 2.7 13.6 -0.1 3.8P 1.7P

113.0 113.6 123.8 118.0 125.7 131.7 110.3 117.6 137.9 127.3 140.0P 133.8P

10.7 24.3 10.5 9.8 13.7 14.1 -5.0 8.8 24.9 4.0 8.6P 5.5P

107.2 97.3 108.4 103.0 104.6 103.6 101.7 106.6 117.3 106.9 113.8P 114.4P

0.3 7.8 3.7 2.4 3.5 1.5 0.2 1.3 9.3 -0.8 3.3P 1.1P

104.5 103.8 103.4 100.6 98.0 97.4 94.3 93.7 94.8 93.9 95.2 93.7

88.4 89.0 90.1 87.2 83.0 81.9 78.7 77.8 78.9 80.7 77.3 77.1

2007 1

96.1

79.3

P: Preliminary Source: Korea National Statistical Office

Economic Bulletin

6. Machinery orders received, domestic machinery shipment and estimated facility investment index See graph 3-2 Domestic machinery orders received excluding ship (billion won) Period

2004 2005 2006P

Domestic machinery shipment excluding ship (2000=100)

Total

Public

Private

23,913 24,260 27,886

2,563 2,484 2,516

21,350 21,776 25,370

10,597 10,195 13,119

98.5 101.8 107.5

101.2 101.8 107.6

Manufacturing

2005

I II III IV

6,207 6,008 5,796 6,248

694 390 580 820

5,514 5,618 5,217 5,427

2,632 2,800 2,330 2,433

101.2 105.3 95.7 104.8

97.2 104.8 98.5 106.8

2006

I II III IVP

6,901 7,259 6,700 7,026

292 559 673 992

6,609 6,700 6,027 6,033

3,426 3,544 3,060 3,090

105.6 109.7 105.3 109.5

102.0 109.0 104.5 114.8

2005 7 8 9 10 11 12

1,938 1,968 1,890 1,928 1,929 2,391

224 221 134 244 145 431

1,714 1,747 1,756 1,684 1,784 1,960

780 754 797 727 798 908

99.3 94.8 93.0 99.2 100.5 114.6

101.8 96.5 97.1 98.2 100.6 121.5

2006 1 2 3 4 5 6 7 8 9 10 11P 12P

2,110 2,344 2,446 2,376 2,225 2,657 1,886 2,268 2,546 2,605 2,147 2,273

79 96 117 94 93 372 71 257 344 636 72 284

964 1,199 1,263 1,229 1,074 1,241 865 1,015 1,179 1,017 1,002 1,071

96.4 97.9 122.4 109.2 110.9 109.0 103.4 105.2 107.2 105.6 105.9 117.0

92.9 96.7 116.3 105.3 112.9 108.8 95.6 104.4 113.6 102.5 112.1 129.8

6.8 1.5 14.9

17.6 -3.1 1.3

5.7 2.0 16.5

22.8 -3.8 28.7

1.4 3.4 5.6

-1.3 0.6 5.7

2004 2005 2006P

2,031 2,248 2,329 2,283 2,132 2,285 1,815 2,011 2,202 1,968 2,075 1,989 Y-o-Y change (%)

2005

I II III IV

-6.9 -12.2 14.0 17.5

7.8 -51.3 38.9 17.1

-8.4 -7.1 11.7 17.6

-10.3 -6.5 2.7 1.4

3.9 1.4 1.1 7.0

-0.3 -1.1 2.4 1.8

2006

I II III IVP

11.2 20.8 15.6 12.5

-57.9 43.3 16.1 21.0

19.9 19.3 15.5 11.2

30.2 26.6 31.3 27.0

4.3 4.2 10.0 4.5

4.9 4.0 6.1 7.5

2005 7 8 9 10 11 12

26.2 18.3 0.1 0.7 11.7 42.8

179.8 116.5 -43.0 57.2 -28.8 26.2

17.8 11.9 6.3 -4.3 17.1 47.1

13.1 1.7 -5.0 -24.9 3.0 38.4

4.3 0.3 -1.6 1.6 6.6 12.6

4.6 1.3 1.0 -2.9 1.5 6.2

2006 1 2 3 4 5 6 7 8 9 10 11P 12P

2.0 38.7 -0.1 15.3 12.6 34.8 -2.7 15.2 34.7 35.1 11.3 -4.9

-18.9 30.2 -77.6 -30.9 -16.5 160.9 -68.2 16.3 156.8 160.4 -50.3 -34.1

3.0 39.1 21.0 18.6 14.4 25.0 5.9 15.1 25.4 16.9 16.3 1.5

-2.2 63.5 38.2 25.1 13.0 43.1 11.0 34.6 48.0 39.9 25.5 18.0

0.1 2.4 9.6 7.1 2.5 3.0 4.1 11.0 15.3 6.5 5.4 2.1

1.1 11.4 3.0 1.3 9.2 1.7 -6.1 8.2 17.0 4.4 11.4 6.8

P: Preliminary Source: Korea National Statistical Office

Estimated facility investment index (2000=100)

February 2007

7. Value of construction completed and domestic construction orders received See graphs 4-2 & 4-3

(billion won)

Period

2004 2005 2006P

Type of order

Value of construction completed (total)

Public

72,838 77,026 81,100

Type of order

Private

Domestic construction orders received (total)

Public

Private

23,916 23,682 24,386

46,649 50,688 54,133

77,774 85,182 92,696

22,210 22,572 21,483

51,510 59,880 67,266

2005

I II III IV

15,851 20,218 18,930 22,027

4,849 6,226 5,680 6,926

10,536 13,369 12,583 14,200

18,384 25,244 17,205 24,349

4,494 6,022 3,613 8,443

13,059 18,069 13,419 15,332

2006

I II III IVP

16,767 20,495 20,144 23,694

4,366 5,974 6,240 7,806

11,862 13,884 13,302 15,085

16,605 21,689 23,425 30,977

3,986 4,316 4,418 8,764

12,277 17,055 18,249 19,685

2005 7 8 9 10 11 12

6,115 6,268 6,547 6,508 7,219 8,299

1,807 1,786 2,087 1,876 2,106 2,944

4,100 4,254 4,230 4,384 4,826 4,990

6,795 5,142 5,268 5,358 6,382 12,609

1,174 1,081 1,357 1,297 2,287 4,859

5,519 4,050 3,850 4,003 3,981 7,349

2006 1 2 3 4 5 6 7 8 9 10 11P 12P

5,158 5,042 6,567 6,560 6,679 7,256 6,070 6,481 7,593 6,998 7,744 8,952

1,371 1,266 1,729 1,865 1,934 2,174 1,804 1,949 2,487 2,229 2,324 3,252

5,996 4,543 6,066 5,291 7,135 9,263 7,291 5,910 10,223 5,439 9,205 16,333

975 1,536 1,475 1,198 1,526 1,592 1,043 879 2,496 1,743 2,876 4,144

4,885 2,905 4,488 4,048 5,506 7,501 6,154 4,605 7,490 3,568 6,196 9,921

11.1 5.7 5.3

4.9 -1.0 3.0

14.8 8.7 6.8

-3.9 9.5 8.8

13.5 1.6 -4.8

-11.6 16.2 12.3

2004 2005 2006P

3,627 3,612 4,624 4,504 4,537 4,843 4,104 4,362 4,836 4,567 5,163 5,355 Y-o-Y change (%)

2005

I II III IV

1.9 9.6 3.8 6.9

-1.0 3.1 -6.6 0.4

3.1 13.0 8.5 9.2

22.3 38.5 15.8 -17.9

22.2 73.7 0.0 -26.3

18.3 30.9 29.1 -5.8

2006

I II III IVP

5.8 1.4 6.4 7.6

-10.0 -4.1 9.8 12.7

12.6 3.8 5.7 6.2

-9.7 -14.1 36.2 27.2

-11.3 -28.3 22.3 3.8

-6.0 -5.6 36.0 28.4

2005 7 8 9 10 11 12

4.5 4.3 2.6 3.0 11.3 6.5

-1.6 -10.0 -7.7 -3.3 -2.4 5.2

7.1 10.7 7.9 5.3 17.5 5.5

6.3 18.3 27.8 -35.3 3.2 -17.0

-10.5 17.8 -1.9 -58.4 1.6 -20.1

22.1 20.1 53.7 -16.9 3.8 -3.6

2006 1 2 3 4 5 6 7 8 9 10 11P 12P

2.5 9.2 5.9 2.0 1.0 1.1 -0.7 3.4 16.0 7.5 7.3 7.9

-10.3 -12.8 -7.5 -4.6 -3.2 -4.3 -0.2 9.1 19.1 18.8 10.4 10.4

8.5 18.2 11.8 5.2 2.7 3.7 0.1 2.5 14.3 4.2 7.0 7.3

10.9 22.2 -34.5 -18.8 -17.9 -7.7 7.3 14.9 94.1 1.5 44.2 29.5

-32.1 144.5 -39.3 -38.1 -21.8 -25.4 -11.2 -18.7 84.0 34.5 25.7 -14.7

38.8 -4.7 -30.9 -9.3 -15.1 5.4 11.5 13.7 94.6 -10.9 55.6 35.0

P: Preliminary Source: Korea National Statistical Office

Economic Bulletin

8. Composite indexes of business cycle indicators and BSI See graphs 13-1, 13-2 & 13-3

Y-o-Y change (%)

Coincident index (2000=100)

Cycle of coincident index (2000=100)

BSI (actual)

BSI (outlook)

114.1 115.2 115.9 117.1 117.7 118.4

1.3 2.0 2.6 3.7 4.3 5.0

118.1 118.9 119.4 120.9 121.6 122.7

99.4 99.6 99.7 100.4 100.6 101.1

79.1 85.1 89.4 103.4 98.9 100.4

90.3 91.4 109.6 110.3 102.8 98.7

2004 1 2 3 4 5 6 7 8 9 10 11 12

118.9 119.4 119.3 119.4 119.6 119.8 119.9 119.7 119.8 120.2 120.4 120.7

5.2 5.4 5.1 4.9 4.8 4.6 4.3 3.7 3.3 3.0 2.6 2.4

123.4 124.2 124.5 124.9 125.1 125.3 125.2 125.1 125.4 126.0 126.4 126.8

101.2 101.5 101.3 101.2 100.9 100.6 100.2 99.7 99.4 99.5 99.4 99.3

90.7 95.3 104.2 101.7 90.2 86.8 83.8 81.2 93.4 92.2 82.2 80.9

99.8 104.9 113.6 104.3 113.2 92.1 86.4 86.4 95.5 99.2 90.3 82.2

2005 1 2 3 4 5 6 7 8 9 10 11 12

120.9 121.5 122.5 122.9 123.4 123.7 124.7 125.7 126.5 127.1 128.3 129.5

2.1 2.3 2.9 3.0 3.2 3.3 4.0 4.7 5.1 5.3 6.0 6.8

127.3 127.3 128.1 128.3 129.2 129.8 130.8 131.7 132.3 132.6 133.6 134.5

99.3 98.9 99.0 98.8 99.1 99.1 99.5 99.8 99.7 99.5 99.9 100.1

84.6 87.2 110.7 107.0 98.2 93.4 91.7 91.0 99.2 98.0 101.8 107.1

77.8 85.7 119.2 117.6 114.1 105.1 96.5 91.7 111.4 110.2 107.8 103.8

2006 1 2 3 4 5 6 7 8 9 10 11 12

130.8 130.9 130.9 130.5 130.6 130.7 130.9 131.3 132.3 133.3P 134.4P 135.0P

7.5 7.1 6.6 5.8 5.3 4.8 4.3 3.9 4.1 4.4P 4.8P 4.8P

135.9 136.1 136.8 136.6 137.0 137.4 137.0 137.8 139.0 141.3 142.4P 142.7P

100.8 100.5 100.5 100.0 99.9 99.8 99.0 99.2 99.6 100.8 101.2P 101.0P

95.4 90.5 111.5 99.8 94.1 94.2 79.1 85.9 99.4 99.4 103.7 100.4

102.6 102.4 118.9 112.7 110.7 98.6 94.2 93.4 107.7 103.5 104.3 101.4

2007 1 2

85.6 -

96.5 93.4

Period

Leading index (2000=100)

2003 7 8 9 10 11 12

P: Preliminary Source: Korea National Statistical Office & The Federation of Korean Industries

February 2007

9. Balance of payments (I) See graphs 5-1, 5-2, 5-3, 10-1 & 10-2 (million US$)

Period

2002 2003 2004 2005 2006P

Current balance

Goods trade balance

Exports

5,393.9 11,949.5 28,173.5 14,980.9 6,092.6

14,777.4 21,952.0 37,568.8 32,683.1 29,213.1

Imports

Services trade balance

Income trade balance

Current transfers

162,470.5 193,817.4 253,844.7 284,418.7 325,681.1

152,126.2 178,826.7 224,462.7 261,238.3 309,308.5

-8,197.5 -7,424.2 -8,046.1 -13,658.2 -18,762.9

432.3 326.3 1,082.8 -1,562.5 -538.6

-1,618.3 -2,904.6 -2,432.0 -2,481.5 -3,819.5

2004

I II III IV

6,418.4 6,856.6 7,565.4 7,333.1

8,585.4 10,060.7 9,752.9 9,169.8

59,298.9 63,974.7 61,633.9 68,937.1

52,797.5 55,269.7 54,707.8 61,687.7

-1,870.9 -1,358.1 -2,305.2 -2,511.9

497.6 -1,168.4 461.4 1,292.2

-793.7 -677.6 -343.7 -617.0

2005

I II III IV

5,263.5 2,352.1 2,198.2 5,167.1

8,750.5 8,365.8 7,234.8 8,332.0

66,807.6 69,702.8 71,097.7 76,810.7

60,626.8 63,694.9 66,228.3 70,688.3

-3,114.4 -3,368.7 -4,254.6 -2,920.5

166.4 -1,948.8 -97.3 317.2

-539.0 -696.2 -684.7 -561.6

2006P I II III IV

-1,118.4 692.0 374.9 6,144.1

5,222.6 7,413.7 6,227.9 10,349.5

73,893.3 81,473.1 82,729.3 87,585.4

72,501.7 76,622.6 80,281.7 79,902.5

-4,996.2 -3,878.9 -5,384.7 -4,503.1

-481.7 -1,648.0 608.6 982.5

-863.0 -1,194.8 -1,076.9 -684.8

2005 1 2 3 4 5 6 7 8 9 10 11 12

3,682.3 781.4 799.8 -1,202.2 1,444.3 2,110.0 1,237.6 -527.9 1,488.5 2,830.3 2,056.8 280.0

4,356.6 1,489.1 2,904.8 2,233.7 2,558.5 3,573.6 3,052.7 1,472.4 2,709.7 3,477.0 3,187.2 1,667.8

22,454.0 20,401.1 23,952.5 22,872.5 23,122.7 23,707.6 23,235.5 23,343.0 24,519.2 25,352.7 25,826.2 25,631.7

19,450.0 18,396.9 22,779.9 21,244.5 21,161.8 21,288.6 21,508.8 22,000.8 22,718.7 22,652.7 23,849.6 24,186.0

-948.6 -1,008.4 -1,157.4 -1,053.6 -1,182.2 -1,132.9 -1,484.3 -1,696.6 -1,073.7 -610.0 -875.1 -1,435.4

498.0 447.7 -779.3 -2,121.9 296.5 -123.4 -91.6 -71.1 65.4 61.8 -80.4 335.8

-223.7 -147.0 -168.3 -260.4 -228.5 -207.3 -239.2 -232.6 -212.9 -98.5 -174.9 -288.2

2006P 1 2 3 4 5 6 7 8 9 10 11 12

91.2 -782.8 -426.8 -1,608.1 1,359.6 940.5 -392.7 -638.3 1,405.9 1,759.9 4,237.5 146.7

1,478.2 837.3 2,907.1 1,883.9 2,815.3 2,714.5 1,619.4 1,443.2 3,165.3 2,685.5 5,712.6 1,951.4

23,259.2 23,788.6 26,845.5 25,591.9 27,931.0 27,950.2 25,779.8 27,292.7 29,656.8 28,053.9 30,661.1 28,870.4

23,064.7 23,500.0 25,937.0 24,450.5 26,162.4 25,009.7 25,536.3 27,036.8 27,708.6 25,639.4 26,763.3 27,499.8

-1,644.0 -1,808.2 -1,544.0 -1,345.7 -1,354.5 -1,178.7 -1,744.0 -2,087.3 -1,553.4 -1,192.8 -1,426.3 -1,884.0

571.4 418.9 -1,472.0 -1,876.5 387.1 -158.6 44.4 311.7 252.5 461.2 236.3 285.0

-314.3 -230.8 -317.9 -269.8 -488.3 -436.7 -312.5 -305.9 -458.5 -194.0 -285.1 -205.7

P: Preliminary Source: The Bank of Korea & Korea Customs Service

Economic Bulletin

10. Balance of payments (II) See graph 10-3 (million US$) Changes in reserve assets

Errors and omissions

-1,086.8 -1,398.4 -1,752.8 -2,340.4 -3,033.3

-11,799.4 -25,849.4 -38,710.5 -19,805.8 -22,111.7

154.0 -9.5 2,938.2 68.4 -2,599.6

Period

Capital & financial account

Direct investment

Portfolio investment

Other investment

Capital transfers & acquisition of non-financial assets

2002 2003 2004 2005 2006P

6,251.5 13,909.4 7,598.8 4,756.5 18,618.7

-224.2 100.0 4,588.3 2,010.4 -3,483.5

708.7 17,906.5 8,619.3 -1,728.2 -22,543.6

6,853.8 -2,698.7 -3,856.0 6,814.7 47,679.1

2004

I II III IV

3,980.6 -6,066.6 -1,137.1 10,821.9

-680.6 3,163.8 144.4 1,960.7

10,260.3 -757.0 1,621.2 -2,505.2

-5,226.3 -8,002.9 -2,514.9 11,888.1

-372.8 -470.5 -387.8 -521.7

-8,746.9 -4,005.5 -6,805.7 -19,152.4

-1,652.1 3,215.5 377.4 997.4

2005

I II III IV

4,141.5 2,257.6 -504.3 -1,138.3

-194.0 1,249.7 48.8 905.9

-1,278.2 -2,575.3 -147.5 2,272.8

6,125.5 4,247.5 256.8 -3,815.1

-511.8 -664.3 -662.4 -501.9

-9,513.7 -2,817.2 -2,300.1 -

108.7 -1,792.5 606.2 1,146.0

2006P I II III IV

6,524.4 3,684.4 4,773.7 3,636.2

-1,306.7 780.4 -3,656.5 699.3

1,436.2 -14,176.7 -7,395.3 -2,407.8

7,083.8 17,880.6 16,479.6 6,235.1

-688.9 -799.9 -654.1 -890.4

-5,679.3 -4,315.7 -3,615.4 -8,501.3

273.3 -60.7 -1,533.2 -1,279.0

2005 1 2 3 4 5 6 7 8 9 10 11 12

376.1 1,061.5 2,703.9 2,430.5 1,523.1 -1,696.0 -9.0 212.7 -708.0 -1,941.8 158.5 645.0

101.6 -255.4 -40.2 1,457.1 -231.1 23.7 -440.0 327.8 161.0 74.5 160.3 671.1

-1,489.7 1,864.5 -1,653.0 -972.8 -740.7 -861.8 2,579.4 1,103.9 -1,623.0 -3,168.6 5,406.6 34.8

1,950.3 -401.7 4,576.9 2,182.9 2,730.5 -665.9 -1,936.8 1,209.2 984.4 1,319.8 -5,213.5 78.6

-186.1 -145.9 -179.8 -236.7 -235.6 -192.0 -211.6 -220.4 -230.4 -167.5 -194.9 -139.5

-2,874.5 -1,848.6 -4,790.6 -625.4 -1,636.7 -555.1 -873.2 -450.3 -976.6 -715.9 -2,518.6 -1,940.3

-1,183.9 5.7 1,286.9 -602.9 -1,330.7 141.1 -355.4 765.5 196.1 -172.6 303.3 1,015.3

2006P 1 2 3 4 5 6 7 8 9 10 11 12

3,628.2 2,110.2 786.0 4,862.8 513.1 -1,691.5 1,730.1 1,234.9 1,808.7 -2,263.8 436.0 5,464.0

-319.4 190.4 -1,177.7 585.2 125.6 69.6 -114.2 -663.3 -2,879.0 -57.9 126.1 631.1

609.5 2,207.1 -1,380.4 -3,180.0 -7,880.1 -3,116.6 -3,669.2 -4,448.2 772.1 -614.1 -653.5 -1,140.2

3,561.3 -92.7 3,615.2 7,745.1 8,509.1 1,626.4 5,789.4 6,511.4 4,178.8 -1,328.7 1,286.9 6,276.9

-223.2 -194.6 -271.1 -287.5 -241.5 -270.9 -275.9 -165.0 -213.2 -263.1 -323.5 -303.8

-5,432.6 140.7 -387.4 -3,354.6 -495.6 -465.5 -686.0 -959.8 -1,969.6 -956.2 -2,695.1 -4,850.0

1,713.2 -1,468.1 28.2 99.9 -1,377.1 1,216.5 -651.4 363.2 -1,245.0 1,460.1 -1,978.4 -760.7

P: Preliminary Source: The Bank of Korea

February 2007

11. Prices See graphs 11-1, 11-2 & 11-3 (2000 = 100) Consumer prices (2005=100)

Producer prices

Export & import prices

Period All Items

Commodity

Service

Core

All items

Commodity

Export

Import

2002 2003 2004 2005 2006

90.8 93.9 97.3 100.0 102.2

90.0 93.0 96.9 100.0 101.5

91.4 94.8 97.7 100.0 102.7

92.1 94.9 97.7 100.0 101.8

99.2 101.4 107.6 109.9 112.4

97.7 99.7 107.2 109.8 112.6

89.5 87.5 92.9 86.7 85.1

97.1 98.9 108.9 112.0 118.0

2005 7 8 9 10 11 12

100.0 100.3 100.8 100.6 100.2 100.5

99.8 100.3 101.5 101.1 99.7 100.4

100.1 100.3 100.3 100.3 100.5 100.7

100.0 100.1 100.2 100.2 100.2 100.4

109.9 110.2 110.8 111.0 110.4 110.2

109.8 110.3 111.0 111.2 110.3 109.9

87.5 87.0 88.8 89.1 86.4 85.0

114.3 116.5 118.8 118.6 115.5 114.8

2006 1 2 3 4 5 6 7 8 9 10 11 12

101.1 101.3 101.9 102.0 102.2 102.0 102.4 103.0 103.3 102.8 102.3 102.6

101.1 101.1 101.1 101.3 101.6 101.0 101.5 103.0 103.1 101.8 100.7 101.2

101.1 101.4 102.3 102.5 102.6 102.7 103.0 103.1 103.4 103.4 103.4 103.6

100.6 100.8 101.4 101.5 101.9 101.9 102.1 102.2 102.2 102.2 102.3 102.5

110.9 110.9 111.0 111.8 112.5 112.5 113.0 113.9 114.2 113.1 112.5 112.6

110.7 110.7 110.9 111.9 112.8 112.9 113.5 114.7 114.9 113.3 112.4 112.5

83.8 82.5 83.3 83.6 84.7 86.2 87.1 89.1 87.3 85.9 84.1 83.6

115.0 113.7 114.3 117.2 119.7 120.7 123.3 125.3 119.1 116.9 115.1 115.4

2007 1

102.8

101.4

103.8

102.7

112.6

112.3

83.4

112.4

Y-o-Y change (%) 2002 2003 2004 2005 2006

2.8 3.5 3.6 2.8 2.2

2.8 3.3 4.2 3.2 1.5

2.8 3.7 3.1 2.4 2.7

3.0 3.1 2.9 2.3 1.8

-0.3 2.2 6.1 2.1 2.3

-1.2 2.0 7.5 2.4 2.6

-7.0 -2.2 6.2 -6.7 -1.9

-6.2 1.8 10.2 2.9 5.3

2005 7 8 9 10 11 12

2.6 2.0 2.5 2.3 2.5 2.6

3.2 1.7 2.9 2.7 2.8 3.6

2.0 2.2 2.2 2.0 2.0 1.9

2.1 1.9 1.8 1.7 1.9 1.8

2.0 1.4 1.6 1.7 1.1 1.7

2.3 1.6 1.6 1.7 0.9 1.6

-6.6 -9.3 -7.4 -8.5 -7.1 -3.2

3.6 2.7 6.3 3.1 5.6 10.2

2006 1 2 3 4 5 6 7 8 9 10 11 12

2.2 2.0 2.0 2.0 2.3 2.4 2.4 2.7 2.5 2.2 2.1 2.1

2.5 1.6 1.2 1.0 1.8 2.0 1.7 2.7 1.6 0.7 1.0 0.8

2.0 2.3 2.3 2.7 2.7 2.8 2.9 2.8 3.1 3.1 2.9 2.9

1.3 1.3 1.4 1.5 1.8 1.9 2.1 2.1 2.0 2.0 2.1 2.1

2.1 1.7 1.4 1.5 2.7 3.2 2.8 3.4 3.1 1.9 1.9 2.2

2.3 1.8 1.3 1.3 2.8 3.9 3.4 4.0 3.5 1.9 1.9 2.4

-3.6 -4.9 -4.4 -4.0 0.6 1.3 -0.5 2.4 -1.7 -3.6 -2.6 -1.6

10.2 8.5 5.7 6.1 11.3 9.2 7.9 7.5 0.2 -1.4 -0.3 0.6

2007 1

1.7

0.3

2.7

2.1

1.5

-0.4

-2.3

Source: Korea National Statistical Office

Economic Bulletin

12. Employment and earnings See graphs 8-1, 8-2 & 8-3

Economically active persons (thous.) Period

Employed persons (thous.)

Unemployment (%)

All industry earnings (won) (base year=2000) Manufacturing

All industry Manufacturing S.O.C&service 2003 2004 2005 2006

22,957 23,417 23,743 23,978

22,139 22,557 22,856 23,151

4,205 4,290 4,234 4,167

15,967 16,427 16,789 17,181

3.6 3.7 3.7 3.5

2,228,491 2,372,612 2,524,917 -

2,073,992 2,279,724 2,458,022 -

2005

7 8 9 10 11 12

24,072 23,689 23,918 24,056 23,976 23,526

23,184 22,847 23,048 23,186 23,191 22,699

4,233 4,167 4,201 4,241 4,197 4,220

16,931 16,713 16,892 16,966 17,137 17,007

3.7 3.6 3.6 3.6 3.3 3.5

2,496,925 2,461,924 2,759,394 2,413,960 2,282,356 3,349,475

2,450,956 2,404,969 2,655,434 2,370,892 2,097,699 3,504,729

2006

1 2 3 4 5 6 7 8 9 10 11 12

23,340 23,365 23,769 24,088 24,267 24,320 24,270 23,972 24,096 24,253 24,225 23,773

22,471 22,412 22,848 23,242 23,484 23,501 23,447 23,164 23,330 23,463 23,458 22,989

4,201 4,184 4,179 4,188 4,170 4,184 4,180 4,114 4,135 4,183 4,137 4,153

16,893 16,763 16,986 17,186 17,293 17,294 17,303 17,099 17,248 17,294 17,467 17,348

3.7 4.1 3.9 3.5 3.2 3.4 3.4 3.4 3.2 3.3 3.2 3.3

2,865,004 2,451,498 2,481,580 2,504,830 2,356,038 2,685,520 2,646,200 2,607,031 2,796,266 2,690,402 2,409,143 -

2,803,400 2,376,782 2,322,720 2,424,268 2,201,426 2,580,407 2,596,198 2,531,654 2,648,830 2,681,556 2,226,062 -

2007

23,580

22,729

4,156

17,221

3.6

Y-o-Y change (%) 2003 2004 2005 2006

0.2 2.0 1.4 1.0

-0.1 1.9 1.3 1.3

-0.9 2.0 -1.3 -1.6

0.8 2.9 2.2 2.3

9.4 6.5 6.4 -

8.8 9.9 7.8 -

2005

7 8 9 10 11 12

1.9 2.0 1.3 1.5 1.5 0.6

1.9 2.1 1.0 1.2 1.7 0.9

-1.8 -1.4 -2.2 -1.9 -2.5 -1.0

2.6 3.1 2.0 2.4 2.9 2.0

5.7 5.1 5.1 6.9 6.5 4.2

6.4 9.6 5.6 10.0 6.7 0.7

2006

1 2 3 4 5 6 7 8 9 10 11 12

1.2 1.3 1.0 1.0 0.9 0.8 0.8 1.2 0.7 0.8 1.0 1.1

1.8 1.5 1.2 1.3 1.2 1.1 1.1 1.4 1.2 1.2 1.1 1.3

-1.2 -1.7 -2.2 -1.9 -1.9 -1.6 -1.2 -1.3 -1.6 -1.4 -1.4 -1.6

3.0 2.5 2.5 2.9 2.5 2.2 2.2 2.3 2.1 1.9 1.9 2.0

20.3 -7.7 5.5 5.3 7.9 4.1 6.0 5.9 1.3 11.5 5.6 -

24.1 -11.8 5.7 4.1 8.1 3.4 5.9 5.3 -0.2 13.1 6.1 -

2007

1.0

1.1

-1.1

1.9

Source: Korea National Statistical Office

February 2007

13. Financial indicators See graphs 9-1 & 9-4 (period average) Yields (%)

Stock

Period Call rate (1 day)

CD (91 days)

Corporate bonds (3 years, AA-)

Treasury bonds (3 years)

Treasury bonds (5 years)

KOSPI (end-period)

2003 1 2 3 4 5 6 7 8 9 10 11 12

4.3 4.3 4.2 4.2 4.1 4.0 3.8 3.7 3.7 3.8 3.8 3.8

4.7 4.5 4.8 4.6 4.4 4.3 4.2 3.9 3.8 3.9 4.2 4.3

5.5 5.3 5.4 5.4 5.3 5.3 5.7 5.9 5.2 5.2 5.5 5.6

5.0 4.7 4.8 4.6 4.3 4.1 4.4 4.6 4.3 4.3 4.8 4.9

5.2 4.9 4.9 4.8 4.4 4.2 4.6 4.9 4.5 4.5 5.1 5.1

591.90 575.40 535.70 599.40 633.40 669.90 713.50 759.50 697.50 782.40 796.20 810.70

2004 1 2 3 4 5 6 7 8 9 10 11 12

3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.6 3.5 3.5 3.3 3.3

4.3 4.1 3.9 3.9 3.9 3.9 3.9 3.7 3.5 3.5 3.4 3.4

5.7 5.6 5.4 5.3 5.1 4.9 4.8 4.4 4.1 4.0 3.9 3.7

4.9 4.8 4.6 4.5 4.4 4.3 4.2 3.8 3.6 3.5 3.4 3.3

5.2 5.1 4.9 4.9 4.8 4.6 4.5 4.0 3.8 3.7 3.5 3.4

848.50 883.40 880.50 862.80 803.80 785.80 735.30 803.60 835.10 834.80 878.10 895.90

2005 1 2 3 4 5 6 7 8 9 10 11 12

3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.4 3.5 3.7

3.5 3.6 3.6 3.5 3.5 3.5 3.5 3.5 3.7 3.9 4.0 4.0

4.1 4.6 4.5 4.3 4.1 4.2 4.5 4.8 4.9 5.2 5.5 5.5

3.7 4.2 4.0 3.9 3.7 3.8 4.1 4.3 4.5 4.8 5.1 5.1

3.9 4.5 4.3 4.1 3.9 4.0 4.4 4.7 4.8 5.1 5.4 5.3

932.70 1,011.40 965.70 911.30 970.20 1,008.20 1,111.30 1,083.30 1,221.00 1,158.10 1,297.40 1,379.40

2006 1 2 3 4 5 6 7 8 9 10 11 12

3.7 3.9 4.0 4.0 4.0 4.2 4.2 4.4 4.5 4.5 4.5 4.5

4.2 4.3 4.3 4.3 4.4 4.5 4.6 4.7 4.6 4.6 4.6 4.8

5.5 5.3 5.3 5.2 5.1 5.2 5.2 5.1 5.0 4.9 5.1 5.2

5.0 4.9 4.9 5.0 4.8 4.9 4.9 4.8 4.7 4.6 4.7 4.8

5.3 5.0 5.1 5.2 4.9 5.0 5.0 4.8 4.8 4.7 4.8 4.9

1,399.80 1,371.60 1,359.60 1,419.70 1,317.70 1,295.20 1,297.80 1,352.70 1,371.40 1,364.60 1,432.20 1,434.50

2007 1

4.6

4.9

5.3

5.0

1,360.2

Source: The Bank of Korea

Economic Bulletin

14. Monetary indicators See graph 9-5 (period average)

Period

(billion won)

Reserve money

2002 2003 2004 2005

33,579.3 35,754.7 37,272.4 38,785.2

265,042.4 283,397.4 306,842.5 332,902.1

824,227.8 888,988.6 929,640.6 993,960.1

1,092,168.8 1,187,839.8 1,260,547.1 1,348,818.8

2005 7 8 9 10 11 12

38,103.3 38,630.0 39,864.5 39,732.8 39,461.4 40,319.5

346,659.4 346,984.8 347,135.3 339,969.4 307,025.1 318,419.2

1,004,960.2 1,008,802.0 1,008,223.6 1,008,215.2 1,011,582.7 1,021,591.6

1,361,474.7 1,366,592.7 1,371,084.6 1,374,836.2 1,381,692.7 1,393,063.7

2006 1 2 3 4 5 6 7 8 9 10 11 12

41,336.0 41,655.5 40,991.9 41,190.0 40,734.4 40,715.1 41,973.7 40,287.2 41,500.4 43,199.9 41,507.4 44,876.4

327,542.1 326,548.3 325,711.9 324,222.6 323,908.4 326,949.2 330,267.7 325,958.2 327,648.4 333,597.5 337,666.0 351,588.5

1,027,697.4 1,034,711.9 1,042,293.6 1,048,598.6 1,055,855.4 1,072,886.5 1,082,577.5 1,084,752.6 1,098,444.2 1,110,360.9 1,123,714.6 1,138,295.5

1,398,707.3 1,407,971.3 1,413,306.8 1,421,447.5 1,430,748.5 1,445,440.3 1,460,729.4 1,468,210.0 1,479,577.9 1,494,767.6 1,510,883.0 1,526,890.0

Y-o-Y change (%) 2002 2003 2004 2005

14.3 6.5 4.2 4.1

22.5 6.9 8.3 8.5

11.5 7.9 4.6 7.0

12.9 8.8 6.1 7.0

2005 7 8 9 10 11 12

5.6 5.8 6.9 5.2 5.7 7.8

13.3 14.4 12.8 9.7 -1.1 -0.5

7.9 7.7 6.6 6.5 6.6 7.0

7.5 7.6 6.9 6.9 7.2 7.4

2006 1 2 3 4 5 6 7 8 9 10 11 12

9.0 5.0 7.8 8.6 7.5 7.6 10.2 4.3 4.1 8.7 5.2 11.3

1.7 -0.8 -2.7 -3.0 -2.3 -3.0 -4.7 -6.1 -5.6 -1.9 10.0 10.4

7.3 7.2 6.6 6.8 7.1 7.7 7.7 7.5 9.0 10.1 11.1 11.4

7.2 7.4 7.0 7.4 7.6 7.3 7.3 7.4 7.9 8.7 9.4 9.6

P: Preliminary Source: The Bank of Korea

February 2007

15. Exchange rates See graphs 9-2 & 9-3 � /US$

� /100¥

� /Euro

Period End-period

Average

End-period

Average

End-period

Average

2002 2003 2004 2005 2006

1,200.4 1,197.8 1,043.8 1,013.0 929.6

1,251.2 1,191.9 1,144.7 1,024.3 955.5

1,012.9 1,119.6 1,012.1 859.9 781.8

999.6 1,029.8 1,058.8 930.7 821.5

1,257.4 1,502.6 1,423.0 1,199.3 1,222.2

1,180.6 1,348.3 1,422.9 1,274.0 1,199.3

2005 7 8 9 10 11 12

1,028.3 1,031.0 1,038.0 1,042.7 1,036.3 1,013.0

1,037.4 1,021.2 1,029.3 1,046.3 1,041.4 1,024.2

915.8 925.6 915.9 900.4 865.4 859.9

927.2 921.8 927.1 910.9 880.1 863.9

1,247.2 1,259.2 1,247.4 1,256.7 1,219.3 1,199.3

1,249.5 1,254.5 1,262.1 1,258.0 1,229.0 1,214.0

2006 1 2 3 4 5 6 7 8 9 10 11 12

971.0 969.0 975.9 945.7 947.4 960.3 953.1 959.6 945.2 944.2 929.9 929.6

987.0 970.2 975.1 954.4 941.4 955.2 950.2 960.7 953.7 954.2 936.2 925.8

824.9 833.8 831.7 828.3 842.2 834.0 830.2 820.3 802.2 803.5 799.0 781.8

854.3 822.4 831.3 814.8 843.0 833.0 821.4 829.7 814.3 803.2 798.0 790.2

1,173.8 1,147.9 1,187.1 1,184.9 1,208.0 1,215.9 1,216.4 1,232.3 1,200.6 1,200.8 1,223.0 1,222.2

1,194.8 1,159.7 1,172.8 1,169.9 1,201.7 1,208.7 1,206.2 1,230.6 1,214.9 1,202.4 1,205.3 1,222.8

2007 1

940.9

936.4

773.1

777.9

1,220.1

1,217.0

Y-o-Y change (%) 2002 2003 2004 2005 2006

-9.5 -0.2 -12.9 -3.0 -8.2

-3.1 -4.7 -4.0 -10.5 -6.7

0.3 10.5 -9.6 -15.0 -9.1

-5.9 3.0 2.8 -12.1 -11.7

7.2 19.5 -5.3 -15.7 1.9

2.1 14.2 5.5 -10.5 -5.9

2005 7 8 9 10 11 12

-12.0 -10.6 -9.6 -7.4 -1.1 -3.0

-10.4 -11.9 -10.3 -8.6 -4.6 -2.6

-12.1 -11.7 -11.4 -15.0 -15.0 -15.0

-12.5 -12.2 -11.3 -13.2 -15.5 -14.7

-11.3 -9.4 -11.9 -12.4 -12.3 -15.7

-12.1 -11.2 -9.9 -12.0 -13.2 -13.8

2006 1 2 3 4 5 6 7 8 9 10 11 12

-5.4 -3.9 -4.7 -5.7 -5.5 -6.3 -7.3 -6.9 -8.9 -9.5 -10.3 -8.2

-4.9 -5.1 -3.2 -5.6 -6.1 -5.5 -8.4 -5.9 -7.4 -8.8 -10.1 -9.6

-16.7 -12.9 -12.7 -12.3 -9.3 -10.1 -9.3 -11.4 -12.4 -10.8 -7.7 -9.1

-15.1 -15.6 -13.2 -13.6 -10.3 -10.4 -11.4 -10.0 -12.2 -11.8 -9.3 -8.5

-12.2 -14.0 -10.3 -8.4 -3.5 -1.8 -2.5 -2.1 -3.8 -4.5 0.3 1.9

-12.4 -13.1 -11.7 -10.6 -5.5 -1.7 -3.5 -1.9 -3.7 -4.4 -1.9 0.7

2007 1

-3.1

-5.1

-6.3

-8.9

3.9

1.9

Source: The Bank of Korea

Economic Bulletin

Editor-in-Chief Kim, Young-Kwa (MOFE) Editorial Board Song, Kyung-Jin (MOFE) Kim, Dong-Yule (KDI) Shim, Jae-Hak (KDI) Coordinators Baek, Yoon-Jin (MOFE) Kang, Ji-Eun (KDI) Assistant Editors Chang, Jae-Yong (MOFE) Kim, Jin-Mi (KDI) Baek, So-Myung (KDI)

Useful Internet Websites Economy-related Websites Recommended

Ministry of Finance and Economy http://english.mofe.go.kr Ministry of Commerce, Industry and Energy http://english.mocie.go.kr Ministry of Planning and Budget http://www.mpb.go.kr/english.html Financial Supervisory Commission/Financial Supervisory Service http://www.fsc.go.kr/eng Fair Trade Commission http://www.ftc.go.kr/eng Ministry of Labor http://english.molab.go.kr Bank of Korea http://www.bok.or.kr Korea National Statistical Office http://www.nso.go.kr/eng/index.html