200806 by KOCIS

Vol. 30 | No. 6

Republic of Korea

Economic Bulletin The Green Book : Current Economic Trends 3

Overview 1. Global economy

2. Private consumption

3. Facility investment

4. Construction investment

5. Exports and imports

6. Mining and manufacturing production

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

Plan for privatization of the KDB and establishment of the KDF

Economic News Briefing

Statistical Appendices

The Green Book Current Economic Trends

Overview Despite brisk exports, the Korean economy has continued to suffer from weak domestic demand and rising inflationary pressures fueled by high oil prices. Mining and manufacturing production maintained a double digit growth of 10.5 percent in April, while service output slightly slowed to 5.9 percent in April from 6.3 percent in the first quarter of 2008. Growth in consumer goods sales edged down 0.2 percent month-to-month, but its growth pace slightly accelerated to 5.8 percent from 4.4 percent a year earlier due to the low base effect stemming from the same month last year when 4 percent growth was recorded. Facility investment (estimated) in April continued to remain weak. It was down by 2 percent as rising investments in transport equipment were offset by decreasing investments in machinery including semiconductor devices. The total number of employees hired rose a mere 191,000 year-on-year, due to a sharp decrease in temporary and daily jobs and a lackluster increase in service ones. In April, the cyclical indicator of coincident composite index went down for the third consecutive month, while the leading composite index has dropped for five months in a row. A shipment/inventory cycle in the manufacturing industry has been on a downward trajectory for three consecutive months. May exports rose 27.2 percent year-on-year on the back of strong exports to emerging markets and resource-rich nations. In April, the Korean economyâ&#x20AC;&#x2122;s current account posted a deficit of US$1.56 billion, down from the previous yearâ&#x20AC;&#x2122;s US$2.08 billion in deficit, mainly due to an increase in the goods account surplus and a reduction in the service account deficit. May consumer prices went up 4.9 percent year-on-year due to soaring oil prices and rising personal service charges. To sum up, the Korean economy is facing cost-pushing inflation triggered by soaring oil prices, in a situation where the current economic downturn is clearly being felt. Worse yet, there are growing concerns that domestic demand is deteriorating due to the worsening terms of trade and sluggish employment growth. Against this backdrop, stepped-up policy efforts are needed to formulate policies which could mitigate the negative impacts of the economic slowdown, to stabilize the lives of the ordinary people, as well as to promote energy conservation efforts in response to higher oil prices.

Economic Bulletin

1. Global economy Downside risks to advanced economies still remain high due to the continued shakeout in the US housing market and soaring oil prices in May, although the global financial crisis triggered by the US subprime mortgage turmoil is believed to pass its worst. However, newly emerging economies have maintained relatively robust growth, which has provided a cushion against a possible drastic slowdown in the global economy.

Projections for the US economic growth in the first quarter of 2008 were raised from 0.6 percent to 0.9 percent. Concerns over a downturn in the US economy have been mitigated as the Institute for Supply Managementâ&#x20AC;&#x2122;s index was on the rise and the leading composite index has reversed its six-month decline and rose for the second consecutive month. However, market uncertainties still remain. The US housing prices have continued to fall, along with an increase in inventories. On top of that, consumer goods sales were down in April due to surging oil prices and weak job markets. In the US financial market, the Treasury bond yield and stock prices have continued to rise since March, as some financial institutions announced their plans to increase capital and the credit crunch is expected to come to an end. Dow Jones industrial average index (monthly average) 12,538.1 (Jan 2008)

12,416.2 (Feb)

12,193.9 (Mar)

12,656.6 (Apr)

12,812.5 (May)

Two-year US Treasury bond yield (month-end, %) 2.10 (Jan 2008)

1.62 (Feb)

1.59 (Mar)

2.26 (Apr)

2.65 (May)

Meanwhile, the US federal funds rate is likely to reverse course and rise as inflationary pressures have increased due to skyrocketing oil prices and the weak dollar. As of the end of May, market analysts expect that federal funds rate would go up by 25 basis points in the second half of 2008 and there is an about 48 percent chance of the FOMC to increase its federal funds rate by 50 basis points. (Percentage change from previous period) 2007

2006

2008

Annual

Feb

Mar

Apr

Real GDP1

2.9

2.2

4.9

0.6

0.9

- Personal consumption expenditure

3.1

2.9

2.8

2.3

1.0

- Corporate fixed investment

6.6

4.7

9.3

6.0

-0.2

- Construction investment for housing

-4.6

-17.0

-20.5

-25.2

-25.5

Industrial production

3.9

2.1

3.6

-1.0

-0.2

-0.7

0.2

-0.7

Retail sales

6.2

4.0

0.9

0.1

-0.5

0.2

-0.2

New non-farm payroll employment (q-o-q, thousand)

2,263

1,337

230

292

-240

-83

-81

-20

New home sales

-18.1

-26.4

-14.6

-10.2

-14.0

-4.2

-11.0

3.3

Existing home sales

-8.5

-12.8

-7.0

-8.4

-0.9

2.9

-1.8

-1.0

Consumer prices (y-o-y, %)

3.2

2.9

2.4

4.0

4.1

4.0

3.9

1. Annualized rate (%)

June 2008

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 has maintained solid growth buoyed by strong domestic demand, rising investments, and brisk exports, but inflation continued to hovered over 8 percent. Disruptions in production and distribution in the aftermath of the earthquake that struck China’s Sichuan province on May 12 are likely to add more upward pressure on consumer prices. (Percentage change from same period in previous year) 2006

2007

2008

Annual

Jan

Feb

Mar

Apr

Real GDP

10.7

11.4

11.5

11.2

10.6

Fixed asset investment (accumulated)

24.5

25.8

26.4

25.8

25.9

24.3

Retail sales

13.7

16.8

19.0

20.6

Industrial production

16.6

18.5

18.1

17.5

16.4

Exports

27.2

25.7

26.2

25.7

Consumer prices

1.5

4.8

6.1

6.6

25.9

25.7

21.2

19.1

21.5

22.0

15.41

17.8

15.7

21.4

26.6

6.5

30.6

21.8

8.0

7.1

8.7

8.3

8.5

1. China’s National Bureau of Statistics (NBS) announced data on fixed asset investment and industrial production for both January and February.

Japan

Japan’s economic recovery slowed down, as the worsening terms of trade led to weak domestic demand and sluggish investments, and exports fell due to the weak demand from advanced countries led by the US. (Percentage change from previous period) 2006

2007

2008

Annual

Jan

Feb

Mar

Apr

Real GDP

2.4

2.1

0.4

0.9

0.8

Industrial and mining production

4.5

2.8

1.7

0.9

-0.6

-0.5

1.6

-3.1

-0.3

Retail sales (y-o-y, %)

0.1

-0.1

-0.5

0.8

1.8

1.3

3.2

1.0

0.1

Exports (y-o-y, %)

14.6

11.5

10.7

10.0

6.2

7.7

8.7

2.3

4.0

Consumer prices (y-o-y, %)

0.3

0.0

-0.1

0.1

0.9

0.7

1.0

1.2

0.8

Eurozone

While high oil prices and a strong euro in the euro area led to weak production/consumption and sluggish exports, the average inflation rate has largely exceeded the European Central Bank (ECB)’s target of 2 percent. Recently, the ECB has announced in the report, released on May 30 celebrating its 10th anniversary, that a higher priority would be put on containing inflationary expectation. (Percentage change from previous period) 2006

2007

2008

Annual

Jan

Feb

Mar

Apr

Real GDP

2.8

2.6

0.7

0.4

0.8

Industrial production

4.0

3.5

1.4

0.1

0.7

0.3

-0.2

Retail sales

1.6

1.0

0.5

-0.9

0.2

0.6

-0.2

-0.4

Exports (y-o-y, %)

11.6

8.3

10.0

4.6

5.4

10.4

12.1

-1.0

Consumer prices (y-o-y, %)

2.2

2.1

1.9

2.9

3.4

3.2

3.3

3.6

3.3

June 2008

1-4

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

1-5

Japanâ&#x20AC;&#x2122;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 Private consumption (preliminary GDP) gained a mere 3.4 percent year-on-year in the first quarter of 2008, the lowest since the first quarter of 2005. Its on-quarter growth also recorded the lowest of 0.4 percent since the third quarter of 2004. Private consumption (y-o-y, %): 3.9 (Q4 2006)

4.1 (Q1 2007)

(SA*, q-o-q, %): 0.9 (Q4 2006)

4.4 (Q2)

1.6 (Q1 2007)

4.8 (Q3)

0.9 (Q2)

4.6 (Q4)

1.3 (Q3)

3.4 (Q1 2008)

0.8 (Q4)

0.4 (Q1 2008)

* SA: seasonally adjusted

Consumer goods sales in April went up 5.8 percent year-on-year due to the low base effect stemming from the previous year. Growth in consumer goods sales slipped into 4 percent in April 2007 from 6 percent in March 2007. On a month-on-month basis, they reversed course and fell 0.2 percent in April after increasing for three straight months with a 1.5 percent gain in March. The downward trend was caused by sluggish sales of semi-durable goods and automobiles. (Percentage change from same period in previous year) 2006

2007

2008

Annual

Apr

Q11

Feb

Mar1

Apr1

Consumer goods sales

4.1

5.3

7.1

4.5

4.0

3.9

2.9

4.4

5.8

(Seasonally adjusted)

1.8

0.3

-1.5

2.0

0.8

1.5

-0.2

11.2

10.8

10.1

6.2

13.1

8.2

5.8

11.2

15.3

- Durable goods

路Automobiles

6.9

6.8

4.1

3.9

11.2

9.5

4.2

14.0

19.4

- Semi-durable goods4

3.0

2.6

3.2

1.8

0.8

5.4

6.1

1.2

-1.0

- Non-durable goods

1.7

3.5

7.1

3.4

1.4

1.5

0.5

2.4

4.3

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

While sales growth at large discounters and department stores slowed down from a month earlier, that at specialized retailers went up from the previous month.

2006

- Department stores - Large discounters - Specialized retailers

Annual

2007 Q4

2008 (Percentage change from same period in previous year) Apr Q11 Feb Mar1 Apr1

3.3

0.7

3.2

2.8

-4.2

4.3

3.5

2.5

1.6

8.1

8.7

12.2

4.4

7.6

7.3

3.3

7.8

2.4

2.3

5.6

7.0

4.4

5.0

1.6

1.8

2.6

4.9

1. Preliminary 2. Specialized retailers are defined as stores carrying a few (1 to 3) specialized items.

June 2008

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

The preliminary consumptions index shows that growth in consumer goods sales in May is likely to remain weak due to soaring oil prices. Domestic demand for Korean automobiles went down significantly compared to the previous month, while domestic credit card spending remain flat and sales at department stores and large discounters were stronger than last month. Value of credit card use (y-o-y, %) 15.9 (Dec 2007)

21.9 (Jan 2008)

17.2 (Feb)

25.5 (Mar)

19.4 (Apr)

20.0 (May)

Department store sales (y-o-y, %) -2.2 (Dec 2007)

6.9 (Jan 2008)

5.5 (Feb)

6.7 (Mar)

6.5 (Apr)

8.5 (May)

Discount store sales (y-o-y, %) -0.6 (Dec 2007)

6.4 (Jan 2008)

-1.5 (Feb)

2.8 (Mar)

0.1 (Apr)

4.3 (May)

11.4 (Apr)

3.3 (May)

Domestic sales of Korean automobiles (y-o-y, %) -6.0 (Dec 2007)

2.2 (Jan 2008)

2.9 (Feb)

5.9 (Mar)

Source: Ministry of Knowledge and Economy The Credit Finance Association Korea Automobile Manufacturers Association Ministry of Strategy and Finance (for April data)

The worsening terms of trade and rising consumer prices triggered by high oil prices has led to a decrease in real income and job markets also continue to deteriorate, which could affect adversely consumer sentiment. CPI (y-o-y, %) 3.0 (Oct 2007)

3.9 (Jan 2008)

3.9 (Mar)

4.1 (Apr)

4.9 (May)

GNI (y-o-y, %) 4.6 (Q2 2007)

5.2 (Q3)

2.6 (Q4)

1.3 (Q1 2008)

5.1 (Q3)

5.7 (Q4)

5.8 (Q1 2008)

GDP (y-o-y, %) 4.9 (Q2 2007)

Employment growth (y-o-y, thousand) 296 (Q3 2007)

June 2008

278 (Q4)

209 (Q1 2008), 210 (Feb)

184 (Mar)

191 (Apr)

2-4

Department store and discount store sales (current value) Source: Ministry of Knowledge Economy (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 first quarter of 2008 (preliminary GDP) remained weak. It grew 1.4 percent year-on-year but dropped 0.4 percent compared to the fourth quarter of 2007. (Percentage change from same period in previous year) 2006

20071

20081

Annual

7.8

7.6

10.9

11.0

2.3

6.5

1.4

4.5

1.6

-1.8

2.1

-0.4

- Machinery

8.2

7.6

13.5

9.5

1.0

7.0

-0.9

- Transportation equipment

6.0

7.7

0.3

18.9

8.9

4.0

12.3

Facility investment

(Seasonally adjusted)3

1. Preliminary

2. National accounts

3. Percentage change from previous period

The facility investment (estimated index) in April edged down 2.0 percent as an increase in investments in transport equipment was offset by a decrease of investments in machinery including semiconductor equipment. (Percentage change from same period in previous year) 2006

2007

Annual Annual Facility investment (estimated)

2008

Apr

Q11

Feb

Mar1

Apr1

8.9

8.6

12.8

11.9

0.7

9.2

15.6

-0.9

-1.9

0.9

-2.0

- Domestic machinery shipments

10.8

3.4

6.4

2.7

-1.4

5.9

3.5

2.2

1.3

1.8

4.4

Domestic machinery orders

18.9

17.0

16.1

7.4

14.7

30.0

1.4

19.3

4.9

19.9

16.0

- Public

7.1

-4.0

12.1

-23.5

-15.2

8.3

3.9

1.8

-22.8

13.2

7.3

- Private

20.5

19.6

16.4

10.5

18.8

33.8

1.3

20.8

7.2

20.5

16.6

1. Preliminary

Leading indicators such as machinery orders, machinery imports, and the business survey index (BSI) indicate that facility investment (estimated index) in May is likely to be sluggish. Domestic machinery orders in April were down in both the public and private sectors. Machinery imports (y-o-y, %) 29.3 (Nov 2007)

25.9 (Dec)

12.2 (Jan 2008)

11.3 (Feb)

12.0 (Mar)

12.4 (Apr)

The Bank of Koreaâ&#x20AC;&#x2122;s BSI for facility investments in the manufacturing sector and BSI projections were the same as the previous month.

2008

Business survey indexes (base=100) Jan

Feb

Mar

Apr

May

Jun

Manufacturing facility investment result

101

100

Manufacturing facility investment prospect

100

101

103

Source: The Bank of Korea

June 2008

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 (preliminary GDP) in the first quarter of 2008 lost 1.1 percent from a year earlier and 1.4 percent compared to the fourth quarter of 2007. (Percentage change from same period in previous year) 2006

20071

Annual

-0.1

1.2

- Building construction

-0.7

1.8

- Civil engineering works

0.7

0.3

Construction investment

(Seasonally adjusted)3

20081

3.7

1.6

-0.1

0.4

-1.1

-0.3

-1.2

0.2

1.2

-1.4

2.0

1.2

1.8

2.2

-0.3

7.2

2.1

-2.9

-1.8

-2.5

1. Preliminary 2. National accounts 3. Percentage change from previous period

In April, construction completed (current value) edged up 4.0 percent year-on-year, up 0.2 percentage points from the previous monthâ&#x20AC;&#x2122;s 3.8 percent, as accelerated growth in privatesector construction compensated for a slowdown in the public-sector construction. Construction growth in the public sector fell 2.4 percentage points month-on-month to 3.1 percent, while that in the private sector gained 1.3 percentage points from a month earlier to 2.1 percent. (Percentage change from same period in previous year) 2006

2007

Annual Annual Construction completed2

2008

Apr

Feb

Mar1

Apr1

2.6

6.6

7.9

6.0

4.4

8.0

7.0

5.8

3.3

3.8

4.0

- Public

0.6

8.4

21.1

12.2

3.0

2.8

8.4

6.9

-1.0

5.5

3.1

- Private

4.0

4.5

3.1

2.3

3.6

8.4

4.0

2.9

2.5

0.8

2.1

1. Preliminary 2. Industrial activity

A full-fledged recovery in construction investments are unlikely for the time being, given trends of the leading composite index and sluggish investment sentiment in the sector. Construction orders, one component of the leading composite index, continued its downward trajectory which had kicked off in the first quarter, recording a 2.5 percent decline in April. Business survey index for construction (base=100) 75.7 (Dec 2007)

67.6 (Jan 2008)

75.0 (Feb)

58.2 (Mar)

51.4 (Apr)

Source: The Construction and Economy Research Institute of Korea

(Percentage change from same period in previous year) 2006

2007

Annual Annual Construction orders2

Apr

Feb

Mar1

Apr1

9.0

19.3

26.3

-5.6

29.5

48.9

-3.9

-6.2

5.3

-2.5

- Public

-6.3

34.2

49.3

21.2

7.3

47.2

45.5

20.0

3.5

44.3

-4.1

- Private

12.8

13.1

21.8

17.0

-12.9

28.6

43.6

-15.0

-14.9

-11.6

0.2

1. Preliminary 2. Current value

2008 1

June 2008

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 Land, Transport and Maritime Affairs (housing construction) 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 -5.0 -10.0

4-3

Leading indicators of construction investment Source: Korea National Statistical Office (construction orders) Ministry of Land, Transport and Maritime Affairs (building construction permit area)

Economic Bulletin

5. Exports and Imports Exports in May reached US$39.49 billion, up 27.2 percent from a year earlier. By export category (estimated by the Ministry of Knowledge Economy), exports of petroleum goods (up 118.0%), ships & vessels (up 56.0%), and wireless telecommunications equipment (up 36.4%) showed positive growth, while those of automobiles (down 1.9%) were lackluster due to growing output at overseas plants. By regional category (estimated by the Ministry of Knowledge Economy), exports to ASEAN nations (up 45.2%), Central and South America (up 44.3%), China (up 32.6%), and the Middle East (up 27.8%) went up, but those to the US (down 5.4%) decreased. (US$ billion) 2007

Exports

2008

Mar

Apr

May

Jan-May

Mar

Apr

May

Jan-May

30.39

29.24

31.04

145.69

36.00

37.84

39.49

176.75

(y-o-y, %)

13.2

17.0

11.1

14.3

18.5

26.4

27.2

21.3

Average daily exports

1.29

1.30

1.32

1.27

1.57

1.65

1.76

1.57

Imports

29.30

29.60

29.86

141.72

36.88

38.04

38.45

181.98

(y-o-y, %)

12.9

20.9

13.9

15.0

25.9

28.5

28.8

28.4

Average daily imports

1.25

1.29

1.27

1.24

1.60

1.65

1.71

1.62

Trade balance

1.09

0.35

1.18

3.97

-0.87

-0.02

1.04

-5.23

May imports rose 28.8 percent year-on-year to post US$38.45 billion. The sharp increase was mainly led by raw materials such as crude oil (up 57.6%), steel products (up 54.7%), and gas (up 66.6%), as well as consumer goods including agricultural products (up 41.4%) and automobiles (up 29.0%). Raw materials (y-o-y, %) 43.8 (Jan 2008)

39.8 (Feb)

35.4 (Mar)

39.0 (Apr)

49.6 (May 1-20, 2008)

12.0 (Mar)

14.5 (Apr)

21.4 (May 1-20, 2008)

20.5 (Mar)

22.9 (Apr)

14.7 (May 1-20, 2008)

Capital goods (y-o-y, %) 13.3 (Jan 2008)

14.0 (Feb)

Consumer goods (y-o-y, %) 23.7 (Jan 2008)

10.3 (Feb)

In May, Korea swung to a trade surplus of US$1.04 billion for the first time in 6 months since November 2007 when it recorded a trade surplus of US$1.88 billion. Dubai crude oil prices (US$/barrel) 58.9 (Mar 2007)

64.0 (Apr)

64.7 (May), 96.9 (Mar 2008)

103.6 (Apr)

119.5 (Apr)

June exports are projected to continue their double digit growth mainly boosted by both the weak won and growing exports to rapidly growing developing economies such as China, the Middle East, and ASEAN. However, as soaring prices of oil and raw materials have shown no signs of leveling off, growth in imports is likely to stay at higher levels.

June 2008

5-1

Exports (customs clearance basis) Source: Ministry of Knowledge Economy (export and import trend)

5-2

Imports (customs clearance basis) Source: Ministry of Knowledge Economy (export and import trend)

5-3

Trade balance Source: Ministry of Knowledge Economy (export and import trend)

Economic Bulletin

6. Mining and manufacturing production Production in mining and manufacturing in April jumped 10.5 percent year-on-year on the strength of brisk exports, continuing its double digit growth. On a month-on-month basis, production in mining and manufacturing in April edged up 1.0 percent, as increased sales of audiovisual telecommunications equipment (cell phones, etc.) and semiconductors & parts made up for weak demand for textiles. By business category, production of semiconductors & parts increased by 34.0 percent while those of audiovisual telecommunications and chemical products were up by 32.5 percent and 7.4 percent respectively. Contribution to on-year output growth in Apr 2008 (%p) Semiconductors & parts (5.02), audiovisual telecommunications (1.79), chemical products (0.56)

April shipments have maintained their growth momentum, posting an 8.6 percent gain, but fell short of production growth, sending inventory levels climbing 12.3 percent, up 2.9 percentage points from the previous month. (Percentage change from same period in previous year) 2007

Production (q-o-q, m-o-m)

Mining and manufacturing activity2

Annual

2008 Q4

Apr

Fed

Mar1

Apr1

-0.5

3.2

2.1

2.0

-0.2

1.0

(y-o-y)

6.8

4.0

11.0

6.2

10.5

10.2

10.1

10.5

(days operated reflected)

7.1

4.7

8.0

4.9

10.1

8.7

11.1

9.5

- Manufacturing

7.0

4.1

11.2

6.2

10.6

10.0

10.5

11.0

路Heavy chemical industry

8.2

4.7

12.6

6.9

12.7

12.0

13.0

13.3

路Light industry

1.7

1.3

4.6

3.3

1.6

0.8

-0.9

0.5

Shipment

7.1

5.1

10.6

7.3

8.8

7.6

8.7

8.6

- Domestic demand

4.8

4.1

6.8

5.9

5.2

4.0

4.2

5.0

- Exports

10.5

6.7

16.2

9.5

14.5

13.0

15.9

14.1

Inventory3

5.8

4.7

5.8

3.8

9.4

8.3

9.4

12.3

Manufacturing Average operation ratio (%) activity Production capacity

80.4

79.4

81.2

80.2

81.3

80.6

81.3

82.2

5.1

4.3

6.1

4.3

5.8

5.6

5.8

6.1

1. Preliminary 2. Including mining, manufacturing, electricity and gas industry 3. End-period (month, quarter and year)

The production in the mining and manufacturing industry in May is forecast to remain on its upward trajectory, supported by strong exports. Export growth on a custom clearance basis (y-o-y, %) 15.0 (Jan 2008)

June 2008

18.8 (Feb)

18.5 (Mar)

26.4 (Apr)

27.2 (May)

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 April rose 5.9 percent year-on-year, continuing a moderate slowdown. It grew 6.3 percent in the first quarter of this year compared to a 6.8 percent rise in the previous quarter. By business category, financial & insurance services (up 12.8%), transportation services (up 10.3%), real estate & renting (up 7.1%) and healthcare & social welfare services (up 6.7%) have contributed to the output growth in the service sector. (Percentage change from same period in previous year) Weight

2007

2006 Annual Annual

2008

Apr

Feb

Mar1

Apr1

Service activity index

100

5.5

6.4

5.4

6.1

7.2

6.8

5.1

6.3

5.9

5.6

5.9

- Wholesale & retail

22.0

3.8

4.3

3.7

4.2

5.2

3.3

3.9

1.9

4.1

4.5

- Hotels & restaurants

7.8

2.2

2.4

2.0

2.6

2.2

2.9

1.9

3.1

3.6

3.0

1.3

- Transportation services

9.0

6.9

7.1

6.6

5.5

8.4

8.1

3.5

7.7

6.3

8.7

10.3

- Communication services

5.0

3.6

3.7

3.1

2.9

2.3

6.3

2.9

4.8

3.9

4.8

6.4

- Financial & insurance services

15.4

9.0

16.0

9.5

16.3

18.3

19.5

13.3

15.2

15.4

13.2

12.8

- Real estate & renting

6.3

9.8

2.7

6.9

2.0

6.6

-3.5

1.1

5.8

7.4

5.5

7.1

- Business services

10.0

5.7

6.6

5.3

6.7

7.0

7.4

6.7

5.0

5.7

3.1

4.4

- Educational services

10.6

2.6

2.3

3.0

2.5

1.4

2.7

3.1

2.9

1.6

0.5

- Healthcare & social welfare services

6.0

11.0

8.5

8.3

9.0

9.2

7.4

7.8

6.2

4.4

5.1

6.7

- Entertainment, cultural & sports services

3.8

1.8

6.4

5.5

6.4

7.5

5.7

4.1

6.0

1.9

0.3

- Other public & personal services

4.2

3.8

0.7

1.0

0.1

0.7

1.0

-1.2

2.1

2.8

1.3

2.5

1. Preliminary

Service activity in May is expected to have been restrained by contracted household income due to growing inflationary pressures and slowing gross national income (GNI) growth. Dubai crude oil prices (US$/barrel, monthly average) 87.2 (Jan 2008)

90.2 (Feb)

96.9 (Mar)

103.6 (Apr)

119.5 (May)

GDP (y-o-y, %) 4.0 (Q1 2007)

4.9 (Q2)

5.1 (Q3)

5.7 (Q4)

5.8 (Q1 2008)

4.6 (Q2)

5.2 (Q3)

2.6 (Q4)

1.3 (Q1 2008)

GNI (y-o-y, %) 3.6 (Q1 2007)

June 2008

7-1

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

80.0 70.0

7-2

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

Apr 2008 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

Bus ines s se rvic es

rent ing Rea l es tate &

Com mun icat ion serv ices Fina serv ncial & ices insu ranc e

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 Korean workers on payroll in April grew by 191,000 year-on-year, a sharp deceleration amid economic slowdown. Service businesses continued to expand led by healthcare & social welfare services, business services, and financial & insurance services, adding 278,000 jobs to payroll in April. The increase, however, sharply slowed due to the sluggish domestic economy. The manufacturing sector has continued its downward trend caused by structural factors, shedding 24,000 jobs. However, the recent robust industrial activity and exports have helped the manufacturing sector record fewer job losses. Employment in the construction sector dropped 22,000 jobs from the same month of the previous year, sustaining the decrease since the third quarter of 2007 due to a recent slump in the construction business. Employment in agriculture, forestry and fisheries lost 44,000 jobs, continuing its downward trend as its share in the national economy has contracted. By status of workers, the growth of wage workers sharply slowed down to 294,000, as companies held back from hiring new employees due to worsening external conditions. The number of regular workers, in particular, rose by 443,000, while the number of temporary or daily workers shrank significantly by 149,000. The employment rate posted 60.0 percent, down 0.2 percentage points compared to the same month of the previous year. The unemployment rate fell by 0.2 percentage points to 3.2 percent year-on-year, settling in the downward tendency. Also, the youth unemployment rate dropped 0.1 percentage points from a year earlier to 7.5 percent.

(Change from same period in previous year, thousand) 2007

2008

Apr

Annual

Jan

Feb

Mar

Apr

278

282

289

296

278

210

235

210

184

191

- Agriculture, forestry and fishery

-42

-58

-52

-72

-67

-62

-64

-58

-44

- Manufacturing

-65

-48

-55

-50

-37

-24

-30

-23

-20

-24

Employment growth

- Construction

-6

-9

-17

-5

-12

-35

-22

- Services

336

373

367

424

392

312

333

307

296

278

Unemployment rate (%)

3.4

3.2

3.1

3.0

3.4

3.3

3.5

3.4

3.2

Employment rate (%)

60.2

59.8

60.6

60.2

60.0

58.5

58.3

58.0

59.1

60.0

June 2008

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 recovered to the 1,850 point range in May as expectations over credit crunch easing grew and investors’ appetites for relatively undervalued Korean stocks were boosted. The Korean main bourse was pushed up to 1,888.9 points on May 16, the highest record in 2008, but the scope of its upswing was limited by worries over inflation driven by high oil prices and profit-taking from a few days of sharp gains. Foreign investors turned their positions into net-buyers of Korean shares for the first time in 12 months since May 2007. Their net buying amounted to 312.6 billion won.

KOSPI

Stock price index Market capitalization

KOSDAQ

2007

May 2008

Change

1,897.1

1,852.02

951.9 5.5

Average daily trade value

2007

May 2008

Change1

-71.63 (-2.38%)

704.2

652.15

-57.18 (-7.40%)

940.2

-11.7 (-1.23%)

99.9

93.7

-6.2 (-6.21%)

6.0

0.5 (9.1%)

2.0

1.4

-0.6 (-30.0%)

1. Change from the end of previous year

9.2 Exchange rate The won/dollar exchange rate soared to the 1,030 won range in May, mainly as offshore investors bought more dollars and Korean refineries increased dollar payments for crude oil amid high oil prices. The exchange rate rose up to 1,049.6 won on May 8, the highest level since October 2005. The increase, however, has narrowed down due to the government’s comments on its exchange rate policy considering inflation and increased dollar selling by Korean exporters seeking the redemption of their L/C. The won/yen exchange rates closed the month higher at 978.2 won as the yen’s value appreciated. (End-period) 2005

2006

2007

2008

Dec

Apr

May

Change1

Won/Dollar

1,011.6

929.8

936.1

1,002.6

1,030.1

-10.0

Won/100Yen

858.5

783.4

828.6

965.6

978.2

-18.1

1. Appreciation from the end of the previous year (%); the exchange rate is based on the closing price at 3:00 p.m., local time.

June 2008

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 soared led by Treasury bond yields in May as inflationary worries stemming from steep oil and other commodity prices dampened expectations over key policy rate cuts by the Bank of Korea. Nevertheless, the increase has been limited as auctions to buy-back Treasury bonds attracted many investors and demands for bonds increased after a short-term surge. (End-period) 2004

2005

2006

2007

Dec

Feb

Mar

Apr

May

Change1

3.29

3.76

4.60

5.02

4.94

4.98

4.95

5.04

Call rate (1 day)

2008

CD (91 days)

3.43

4.09

4.86

5.82

5.18

5.38

5.36

-46

Treasury bonds (3 yrs)

3.28

5.08

4.92

5.74

4.97

5.10

4.88

5.46

-28

Corporate bonds (3 yrs)

3.72

5.52

5.29

6.77

6.14

6.01

5.82

6.41

-36

Treasury bonds (5 yrs)

3.39

5.36

5.00

5.78

5.08

5.13

4.96

5.54

-24

1. Basis point change in April 2008 from end December 2007

9.4 Money supply & money market The M2 growth in April expanded substantially as private sector credit continued to increase mainly led by bank loans. In the mean time, M1 decreased at a slower pace. (Percentage change from same period in previous year, average) 2006

2007

Annual

2008

Feb

Mar

Apr1

Mar2

M13

8.3

2.4

5.8

3.9

1.5

-1.3

-1.8

-3.0

Mid -2

299.8

8.3

11.2

11.5

11.0

11.1

11.2

13.4

13.9

Mid 14

1,324.0

Lf 4

7.9

10.2

10.0

10.2

10.5

11.6

Upper 11

Lower 12

1,726.45

1. Estimate 2. Balance, trillion won 3. Excluding corporate MMFs and individual MMFs 4. Liquidity aggregates of financial institutions (mostly identical with M3) 5. Feb 2008 data

In April, bank deposits surged from the previous month as instant access account deposits shifted to a 4.9 trillion won increase from a 7.3 trillion won decrease in the previous month. Furthermore, the increased bank deposits were driven by accelerated growth in time deposits for which some banks offered higher interest rates. The deposits grew 6.9 trillion won in April after expanding 1.7 trillion won a month earlier. Asset management company (AMC) deposits grew at an even faster pace as more money flowed into equity funds and financial institutionsâ&#x20AC;&#x2122; idle money came pouring into money market funds (MMFs). MMFs shifted to a 5.9 trillion won increase from a 6.3 trillion won decrease a month earlier. (Monthly change, end-period, trillion won) 2007 May

Jun

Jul

Aug

2008 Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

Bank deposits

6.9

13.3

-8.3

4.3

6.5

7.6

11.3

-4.3

12.2

8.9

-6.0

22.8

AMC deposits

7.6

13.6

3.9

4.0

3.3

13.0

14.3

-0.4

23.5

13.9

0.4

10.2

June 2008

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 Koreaâ&#x20AC;&#x2122;s current account deficit narrowed in April to post US$1.56 billion from US$2.08 billion a year earlier. The goods account registered a surplus of US$1.65 billion compared to US$1.52 billion in the same month of last year, although oil imports increased US$2.42 billion year-on-year to US$6.69 billion amid soaring international oil prices. The expanded surplus was helped by brisk export growth and a surplus from the adjustment for the time difference between customs clearance and the hand-over of exported ships. The service account deficit shrank to US$980 million in April from US$1.40 billion a year earlier, as the transportation account surplus rose while the travel account deficit went down. Despite more overseas dividend payments, the income account deficit decreased to US$1.93 billion in April from US$2.00 billion a year earlier due mainly to higher returns on overseas investments such as dividends and interest received on investments. Investment income in Apr (US$ billion) 0.51 (2004)

0.71 (2005)

0.92 (2006)

1.52 (2007)

1.87 (2008)

The seasonally adjusted current account advanced by US$4.31 billion from the original series to record US$2.75 billion, as the goods account surplus expanded and the income account shifted to a surplus with the adjustment process. (US$ billion) 2007

2008

Feb

Mar

Apr

Jan-Apr

Feb

Mar

Apr

Jan-Apr

Current account

0.40

-1.64

-2.08

-3.74

-2.35

-0.11

-1.56

-6.78

- Goods balance

2.39

2.36

1.52

7.56

-0.60

0.53

1.65

0.43

- Service balance

-2.55

-1.69

-1.40

-7.58

-2.25

-0.68

-0.98

-6.05

- Income balance

0.85

-2.09

-2.00

-2.69

0.70

0.22

-1.93

-0.24

- Current transfers

-0.29

-0.22

-0.20

-1.03

-0.20

-0.13

-0.03

-0.92

The capital and financial account balance realized a net outflow of US$390 million in April as the direct and other investment accounts recorded a deficit, although the portfolio investment account showed a large net inflow of US$3.57 billion. Capital outflows exceeded inflows mainly as overseas direct investment by locals increased, and borrowings by domestic financial institutions from overseas shifted to a net redemption. Capital & financial account balance (US$ billion) -0.40 (Feb 2007)

3.64 (Mar)

4.20 (Apr), -0.40 (Feb 2008)

0.39 (Mar)

-0.39 (Apr)

The current account balance in May is expected to have improved, as export-import gaps turned to a US$1.04 billion surplus and overseas dividend payments, which were mostly made until April, are expected to fall significantly.

June 2008

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 in May rose by 4.9 percent year-on-year and 0.8 percent month-on-month, prompted by a surge in international oil and grain prices.

Consumer price inflation 2007

2008

May

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Month-on-Month (%)

0.1

0.2

0.0

0.4

0.5

0.4

0.9

0.6

0.8

Year-on-Year (%)

2.3

3.0

3.5

3.6

3.9

3.6

3.9

4.1

4.9

Price gains of oil products contributed almost 0.47 percentage points to a month-on-month 0.8 percent rise in consumer prices in May. In other words, high oil prices are responsible for 60 percent of the increment in consumer prices. For example, Benchmark Dubai crude prices in May surged by 15 percent from the previous month and 85 percent from a year earlier. Personal service charges jumped up reflecting the hikes in international oil and commodity prices. Overall prices of agricultural, livestock and fishery products, public utility charges and housing rents increased at a similar pace as in the previous years.

Consumer price inflation in major sectors Total

Agricultural, livestock & fishery products

Industrial products

Oil products

Public utility

Housing rents

Personal services

Month-on-Month (%)

0.8

0.0

2.1

7.4

0.0

0.2

0.4

May 2008 contribution (%p)

0.8

0.0

0.65

0.47

0.00

0.02

0.13

Year-on-Year (%)

4.9

1.2

8.5

25.3

2.5

2.2

4.4

a. May 2008 contribution (%p)

4.9

0.10

2.59

1.43

0.42

0.21

1.54

b. Jan-Sep 2007 contribution (%p)

2.2

0.12

0.38

-0.01

0.50

0.17

1.08

c. a-b

2.7

-0.02

2.21

1.44

-0.08

0.04

0.46

Core inflation, which excludes the prices of oil and agricultural products, rose by 3.9 percent from a year earlier due to soaring commodity prices. Core inflation (y-o-y, %) 2.2 (May 2007)

2.4 (Dec)

2.8 (Jan 2008)

2.8 (Feb)

3.3 (Mar)

3.5 (Apr)

Consumer prices for basic necessities, a barometer of perceived consumer prices, were up 5.9 percent in May compared to the same month of the previous year. Consumer price inflation in June is forecasted to stay at the 4-percent level as hikes in crude oil prices are unlikely to be eased.

June 2008

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 in May jumped up month-on-month to set all-time highs. The surge was attributed to the weak US dollar, soaring oil demands from Chinese power plants after devastating earthquakes in Sichuan province and increasing geopolitical unrest in Nigeria. International oil prices in June are expectedly determined by the movement of the US dollar and geopolitical factors in Nigeria. (US$/barrel, period average) 2005

2006

2007

2008

Annual

Nov

Dec

Jan

Feb

Mar

Apr

May

Dubai crude

49.4

61.6

68.4

86.9

85.7

87.2

90.2

96.9

103.6

119.5

Brent crude

54.3

65.1

72.8

92.9

91.0

92.3

95.4

104.2

108.9

122.7

WTI crude

56.5

66.0

72.3

94.7

91.3

93.0

95.4

105.4

112.6

125.4

Record high oil prices (spot prices, US$/barrel) Dubai crude: 129.0 (May 22, 2008), Brent crude: 129.8 (May 23), WTI crude: 132.6 (May 21)

Prices of domestic oil products including gasoline and diesel fuels have stayed on the upward track, due to the increased prices of international oil and oil products. (won/liter, period average) (Won/liter, period average) 2008

2005

2006

Annual

2007 Nov

Dec

Jan

Feb

Mar

Apr

May

Gasoline prices

1,432

1,492

1,526

1,606

1,633

1,652

1,654

1,670

1,698

1,803

Diesel prices

1,080

1,228

1,273

1,405

1,436

1,456

1,504

1,611

1,768

Source: Korea National Oil Corporation

In May, international prices for non-ferrous metals were down month-on-month, while prices for grains were up compared to the previous month. Prices for non-ferrous metals declined thanks to improved supply and demand conditions. However, prices for tin increased due to supply disruptions in China and Indonesia. Corn and soybean prices increased due to farmersâ&#x20AC;&#x2122; strikes in Argentina and delayed sowing in US farms. In contrast, the price of wheat fell driven by expanded outputs in major wheat producers such as Canada and the US. Price increases in May 2008 (m-o-m, %) Corn (0.8), soybean (1.3), tin (10.4)

Price decreases in May 2008 (m-o-m, %) Wheat (-11.7), copper (-4.0), aluminum (-2.1), nickel (-11.1), zinc (-4.5), lead (-21.2)

Reuters index*

(Period average)

2005

2006

2007

Annual

Jan

Feb

Mar

Apr

May

1,680

2,019

2,400

2,645

2,831

2,923

2,773

2,737

* A weighted average index of 17 major commodities

June 2008

2008

11-4 International oil prices Source: Korea National Oil Corporation 140 120 100 60 80 40 20 0

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 An increase in apartment prices nationwide slowed compared to the previous month in May as apartment prices in northern Seoul increased a mere 1.4 percent compared to a 3.5 percent rise in the previous month.

Nationwide apartment sales prices

(Percentage change from previous period)

2004

2005

2006

Annual

Nov

Dec

Jan

Feb

Mar

Apr

May

Apr 51 Apr 121 Apr 191 Apr 261

Nationwide

-0.6

5.9

13.8

0.2

0.0

0.2

0.6

1.0

0.6

0.13

0.12

0.11

0.10

Seoul

-1.0

9.1

24.1

0.3

0.1

0.5

1.4

2.0

0.8

0.19

0.18

0.12

0.11

-1.3

13.5

27.6

0.0

-0.1

0.1

0.5

0.7

0.4

0.09

0.06

0.02

-3.7

7.6

28.4

0.1

0.0

0.2

0.7

1.0

0.8

0.18

0.16

0.12

0.14

Gangnam

Gyeonggi

2007

2008

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

The average rental prices of apartments slowed or remained flat in May as the spring moving season ended.

Nationwide apartment rental prices

(Percentage change from previous period)

2004

2005

2006

Annual

Nov

Dec

Jan

Feb

Mar

Apr

May

Apr 51 Apr 121 Apr 191 Apr 261

Nationwide

-2.7

5.7

7.6

0.0

0.1

0.2

0.5

0.6

0.2

0.07

0.04

0.06

0.03

Seoul

-4.4

6.2

11.5

-0.1

0.2

0.3

0.7

0.6

0.2

0.05

0.04

0.01

0.00

-5.2

8.6

11.3

-0.3

-0.2

0.1

0.2

0.5

0.4

0.2

0.02

0.05

-0.01

0.00

-5.5

10.6

12.4

-0.1

0.0

0.3

0.7

0.8

0.3

0.11

0.03

0.06

0.02

Gangnam

Gyeonggi

2007

2008

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

Apartment sales transactions in April rose from the previous month as well as from the same month of the previous year.

Apartment sales transactions 2005

2006

Annual Annual 79

June 2008

2008

2007 Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

Source: Korea Land Corporation

(Monthly average, thousand)

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 April slightly accelerated growth centering on the Seoul metropolitan area, with a rise of 0.5 percent compared to the previous month. Out of 248 cities, counties and districts, 53 areas including 49 in the Seoul metropolitan area witnessed a higher price increase than the national average of 0.5 percent. Nevertheless, the rest stood below the average.

Land prices by region

(Percentage change from previous period) 2006

2005 Annual Annual

2007

2008

Annual

Jan

Feb

Mar

Apr

Nationwide

4.98

5.61

1.31

1.43

1.25

1.50

3.88

0.96

0.79

0.91

1.15

0.36

0.39

0.46

0.50

Seoul

6.56

9.17

1.78

2.37

2.19

2.53

5.88

1.38

1.07

1.40

1.90

0.53

0.59

0.70

0.77

Gyeonggi

5.69

5.07

1.12

1.29

1.05

1.51

4.22

1.07

0.89

1.05

1.14

0.40

0.41

0.47

0.51

South Chungcheong

8.32

5.54

2.77

1.31

0.69

0.67

2.02

0.46

0.41

0.42

0.71

0.25

0.24

0.25

Nationwide land transactions in April registered 269,163 land lots increasing 32.3 percent from a year earlier and 13.6 percent from the previous month.

Land sales transactions

(Monthly average, land lot, thousand)

2004

2005

2006

Annual

May

Jul

Sep

Nov

Dec

Jan

Feb

Mar

Apr

Nationwide

218

248

237

208

216

196

157

242

229

216

190

237

269

Seoul

Gyeonggi

North Chungcheong

South Chungcheong

June 2008

2007

2008

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)

Economic Bulletin

13. Composite indexes of business cycle indicators The cyclical indicator of coincident composite index, a barometer of current economic conditions, has fallen in April for the third consecutive month with a decrease of 0.5 point from the previous month. Four out of all seven components of the index, i.e., the number of non-farm payroll employment, the mining and manufacturing production index, the manufacturing operation ratio index, and the wholesale & retail sales index inched up. However, the service activity index fell while the value of construction completed was sharply down 3.4 percent. Cyclical indicator of coincident composite index (m-o-m, p) 0.0 (Nov 2007)

0.4 (Dec)

0.3 (Jan 2008)

-0.3 (Feb)

-0.3 (Mar)

-0.5 (Apr)

The year-on-year leading composite index, which foresees the future economic conditions, has gone down for five consecutive months with a month-on-month decrease of 0.6 percentage points in April. The composite stock price index, the value of construction orders received, imports of capital goods, and the net terms-of-trade increased, while the other six components of the leading composite index fell. Six components of the leading composite index fell in Apr 2008 (m-o-m) Ratio of job openings to job seekers (-2.9%p), indicator of inventory cycle (-3.0%p), consumer expectations index (-1.9p), value of machinery orders received (-6.9%), liquidity in the financial institutions (-0.5%), spreads between long & short term interest rates (-0.2%p)

12 month smoothed change in leading composite index (m-o-m, %p) 0.1 (Nov 2007)

-0.3 (Dec)

-1.3 (Jan 2008)

-1.4 (Feb)

-1.1 (Mar)

2007

-0.6 (Apr)

2008

Dec

Jan

Feb

Mar1

Apr1

0.9

0.7

0.1

0.2

0.0

101.2

101.5

101.2

100.9

100.4

0.4

0.3

-0.3

-0.5

Leading composite index (m-o-m, %)

0.3

-0.6

-0.7

-0.4

0.0

12 month smoothed change in leading composite index (%)

7.0

5.7

4.3

3.2

2.6

-0.3

-1.3

-1.4

-1.1

-0.6

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

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

June 2008

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 Plan for Privatization of the KDB and Establishment of the KDF

1. Purpose The privatization of the KDB (Korea Development Bank) goes beyond a one-off move to restructure one of the state-owned companies. It should be regarded as a strategic initiative by the Korean government to upgrade its financial industry, thereby nurturing it into a new growth engine. The state-run KDB will be split into a holding company that would become a fully private investment bank by 2012 and a separate state fund, the Korea Development Fund (KDF), aimed at supporting promising SMEs. The privatization initiative provides the optimal solution to achieve the national agenda aiming to nurture competitive CIBs (corporate and investment banks). That is, the initiative will lay the foundation for creating a competitive investment bank through the combination of the KDB which has a strong corporate banking capacity with Daewoo Securities, Koreaâ&#x20AC;&#x2122;s leading securities house. In addition, investment banks (IBs) will act as a core intermediary of the capital market, which could lead to the development of innovative value-added industries. After all, the development of CIBs is necessary to provide risk capital to innovative industries, which will be central to the future Korean economy. The privatization of the KDB is expected to trigger the reorganization of the financial industry and further its advancement. On the whole, Korean financial institutions have stayed complacent in the limited domestic market, maintaining their existing revenue structures which have been based on retail-banking. As a result, the competitiveness of Korean banks and securities firms has not been enhanced as their business has solely concentrated on retail-banking and generating greater brokerage fees. The proportion of overseas assets, held by leading global investment banks, is over 50 percent of their total assets (e.g. Citi: 51%, HSBC: 56%, UBS: 91%). Yet, the average proportion for Korean banks in 2006 was a mere 2.5 percent. The KDBH (Korea Development Bank Holdings) will actively seek M&A

June 2008

opportunities to develop itself into a global investment bank through diversifying its revenue structures and expanding overseas businesses. By doing so, it will act as a role model for other financial institutions, presenting new business models. This will facilitate M&A activities, exploration of new business areas, and active overseas expansions to make the Korean financial industry high value-added and competitive. The financial industry as a growth engine will provide a new growth momentum for the Korean economy. The KDBH will promote exports of Korea’s financial products and services and lay the foundation for developing the Korean financial industry into an independent high value-added one. In doing so, IBs will help set up global networks, tap qualified human resources, and promote domestic and cross-border M&As. The government’s support will be given to SMEs with the creation of a market-friendly financing system. Funds raised through the KDB’s privatization will be used to establish the Korea Development Fund (KDF), a state-backed financing institution that conforms to global standards. Many European countries and the US have shifted to indirect financing from direct financing. The KDF will fully inherit the KDB’s roles in overseas funding and stabilizing markets. The Fund will focus on an on-lending scheme which exploits market power which selects and evaluates the companies, thereby upgrading state financing for SMEs. In addition, it will help private financial institutions to select promising SMEs that have easy access to the market and to offer indirect financing for target companies. In order to disperse the SME credit risk which might arise from financial support by private financial institutions, the KDF will use credit enhancement programs (up to 50% of the loan) and securitization. It will promote stable long-term funding for SMEs through on-lending schemes.

Previous SME financial support

New market-friendly SME financial support

Short-term loans

Long-term loans

Direct support for individual firms from a state-backed financing institution

Indirect support for SMEs

Evaluation focused on tangible collateral and solvency of each SME Support provided mostly through indirect financing (loans and guarantees)

Cooperation among private and state-backed financing institutions

Evaluation focused on profitability and technology capacity Utilization of direct financing (investment and securitization) in addition to indirect financing (loans and guarantees)

Economic Bulletin

Organization structure of the privatized KDBH (After)

(Before) Government

Government

Private investors

100% Ownership

100% KDB

KDF

KDB

KDB Holding Co Daewoo Securities

KDB Asset

KDB Capital

Entrusted to KDB for operation KDF Daewoo Securties

KDB Asset Mgmt

KDB Capital

Coexistence of Policy financing and commercial banking

Increased market frictions and limited development of the private financial sector

Planning & SME Investment Development Admin Dept Support Dept Finance Dept Finance Dept

Commercial banking State-backed financing

Investment banking under the holding company structure Market-friendly financial institution

No market friction and further advancement of the private financial sector

2. Privatization of the KDB The KDBH and the KDF will be set up through the demerger of the KDB. The KDBH will consist of the KDB and the KDB’s financial subsidiaries including Daewoo Securities. The KDB’s liabilities and shares in the previously distressed companies (e.g. Hynix) and state-owned companies (e.g. Kepco) will be partly transferred to launch the KDF. Shortly after the establishment of the KDF, 49 percent of the KDBH shares will be transferred to the KDF in the form of capital injections. The KDF will then begin to provide market-friendly financing for SMEs. (Present KDB)

(New IB group)

KDBH M Assets i (loans, etc.) Investment x Corporate Banking e Banking (Daewoo d Shares in financial subsidiaries (KDB) (Daewoo Securities, etc.) Securities, etc) r o Shares in public co. ① partial spin-off (State-backed financing institution) l e and restructured co. KDF s (Kepco, Hynix, etc.)

June 2008

② inject capital (49%)

The KDBH’s 49 percent stake in the KDF will be disposed of between 2009 and 2010 through various means such as Pre-IPO investment, IPOs, and block sales. Then sales proceeds will be used for supporting SMEs. In doing so, the investment banking capability will be also enhanced through attracting strategic investors. Moreover, the remaining KDBH shares of 51 percent will be sold between 2011 and 2012 to domestic and foreign consortia (pension funds, PEFs, etc.) and private financial firms that seek to either enlarge their domains or sharpen their competitiveness by engaging in investment banking businesses.

3. Measures for addressing the KDB’s external debt The government will provide guarantees or other equivalent measures to secure the repayment of the existing debts of the KDB to prevent possible demand for early redemption by overseas investors. The Offset of Losses, Article 44 of the KDB Act, will remain effective as long as the government stays as a controlling shareholder of the KDB. While the government holds the position of a controlling shareholder, parts of the KDB’s new external debt will be guaranteed by the government in case concerns are raised about possible reductions in KDB’s overseas funding activities due to adverse changes in market conditions. That is, government guaranteed bonds are limitedly allowed to be issued for specific purposes such as refinancing of existing debt, which needs prior approval by the National Assembly.

4. Transformation of the KDBH into an IB Group To maximize the sales value of the KDBH, its transformation into a global investment bank will be actively supported. To this end, the FSC’s approval of budget and business plans will be abolished. Existing restrictions on the taking of demand deposits and other operations will be lifted as well. For good corporate governance, the KDBH will attract renowned investment banking experts through proper incentives for successful privatization. Moreover, the privatization process will be monitored by a government-appointed Chairman of the BOD to manage government properties. The holding company will also seek additional M&A opportunities in the domestic and overseas financial markets to secure global competitiveness.

5. Plan for operating the KDF During the early stage, the KDF will entrust its operation to the KDB and keep the number of its staff at a minimum. Once privatization has been completed, the KDF will be run by its own staff. And then the roles of the KDF and other state-backed financing institutions will be reassigned. Major tasks Firstly, the KDF will introduce a market-friendly system to support SMEs and will take over the financing roles previously played by the KDB. In the process of supporting SMEs, the Fund

Economic Bulletin

will provide indirect loans, co-investments, and credit enhancement through an on-lending scheme and will take advantage of private financial institutions’ capability to evaluate SMEs’ performance and management and to implement and review SME lending programs. Secondly, the Fund will provide the funds and guidelines for on-lending, while private financial institutions will evaluate the eligibility of the company, determine interest rates, and extend loans. In order to mitigate risk burdens on private financial institutions, the Fund will provide credit enhancement (up to 50% of the loan) and securitization. Thirdly, it will differentiate itself from existing state-backed financing institutions by specifying eligible SMEs and developing support programs in cooperation with other financial institutions. More specifically, the Fund will specialize in companies with credit ratings from B to BBB which are screened as eligible by private financial institutions. In contrast, existing state-backed financing institutions focus more on state-backed financing businesses than on start-up companies with low credit ratings or technology-based companies. Co-financing with commercial banks in “Technology guarantee loans” by the KIBO Technology Fund will be considered. Last but not least, the KDF will serve as a market stabilizer at times of crisis and a window for overseas funding which do not trigger competition with the private sector. As a main source of operation, financial resources will be raised through the disposal of the KDBH shares (49%) and of other shares in restructured companies which are acquired from the demerger of the KDB.

6. Time schedule Category

Privatization of the KDB

June 2008

- Announcement of the government’s privatization plan - Non-deal Roadshow for overseas investors

- Announcement of the government’s privatization plan

Jun ~ Jul

- Carrying out legislation process [Revised the Draft of the KDB Act] - Reform of the KDB’s corporate governance

- Carrying out legislation process [the Draft of the KDB Act]

- Submission of a revised draft of the KDB Act to the National Assembly

- Submission of the draft of the KDB Act to the National Assembly

- Review by the National Assembly

Aug Sept ~ Oct

[After approval of the National Assembly] Nov ~ Dec - Demerger of the KDB - Establishment of the KDBH Jan 2009

- Investment of 49% share of the KDBH in the KDF

Jan 2009 - Disposal of the 49% share owned by the KDF ~ Dec 2010 (Pre-IPO, IPO, block sale) After 2011 ~ 2012

June 2008

Establishment of the KDF

- Disposal of controlling shares and completion of privatization within the term of the current government

[After approval of the National Assembly] - Establishment of the KDF through demerger of the KDB - Capital injection with 49% share of the KDBH - Receive sales proceeds from the disposal of the 49% share

Economic News Briefing

GDP grows a revised 5.8 percent year-on-year in Q1 (preliminary) Koreaâ&#x20AC;&#x2122;s economy expanded 5.8 percent from a year earlier in the first quarter of 2008, up 0.1 percentage points from an advance estimate of a 5.7 percent gain. The increase was mainly attributed to a robust manufacturing sector and brisk exports. From a month earlier, the real GDP grew a revised 0.8 percent compared to an earlier estimate of a 0.7 percent rise in the January-March period.

GDP by production and expenditure*

(Percentage change from same period in pervious year)

2006

20071

20081

Annual

GDP

6.3 (1.2)

5.2 (0.8)

5.0 (1.3)

4.2 (0.8)

5.1

4.0 (1.0)

4.9 (1.7)

5.1 (1.5)

5.7 (1.6)

5.0

5.8 (0.8)

Agriculture, forestry and fishery

2.8

-2.2

-4.1

-0.9

-1.5

5.8

1.1

3.5

-0.7

1.1

2.0 (0.4)

Manufacturing

10.1

9.6

9.0

5.6

8.5

3.8

6.1

6.3

9.5

6.5

9.1 (0.5)

Construction

-0.5

-4.2

2.0

3.5

0.3

3.9

2.7

0.1

1.4

1.8

0.4 (0.0)

Services3

4.5

4.1

3.9

4.2

4.1

4.7

5.5

4.8

4.1 (0.5)

Private consumption

5.3

4.4

3.9

4.5

4.1

4.4

4.8

4.6

4.5

3.4 (0.6)

Facility investment

7.1

7.5

11.4

5.4

7.8

10.9

11.0

2.3

6.5

7.6

1.4 (-0.1)

Construction investment

1.1

-5.3

0.2

3.6

-0.1

3.7

1.6

-0.1

0.4

1.2

-1.1 (-1.0)

Goods exports4

11.2

16.2

12.7

9.9

12.4

10.5

10.3

9.0

17.7

12.0

12.0 (-1.1)

Goods imports4

11.6

14.1

11.2

8.1

11.2

9.6

10.9

5.1

17.6

10.9

11.3 (-1.7)

Domestic demand5

5.0

3.2

4.8

4.7

4.4

5.3

5.1

3.6

4.1

4.5

2.7 (-2.2)

*At 2000 constant prices 1. Preliminary 2. Figures in parenthesis denote percentage change from the previous period in seasonally adjusted terms. 3. Wholesale & retail sales, hotels & restaurants, transportation & storage, communication services, financial & insurance services, real estate, business services, public administration, defense & social security, educational services, healthcare & social welfare services and other services are included. 4. FOB basis 5. Excluding inventory

Economic Bulletin

Korea plans to cut corporate taxes to spur the economy Korea plans to lower corporate taxes earlier than scheduled in a bid to spur its economic growth by bolstering investments and helping to create more jobs, the government said on June 3. The Ministry of Strategy and Finance said that it will cut the maximum corporate tax rate from the current 25 percent to 22 percent this year and further lower it to 20 percent by the end of 2010. The new timetable will be two years ahead of the original schedule. The minimum tax rates will also be lowered to 10 percent from the current 13 percent, the Ministry said. At present, companies with taxable earnings of 100 million won (US$98,454) or less are levied minimum rates of 13 percent, but the limit will be raised to 200 million won in order to ease tax burdens that small- and medium-sized companies shoulder. The Ministry estimates that the envisioned tax reduction would help companies save around 8.7 trillion won in tax payments over the next four years. Furthermore, the plan is expected to boost inflows of foreign direct investments into Korea. The tax revision bill is scheduled to be submitted to the National Assembly by the end of this month. If approved, a new tax scheme will come into effect by the latter part of this year.

Economic ties between Korea and China to be strengthened President Lee Myung-bak and Chinese President Hu Jintao agreed to upgrade the SinoKorean bilateral relations from the previous comprehensive cooperative partnership to a strategic cooperative partnership during their summit meeting held on May 27. The upgraded bilateral relations call for a significant improvement in exchanges along with cooperation in diplomacy, security, economy, social issues and culture, according to a joint statement announced on May 28, based on the summit agreement. On the economic and commercial front, the statement stressed that South Korea and China have agreed to reinforce practical cooperation and bilateral investment in the fields of information technology, financial services, atomic power generation, energy, science, and technology. The two countries also agreed to continue to closely examine the feasibility of a two-way free trade agreement on the basis of joint academic, industrial and government research activities.

Eased regulations to facilitate forex transactions The Ministry of Strategy and Finance announced new regulations on foreign currency transactions to reduce some of the inconveniences faced by the public. As a part of

June 2008

deregulation efforts, the ceiling on the acquisition of overseas real estate properties for investment purposes was completely removed as of June 2. However, before the change takes effect, if a forex transaction for real estate acquisition exceeds US$3 million, a person must report the transaction to the Bank of Korea. Under the revised regulation, purchasing real estate properties regardless of the price only requires a report of remittance to forex banks. In addition, the threshold amount of overseas travel expenses for foreign residents was raised to US$50,000 a year from US$10,000 per trip. The Ministry said that the reason for the revision of regulation was to provide more convenience to foreigners living in Korea, who have filed complaints about the ceiling on overseas travel expenses. With the new regulation, foreigners are now able to pay up to US$50,000 per year with their credit cards issued in the country for their overseas travels.

Foreign Banks to be allowed to open offices without prior approval Foreign banks will be able to set up their offices in Korea through a registration procedure without prior approval from the government, the Financial Services Commission (FSC) said on May 30. Also, the FSC will not require foreign banks and insurance companies to appoint a local representative after they acquired equity stakes in Korean financial firms. The deregulatory move is a part of the governmentâ&#x20AC;&#x2122;s efforts to improve the business environment for foreign investors. Meanwhile, Korean banks also do not need to report to the financial authority (FSC) before establishing an overseas subsidiary, branch or office. However, a report must be made after they make inroads into global markets. The eased regulation is expected to facilitate business activities of foreign banks in Korea as well as encourage domestic banks to go overseas. The government plans to submit the revised bill relating to the operations of domestic and foreign firms to the National Assembly for an approval by the end of this year.

Korea opens up R&D to foreign organization The Ministry of Knowledge Economy announced Business operation know-how for international joint technical development , which allows foreign institutions to take a leading role in joint R&D projects in Korea. So far, foreign organizationsâ&#x20AC;&#x2122; roles were limited in international joint projects as an advisory or consultancy to provide assistance to Korean researchers to sort out problems. Under the revised regulations, they will be able to cofinance projects and own or share intellectual property rights on the technology developed in projects as long as at least one Korean entity joins in the R&D consortium. Consequently, foreign organizations can share responsibilities and results from the projects. To boost

Economic Bulletin

foreign participation, the government minimized regulations and institutional obstacles by business and country categories. The new regulations come into effect immediately after the launch of the KORUS-Tech projects.

Korean corporations recorded an improved bottom line in 2007 Korean companies witnessed better business performance in 2007, as the overall volume of businesses grew, profitability improved and financial structures remained stable. The strong exports and buoyant domestic consumption increased companies’ revenues by 9.5 percent, up 3.5 percentage points from a year earlier, recording the highest growth rate since 2004 . Despite difficulties such as high crude oil and raw material prices, Korean companies saw robust growth in sales and revenue records, which in turn drove the ratio of operating income to sales to 5.5 percent and that of pretax net profits to sales to 5.8 percent. As of the end of 2007, the average debt ratio of Korean companies stood at 106.5 percent, which was up 1.2 percentage points from the previous year.

Financial minister Kang Man-Soo host an Investor Relations in London Minister of Strategy and Finance Man-Soo Kang met with international investors to introduce economic policies of the new government on May 7 in London. At the Korean IR event, held in Merchant Taylors’ Hall, as many as 170 investors were present to learn about the Korean government’s economic philosophy, “MBnomics”, a combination of “MB” (initials of Lee Myung-bak) and economics. Minister Kang delivered a key note speech, titled “The New Korea-Continuous Growth through MBnomics”, to explain visions and policies pursued by the government. President Lee, who was elected in a landslide victory last December, promised deregulations, tax cuts and privatization. During the speech, Minister Kang urged foreign businessmen to invest in Korea, which has huge potentials to become an Asian gate way.

Korea aims to conclude FTA negotiation with EU within this year Korea and the European Union (EU) held the 7th round of Korean-EU FTA negotiations from May 12 to 15 in Brussels. After the negotiation, both sides reported that “significant” progress was made, although some contentious issues remain to be resolved. Korean chief negotiator Lee Hye-min said the next round of negotiation will be held in Seoul, but a date for upcoming talks will be set later depending on the results of inter-session meetings and minister-level meetings.

June 2008

In the latest negotiation, Korean and the EU made some progress in narrowing down differentiations in key issues such as rules of origin, non-tariff barriers, and the so-called geographical indications of some products. Korea has demanded the EU ease its rules of origin, under which a product is considered manufactured by a trading partner only if at least 60 percent of the finished item is made in that country. Major hurdles to the bilateral FTA are automobile tariffs and auto-related technical standards. The EU wants Seoul to ease regulations on European carmakers by applying international standards instead of domestic rules. In addition, Brussels demands South Korea to cut tariffs on cars and other products to the same extent that South Korea agreed in its free trade deal with the US. Seoul is seeking to sign FTAs with as many countries as possible to boost its export-driven economy. Currently, Korea has signed FTAs with Chile, Singapore and the European Free Trade Association (EFTA). Similar trade deals with India and Canada are being pursued by the government.

The Korean government to lend shares in state firms The Korean government wants to generate higher returns on its stockholdings by adopting asset management skills used by private corporations. This scheme includes lending shares in state-run companies like the Industrial Bank of Korea, Korea Gas Corp and Korea Electric Power Corp to investors who can boost their returns. Currently, the government focuses on holding stocks, so dividends have become the major source of returns from the stock portfolio. If a new financial method of loan transactions is introduced, investors will be able to borrow government-owned stocks and sell them when share prices are expected to fall. Then, investors will profit if they repurchase the stocks later at a lower price before returning them to the government. With this trading through stock lending, the government expects to see an increment of 3 to 4 percent in revenues besides dividend incomes. To this end, the government plans to revise related laws by the end of this year and set up detailed plans from early 2009. The State-run National Pension Service generated 16.5 billion won in revenues through commissions paid by investors who borrowed government-owned shares.

Economic Bulletin

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

Gross fixed capital formation

Final consumption expenditure

Agri., fores. & fisheries

Manufacturing

1.2

17.0

7.1

Construction

Facilities

12.2

-0.8

33.6

2000

8.5

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

2005

4.2

0.7

7.1

3.9

2.4

-0.2

5.7

2006

5.0

-1.5

8.5

4.8

3.6

-0.1

7.8

2007P

5.0

1.1

6.5

4.7

4.0

1.2

7.6

2002

2003

2004

2005

2006

2007P

2008P

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

2.9

-0.1

5.4

2.0

0.5

-3.3

3.8

3.4

3.1

5.1

3.9

2.1

1.1

3.1

III

4.8

1.9

7.5

4.8

2.2

-0.1

5.0

5.5

-0.5

10.1

4.9

4.3

0.4

10.8

6.3

2.8

10.1

5.4

4.2

1.1

7.1

5.2

-2.2

9.6

4.6

0.2

-5.3

7.5

III

5.0

-4.1

9.0

4.7

5.1

0.2

11.4

4.2

-0.9

5.6

4.6

4.9

3.6

5.4

4.0

5.8

3.8

4.5

7.2

3.7

10.9

4.9

1.1

6.1

4.9

5.5

1.6

11.0

III

5.1

3.5

6.3

4.7

1.3

-0.1

2.3

5.7

-0.7

9.5

4.8

2.9

0.4

6.5

5.8

2.0

9.3

3.5

0.5

-1.1

1.4

P: Preliminary Source: The Bank of Korea

June 2008

Growth rate by economic activity

2008

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, 2005 = 100)

Period

2006 2007

Production index

Y-o-Y change (%)

Shipment index

Y-o-Y change (%)

Inventory index

Y-o-Y change (%)

Service production index

Y-o-Y change (%)

108.3 115.7

8.3 6.8

107.6 115.2

7.6 7.1

110.8 117.2

9.1 5.8

105.5 112.3

5.5 6.4

2006

I II III IV

105.3 108.1 106.2 113.6

10.5 9.0 9.7 4.6

104.2 107.6 105.8 112.7

8.7 8.1 9.3 4.5

108.7 110.1 109.5 110.8

9.2 11.8 11.1 9.1

101.5 105.0 105.2 110.4

6.4 6.0 4.7 5.1

2007

I II III IV

109.5 114.8 112.6 126.1

4.0 6.2 6.0 11.0

109.5 115.0 111.6 124.6

5.1 6.9 5.5 10.6

113.8 114.1 112.1 117.2

4.7 3.6 2.4 5.8

107.0 111.4 112.8 117.9

5.4 6.1 7.2 6.8

2008

121.0

10.5

119.1

8.8

124.5

9.4

113.7

6.3

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

103.7 100.5 111.8 107.0 109.5 107.9 99.7 104.2 114.8 110.7 118.3 111.9

5.5 18.7 8.5 7.8 9.8 9.3 1.4 9.9 17.9 4.8 7.0 2.1

101.8 99.7 111.1 106.6 108.7 107.5 98.4 104.7 114.4 109.2 116.9 111.9

4.2 15.5 7.2 6.7 9.8 7.9 0.9 9.5 17.5 4.1 6.9 2.6

107.1 106.6 108.7 107.6 110.2 110.1 112.6 109.6 109.5 109.6 110.2 110.8

4.8 6.7 9.2 7.1 7.7 11.8 11.7 12.0 11.1 11.3 10.6 9.1

101.8 96.8 106.0 104.3 106.3 104.3 102.4 105.0 108.3 106.0 108.7 116.4

7.0 6.4 6.0 6.5 6.4 4.7 2.3 5.1 6.7 3.9 5.7 5.6

2007 1 2 3 4 5 6 7 8 9 10 11 12

112.6 100.3 115.5 113.6 115.7 115.0 113.1 113.4 111.3 128.2 127.4 122.6

8.6 -0.2 3.3 6.2 5.7 6.6 13.4 8.8 -3.0 15.8 7.7 9.6

110.2 101.6 116.6 114.4 115.9 114.7 112.3 112.2 110.3 125.9 126.0 121.8

8.3 1.9 5.0 7.3 6.6 6.7 14.1 7.2 -3.6 15.3 7.8 8.8

118.1 115.2 113.8 111.7 113.9 114.1 115.0 115.0 112.1 114.4 114.7 117.2

10.3 8.1 4.7 3.8 3.4 3.6 2.1 4.9 2.4 4.4 4.1 5.8

106.1 103.2 111.7 109.6 112.2 112.3 112.2 113.1 113.0 115.1 115.6 123.1

4.2 6.6 5.4 5.1 5.6 7.7 9.6 7.7 4.3 8.6 6.3 5.8

2008 1 2 3P 4P

125.3 110.5 127.2 125.5

11.3 10.2 10.1 10.5

121.2 109.3 126.8 124.2

10.0 7.6 8.7 8.6

124.0 124.8 124.5 125.4

5.0 8.3 9.4 12.3

114.0 109.3 117.9 116.1

7.4 5.9 5.6 5.9

P: Preliminary Source: Korea National Statistical Office

June 2008

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

Period

2006 2007

Y-o-Y change (%)

Operation ratio index (2005=100)

Y-o-Y change (%)

Average operation ratio (%)

104.1 109.4

4.1 5.1

100.3 100.6

0.3 0.3

80.0 80.4

Production capacity index (2005=100)

2006

I II III IV

102.9 103.6 104.1 105.8

4.8 4.2 3.8 3.6

99.3 101.8 97.9 101.9

2.4 0.8 1.3 -3.3

81.0 79.5 79.0 80.3

2007

I II III IV

107.3 108.1 109.9 112.3

4.2 4.2 5.6 6.1

97.4 102.8 96.4 105.7

-1.9 1.0 -1.5 3.7

79.4 80.7 80.1 81.2

2008

113.5

5.8

99.3

2.0

81.4

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

102.7 102.7 103.3 103.3 103.8 103.8 103.8 104.0 104.4 105.4 105.8 106.1

4.9 4.7 4.8 4.3 4.3 4.1 4.0 3.7 3.7 3.6 3.5 3.5

97.4 95.0 105.6 100.7 103.0 101.8 91.6 95.3 106.8 99.8 107.2 98.8

-3.2 11.4 0.5 -0.9 2.2 1.3 -7.5 1.2 10.6 -4.6 -0.8 -4.6

82.1 80.4 80.6 79.3 79.1 80.2 75.0 80.1 82.0 81.4 80.6 78.8

2007 1 2 3 4 5 6 7 8 9 10 11 12

107.0 107.3 107.6 107.7 108.0 108.6 109.4 109.9 110.5 112.1 112.3 112.6

4.2 4.5 4.2 4.3 4.0 4.6 5.4 5.7 5.8 6.4 6.1 6.1

98.8 88.6 103.8 101.7 104.1 102.7 98.5 96.7 94.0 109.6 107.6 100.0

2.6 -6.7 -1.7 1.0 1.1 0.9 7.5 1.5 -12.0 9.8 0.4 1.2

79.2 79.8 79.3 80.2 81.1 80.9 80.5 81.1 78.8 81.7 80.8 81.0

2008 1 2 3P 4P

113.3 113.3 113.8 114.3

5.9 5.6 5.8 6.1

103.3 89.6 104.9 104.1

3.4 1.1 1.1 2.4

82.1 80.6 81.3 82.2

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, 2005 = 100)

Period

2006 2007

Consumer goods sales index

Y-o-Y change (%)

Semi-durable goods

Y-o-Y change (%)

Non-durable goods

Y-o-Y change (%)

104.1 109.6

4.1 5.3

111.2 123.2

11.2 10.8

103.0 105.7

3.0 2.6

101.7 105.3

1.7 3.5

2006

I II III IV

100.9 104.2 100.3 110.8

4.7 5.6 3.1 3.0

102.0 110.2 113.2 119.4

13.8 11.8 11.7 8.1

96.9 105.1 90.7 119.2

3.7 3.4 2.7 2.2

102.2 101.4 99.1 103.9

1.8 3.9 -0.2 1.2

2007

I II III IV

106.7 108.6 107.4 115.8

5.7 4.2 7.1 4.5

118.0 123.6 124.6 127.6

15.7 12.2 10.1 6.9

100.4 107.4 93.6 122.7

3.6 2.2 3.2 2.9

104.6 103.1 106.1 108.1

2.3 1.7 7.1 4.0

2008

110.9

3.9

127.7

8.2

105.8

5.4

106.2

1.5

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

105.1 93.6 104.1 102.8 106.0 103.9 96.8 98.4 105.8 106.4 109.7 116.4

9.5 0.5 3.9 5.0 6.1 5.7 -0.6 4.7 5.3 4.2 3.6 1.5

97.1 99.1 110.0 105.7 110.1 114.7 107.3 112.9 119.4 110.8 122.3 125.2

9.0 20.0 13.3 9.9 11.9 13.3 -2.3 13.0 26.6 8.8 10.6 5.1

98.2 90.7 102.0 107.8 110.0 97.6 91.3 79.5 101.3 111.3 119.2 127.2

4.4 3.0 4.2 3.8 4.1 2.4 1.9 3.0 3.2 -1.5 4.7 3.2

111.2 92.6 102.7 99.6 102.7 102.0 94.8 100.4 102.2 102.7 100.7 108.4

11.8 -6.8 0.3 3.5 4.6 3.8 -0.7 1.9 -1.7 5.0 0.0 -1.0

2007 1 2 3 4 5 6 7 8 9 10 11 12

106.2 103.5 110.3 106.9 111.5 107.5 105.4 104.1 112.6 113.4 114.5 119.4

1.0 10.6 6.0 4.0 5.2 3.5 8.9 5.8 6.4 6.6 4.4 2.6

117.3 109.7 126.8 119.5 125.7 125.7 128.9 125.4 119.4 121.6 129.3 131.9

20.8 10.7 15.3 13.1 14.2 9.6 20.1 11.1 0.0 9.7 5.7 5.4

98.9 95.1 107.3 108.7 112.5 101.0 93.8 81.4 105.5 117.3 122.5 128.3

0.7 4.9 5.2 0.8 2.3 3.5 2.7 2.4 4.1 5.4 2.8 0.9

104.7 104.4 104.8 101.0 105.4 102.8 100.7 104.8 112.8 108.4 105.3 110.7

-5.8 12.7 2.0 1.4 2.6 0.8 6.2 4.4 10.4 5.6 4.6 2.1

2008 1 2 3P 4P

111.1 106.5 115.1 113.1

4.6 2.9 4.4 5.8

125.9 116.1 141.0 137.8

7.3 5.8 11.2 15.3

107.8 100.9 108.6 107.6

9.0 6.1 1.2 -1.0

106.4 104.9 107.3 105.3

1.6 0.5 2.4 4.3

P: Preliminary Source: Korea National Statistical Office

Durable goods

June 2008

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

Domestic consumer goods shipment index (2005=100) Y-o-Y change (%)

Period

2006 2007

Consumer sentiment index Durable goods

Y-o-Y change (%)

Non-durable goods

Y-o-Y change (%)

Present Expectations situation index index

106.3 112.2

6.3 5.6

109.9 124.0

9.9 12.8

104.8 107.4

4.8 2.5

2006

I II III IV

102.2 102.7 108.3 111.7

7.2 6.3 7.7 3.9

101.5 106.0 111.7 120.2

13.4 9.3 10.7 6.8

102.5 101.4 107.0 108.3

5.0 5.2 6.6 2.7

2007

I II III IV

110.0 110.3 110.5 117.8

7.6 7.4 2.0 5.5

118.6 121.7 122.4 133.5

16.8 14.8 9.6 11.1

106.7 105.7 105.7 111.5

4.1 4.2 -1.2 3.0

2008

116.5

5.9

133.3

12.4

109.7

2.8

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

103.1 96.5 107.1 101.2 103.6 103.4 99.4 106.2 119.4 108.4 114.0 112.7

3.4 12.3 6.8 5.4 7.6 6.1 1.3 5.3 16.3 2.6 6.4 2.6

96.4 98.6 109.5 99.9 105.5 112.7 99.8 109.1 126.2 116.1 122.9 121.6

7.6 21.7 11.7 6.6 9.6 11.5 -4.5 10.9 26.6 5.9 8.2 6.3

105.8 95.6 106.1 101.7 102.8 99.6 99.2 105.1 116.7 105.4 110.5 109.1

1.9 8.9 4.8 5.0 6.6 3.8 3.9 3.1 12.3 1.2 5.7 1.0

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 2 3 4 5 6 7 8 9 10 11 12

113.8 103.2 113.1 110.6 112.2 108.0 108.9 112.0 110.5 120.7 116.8 115.9

10.4 6.9 5.6 9.3 8.3 4.4 9.6 5.5 -7.5 11.3 2.5 2.8

116.7 112.3 126.7 118.6 124.6 121.8 123.5 123.7 120.0 136.4 132.7 131.3

21.1 13.9 15.7 18.7 18.1 8.1 23.7 13.4 -4.9 17.5 8.0 8.0

112.7 99.6 107.7 107.4 107.2 102.4 103.1 107.3 106.7 114.4 110.4 109.8

6.5 4.2 1.5 5.6 4.3 2.8 3.9 2.1 -8.6 8.5 -0.1 0.6

96.1 98.1 97.8 100.1 101.1 101.5 102.6 103.0 103.2 103.3 102.0 104.0

79.3 82.3 83.3 87.4 89.6 90.4 91.4 91.4 92.0 92.5 88.0 85.1

2008 1 2 3 4 5

123.4 106.0 120.0P 119.6P -

132.5 123.0 144.5P 144.7P -

13.5 9.5 14.0P 22.0P -

119.8 99.1 110.1P 109.5P -

6.3 -0.5 2.2P 2.0P -

105.9 103.1 99.7 100.4 92.2

82.7 81.8 76.4 80.0 72.2

8.4 2.7 6.1P 8.1P -

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, constant prices) Period

2006 2007

Estimated facility investment index (2000=100)

Domestic machinery shipment excluding ship (2005=100)

Total

Public

Private

32,597 38,152

3,576 3,433

29,022 34,719

14,559 18,093

116.5 126.5

110.8 114.6

Manufacturing

2006

I II III IV

8,122 8,300 7,921 8,254

636 761 944 1,234

7,486 7,539 6,977 7,020

3,872 3,828 3,388 3,470

112.6 116.8 117.4 119.0

103.9 116.4 107.9 115.1

2007

I II III IV

9,426 8,913 9,087 10,729

713 582 801 1,337

8,713 8,331 8,286 9,391

4,195 4,050 4,365 5,484

127.0 130.7 118.2 130.0

110.5 119.5 106.4 121.9

2008

11,245

726

10,520

5,475

125.9

112.9

2007 1 2 3 4 5 6 7 8 9 10 11 12

3,101 3,197 3,128 2,814 2,981 3,118 3,003 2,786 3,297 3,874 3,483 3,371

227 243 243 188 184 210 293 245 262 171 308 858

2,874 2,953 2,885 2,626 2,797 2,908 2,710 2,541 3,035 3,703 3,175 2,513

1,409 1,488 1,298 1,318 1,282 1,449 1,305 1,171 1,889 2,413 1,859 1,210

121.6 120.3 139.1 137.2 130.0 125.0 120.1 122.4 112.1 121.8 129.2 139.0

104.9 103.0 123.7 114.4 122.7 121.3 111.0 105.2 102.9 112.3 121.6 131.8

2008 1 2 3P 4P

4,140 3,353 3,752 3,265

263 188 275 202

3,877 3,166 3,477 3,063

2,168 1,723 1,583 1,360

119.4 118.0 140.3 134.4

108.4 104.3 125.9 119.4

Y-o-Y change (%) 2006 2007

18.9 17.0

7.1 -4.0

20.5 19.6

32.5 24.3

8.9 8.6

10.8 3.4

2006

I II III IV

13.6 24.4 21.1 16.8

-31.1 24.7 19.0 22.1

20.3 24.4 21.4 16.0

32.2 30.0 35.2 33.3

7.4 9.1 12.8 6.4

12.1 12.2 9.2 9.7

2007

I II III IV

16.1 7.4 14.7 30.0

12.1 -23.5 -15.2 8.3

16.4 10.5 18.8 33.8

8.3 5.8 28.8 58.0

12.8 11.9 0.7 9.2

6.4 2.7 -1.4 5.9

2008

19.3

1.8

20.7

30.5

-0.9

2.2

2007 1 2 3 4 5 6 7 8 9 10 11 12

27.2 15.9 6.9 1.4 17.8 4.1 30.8 5.1 10.8 31.3 33.4 25.2

22.1 20.2 -2.0 3.9 28.6 -52.0 58.0 -21.3 -41.3 -74.5 63.6 129.9

27.6 15.6 7.7 1.3 17.1 13.7 28.4 8.6 20.1 62.6 31.0 8.4

24.4 12.5 -8.5 -3.3 10.6 11.0 31.8 5.6 46.5 111.0 64.2 1.4

18.6 14.5 6.9 15.6 8.8 11.3 2.2 3.5 -3.7 7.0 10.4 10.1

10.1 4.0 5.4 3.5 0.7 3.8 9.1 -1.6 -10.7 7.7 4.9 5.4

2008 1 2 3P 4P

33.5 4.9 19.9 16

16.0 -22.8 13.2 7.3

34.9 7.2 20.5 16.6

53.9 15.9 21.9 3.2

-1.8 -1.9 0.9 -2.0

3.3 1.3 1.8 4.4

P: Preliminary Source: Korea National Statistical Office

June 2008

7. Value of construction completed and domestic construction orders received See graphs 4-2 & 4-3 (current prices, billion won)

Period

2006 2007

Type of order

Private

Domestic construction orders received (total)

Public

Private

23,159 25,096

52,148 54,476

91,001 108,559

20,460 27,454

66,550 75,285

Value of construction completed (total)

Public

77,839 82,950

2006

I II III IV

16,044 19,700 19,337 22,758

4,080 5,655 5,927 7,498

11,431 13,419 12,822 14,476

16,377 21,249 23,049 30,327

3,807 4,147 4,159 8,347

12,227 16,801 18,074 19,447

2007

I II III IV

17,306 20,878 20,183 24,582

4,940 6,345 6,103 7,708

11,783 13,723 13,280 15,690

20,678 26,839 21,768 39.274

5,683 5,025 4,462 12,285

14,893 19,649 15,740 25,002

18,314

5,279

12,128

19,868

6,820

12,661

2007 1 2 3 4 5 6 7 8 9 10 11 12

5,498 5,307 6,501 6,743 6,810 7,326 6,597 6,759 6,829 7,364 7,882 9,337

1,473 1,533 1,934 1,922 2,119 2,305 1,963 1,953 2,185 2,075 2,432 3,201

3,854 3,602 4,328 4,515 4,462 4,745 4,381 4,542 4,361 4,967 5,094 5,629

6,411 6,326 7,942 7,841 7,096 11,902 6,060 6,586 9,122 10,691 12,311 16,272

1,562 1,830 2,291 1,789 1,621 1,615 1,491 1,354 1,616 3,286 3,694 5,304

4,822 4,488 5,584 5,733 4,891 9,025 3,685 4,874 7,181 7,094 7,792 10,117

2008 1 2 3P 4P

6,090 5,480 6,745 7,012

1,721 1,519 2,040 1,981

4,074 3,692 4,362 4,609

5,570 5,931 8,367 7,646

1,619 1,894 3,306 1,715

3,904 3,820 4,937 5,745

2008

Y-o-Y change (%) 2006 2007

2.6 6.6

0.6 8.4

4.0 4.5

9.0 19.3

-6.3 34.2

12.8 13.1

2006

I II III IV

2.9 -1.0 3.8 4.8

-13.3 -6.7 7.5 11.1

9.7 1.5 3.0 2.9

-8.5 -14.7 37.1 27.1

-12.4 -29.9 21.2 2.7

-3.9 -6.0 36.8 28.3

2007

I II III IV

7.9 6.0 4.4 8.0

21.1 12.2 3.0 2.8

3.1 2.3 3.6 8.4

26.3 26.3 -5.6 29.5

49.3 21.2 7.3 47.2

21.8 17.0 -12.9 28.6

5.8

6.9

2.9

-3.9

20.0

-15.0

2007 1 2 3 4 5 6 7 8 9 10 11 12

12.9 9.1 3.0 7.0 6.2 4.9 13.2 8.6 -6.3 8.8 5.9 9.2

18.1 27.0 19.0 8.4 16.4 11.9 14.9 5.0 -7.3 -4.6 8.8 3.7

11.3 3.1 -3.3 4.0 1.7 1.2 10.6 8.2 -6.5 13.0 2.8 9.8

9.7 40.1 32.0 48.9 5.2 28.8 -14.9 13.4 -9.8 103.8 36.3 1.4

73.4 20.5 65.0 45.5 15.6 6.6 51.1 72.5 -32.3 104.2 32.1 34.6

0.3 55.1 23.4 43.6 -6.8 19.4 -38.8 6.0 -3.7 102.5 27.7 2.8

2008 1 2 3P 4P

10.8 3.3 3.8 4.0

16.8 -1.0 5.5 3.1

5.7 2.5 0.8 2.1

-13.1 -6.2 5.3 -2.5

3.6 3.5 44.3 -4.1

-19.0 -14.9 -11.6 0.2

2008

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 (2005=100)

Cycle of coincident index (2005=100)

BSI (actual)

BSI (outlook)

104.1

6.7

104.0

100.3

95.4

102.6

104.1

6.3

104.2

100.0

90.5

102.4

104.1

5.7

104.7

100.1

111.5

118.9

104.2

5.3

104.9

99.9

99.8

112.7

104.4

5.0

105.3

99.9

94.1

110.7

104.7

4.7

105.6

99.7

94.2

98.6

104.8

4.1

105.1

98.8

79.1

94.2

105.2

3.9

105.6

98.9

85.9

93.4

106.0

4.3

106.5

99.3

99.4

107.7

106.9

4.7

108.3

100.6

99.4

103.5

107.6

5.0

109.1

100.9

103.7

104.3

108.0

4.9

109.3

100.6

100.4

101.4

2007 1

108.5

5.0

109.4

100.3

85.6

96.5

109.3

5.4

109.8

100.2

87.5

93.4

109.7

5.4

110.2

100.2

109.4

112.3

110.5

5.7

110.8

100.3

105.8

107.7

110.8

5.6

111.4

100.3

104.1

110.9

111.7

6.1

112.2

100.6

100.2

105.6

112.5

6.5

113.0

100.9

95.8

99.3

113.3

6.8

113.6

101.1

94.4

102.5

114.0

6.9

113.7

100.7

101.5

111.8

114.8

7.2

114.3

100.8

108.3

116.3

115.5

7.3

114.8

100.8

106.0

112.4

115.8

7.0

115.8

101.2

98.9

103.4

2008 1

115.1

5.7

116.6

101.5

95.2

103.0

114.3P

4.3P

116.7

101.2

95.6

94.8

113.8P

3.2P

116.9P

100.9P

101.1

102.1

113.8P

2.6P

116.9P

100.4P

101.7

98.1

104.7

95.3

Period

Leading index (2005=100)

2006 1

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

June 2008

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

Current balance

Period

2004 2005 2006 2007P

Goods trade balance

Exports

28,173.5 14,980.9 5,385.2 5,954.3

37,568.8 32,683.1 27,905.1 29,409.4

Imports

Services trade balance

Income trade balance

Current transfers

253,844.7 284,418.7 325,464.8 371,489.1

224,462.7 261,238.3 309,382.6 356,845.7

-8,046.1 -13,658.2 -18,960.7 -20,574.9

1,082.8 -1,562.5 533.7 768.5

-2,432.0 -2,481.5 -4,092.9 -3,648.7

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

2006

I II III IV

-1,977.6 235.0 1,016.9 6,110.9

4,682.7 7,109.8 6,230.9 9,881.7

73,884.9 81,473.4 82,712.8 87,393.7

72,542.1 76,719.7 80,215.8 79,905.1

-5,084.8 -4,200.8 -5,340.1 -4,335.0

-519.6 -1,356.9 1,148.3 1,261.9

-1,055.9 -1,317.1 -1,022.2 -697.7

2007P

I II III IV

-1,662.2 34.4 4,430.2 3,151.9

6,037.9 6,970.2 9,676.2 6,725.1

84,703.5 92,984.5 90,529.1 103,272.0

82,261.7 87,961.9 86,058.8 100,563.3

-6,180.1 -4,395.3 -5,884.1 -4,115.4

-689.6 -1,543.1 1,663.8 1,337.4

-830.4 -997.4 -1,025.7 -795.2

2008P

-5,212.6

-1,219.8

99,413.6

105,447.9

-5,067.2

1,688.1

-613.7

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

-273.5 -1,217.8 -486.3 -1,978.8 782.8 1,431.0 -226.2 -734.2 1,977.3 1,776.0 4,270.7 64.2

1,143.9 681.3 2,857.5 1,639.0 2,240.9 3,229.9 1,553.5 1,330.3 3,347.1 2,627.4 5,550.9 1,703.4

23,257.9 23,787.0 26,840.1 25,590.1 27,934.5 27,948.8 25,774.4 27,287.2 29,651.2 28,015.9 30,602.3 28,775.4

23,089.3 23,507.8 25,945.0 24,485.8 26,210.4 26,023.5 25,549.7 27,029.5 27,636.6 25,621.8 26,765.1 27,518.2

-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

2007P 1 2 3 4 5 6 7 8 9 10 11 12

-428.1 402.1 -1,636.2 -2,078.1 839.1 1,273.4 1,552.3 573.7 2,304.2 2,461.1 1,504.6 -813.8

1,292.1 2,387.3 2,358.5 1,519.5 2,239.0 3,211.7 3,044.1 2,906.4 3,725.7 3,638.0 2,643.7 443.4

28,092.6 26,225.1 30,385.8 29,944.4 31,039.9 32,000.1 30,207.4 30,998.1 29,323.5 34,433.8 35,807.9 33,030.3

27,560.1 25,406.2 29,295.5 29,596.9 29,856.9 28,508.1 29,223.2 29,642.1 27,193.6 32,741.2 33,926.1 33,895.9

-1,943.4 -2,551.1 -1,685.6 -1,396.1 -1,483.2 -1,516.0 -1,688.2 -2,445.2 -1,750.7 -1,416.5 -1,458.9 -1,240.0

547.1 850.7 -2,087.4 -2,001.5 461.6 -3.2 533.5 444.3 686.0 502.9 422.8 411.7

-323.9 -284.8 -221.7 -200.0 -378.3 -419.1 -337.1 -331.8 -356.8 -263.3 -103.0 -428.9

2008P 1 2 3 4

-2,751.3 -2,350.7 -110.6 -1,563.0

-1,095.2 -599.1 474.5 1,651.4

32,322.9 31,148.6 36,045.8 37,843.4

36,162.3 32,446.6 36,875.7 38,038.2

-2,138.1 -2,249.6 -679.5 -979.8

768.0 700.7 219.4 -1,932.0

-286.0 -202.7 -125.0 -302.6

2006

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

Economic Bulletin

10. Balance of payments (II) See graph 10-3 (million US$)

Period

Capital & financial account

Direct investment

2004 2005 2006 2007P

7,598.8 4,756.5 17,972.0 6,232.3

Changes in reserve assets

Errors and omissions

Portfolio investment

Other investment

Capital transfers & acquisition of non-financial assets

4,588.3 2,010.4 -4,540.4 -13,696.7

8,619.3 -1,728.2 -22,745.6 -19,093.3

-3,856.0 6,814.7 48,384.1 41,411.9

-1,752.8 -2,340.4 -3,126.1 -2,389.6

-38,710.5 -19,805.8 -22,112.9 -15,128.2

2,938.2 68.4 -1,244.3 2,941.6

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 -5,174.8

108.7 -1,792.5 606.2 1,146.0

2006

I II III IV

6,824.8 3,319.1 3,754.1 4,074.0

-1,062.3 -30.9 -3,856.2 409.0

1,847.1 -14,079.6 -7,703.3 -2,809.8

6,787.0 18,255.2 15,978.3 7,363.6

-747.0 -825.6 -664.7 -888.8

-5,679.3 -4,315.9 -3,688.8 -8,428.9

832.1 761.8 -1,082.2 -1,756.0

2007P I II III IV

5,313.6 6,442.1 -3,326.5 -2,196.9

-959.8 -2,867.7 -2,445.6 -7,423.6

-10,492.9 -27.2 -9,169.6 596.4

17,580.4 10,023.0 8,858.8 4,949.7

-814.1 -686.0 -570.1 -319.4

-3,998.3 -6,250.1 -2,495.6 -2,384.2

346.9 -226.4 1,391.9 1,429.2

2008P I

395.9

-4,790.6

-11,065.6

16,489.7

-237.6

3,850.0

966.7

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

4,082.2 1,594.0 1,148.6 4,639.6 391.0 -1,711.5 1,767.1 1,410.5 576.5 -940.2 -524.0 5,538.2

-504.9 137.3 -694.7 328.5 -105.2 -254.2 -174.9 -671.6 -3,009.7 -131.6 -38.9 579.5

602.7 2,404.0 -1,249.6 -3,099.7 -7,937.6 -3,042.3 -3,899.6 -4,470.4 666.7 -678.3 -827.2 -1,304.3

4,124.2 -695.4 3,358.2 7,714.2 8,680.4 1,860.6 6,123.2 6,719.8 3,135.3 137.1 671.9 6,554.6

-229.8 -251.9 -265.3 -303.4 -246.6 -275.6 -281.6 -167.3 -215.8 -267.4 -329.8 -291.6

-5,432.6 140.7 -387.4 -3,354.8 -495.6 -465.5 -686.0 -959.7 -2,043.1 -933.1 -2,677.2 -4,818.6

1,623.9 -516.9 -274.9 694.0 -678.2 746.0 -854.9 283.4 -510.7 97.3 -1,069.5 -783.8

2007P 1 2 3 4 5 6 7 8 9 10 11 12

2,078.9 -404.0 3,638.7 4,203.3 3,597.1 -1,358.3 537.1 -304.8 -3,558.8 -1,912.9 -1,498.6 1,214.6

-208.9 -687.6 -63.3 -388.2 -311.3 -2,168.2 -3.0 -1,372.5 -1,070.1 -4,439.9 -1,726.1 -1,257.6

-1,411.2 -1,940.7 -7,141.0 3,808.0 529.6 -4,364.8 -6,925.0 -5,973.7 3,729.1 154.3 -2,901.5 3,343.6

4,054.0 2,427.6 11,098.8 1,029.3 3,613.2 5,380.5 7,692.6 7,248.3 -6,082.1 2,538.1 3,202.6 -791.0

-355.0 -203.3 -255.8 -245.8 -234.4 -205.8 -227.5 -206.9 -135.7 -165.4 -73.6 -80.4

-2,350.7 -1,134.7 -512.9 -1,878.4 -4,492.9 121.2 -2,421.6 -937.5 863.5 -847.5 -493.8 -1,042.9

699.9 1,136.6 -1,489.6 -246.8 56.7 -36.3 332.2 668.6 391.1 299.3 487.8 642.1

2008P 1 2 3 4

409.2 -401.3 388.0 -386.9

-2,488.7 303.5 -2,605.4 -1,911.9

-4,011.1 -5,426.4 -1,628.1 3,571.7

7,013.3 4,819.9 4,656.5 1,958.9

-104.3 -98.3 -35.0 -87.8

1,436.1 1,703.1 710.8 2,411.3

906.0 1,048.9 -988.2 -461.4

P: Preliminary Source: The Bank of Korea

June 2008

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

Consumer prices

Export & import prices

Period All Items

Commodity

Service

Core

All items

Commodity

Export

Import

2006 2007

102.2 104.8

101.5 103.5

102.7 105.7

101.8 104.2

112.4 115.4

112.6 115.7

91.8 89.8

100.9 105.5

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

93.9 92.0 92.0 90.9 90.7 92.0 92.0 93.8 93.2 92.1 89.9 89.1

99.1 98.0 98.4 99.8 101.6 102.6 104.0 105.9 102.2 100.9 99.3 99.4

2007 1 2 3 4 5 6 7 8 9 10 11 12

102.8 103.5 104.1 104.5 104.6 104.6 105.0 105.1 105.7 105.9 105.9 106.3

101.4 102.3 102.3 102.8 102.8 102.7 103.3 103.5 104.7 105.1 104.9 105.6

103.8 104.2 105.2 105.5 105.7 105.8 106.0 106.1 106.3 106.4 106.6 106.7

102.7 103.1 103.8 104.1 104.1 104.2 104.4 104.5 104.6 104.7 104.8 105.0

112.6 112.8 113.4 114.6 115.3 115.5 115.7 115.8 116.6 116.9 117.4 118.3

112.3 112.5 113.3 114.8 115.6 115.8 116.0 116.2 117.1 117.3 118.1 119.2

88.6 88.1 88.9 89.2 89.3 89.5 89.6 90.6 90.8 89.8 91.5 92.0

97.7 99.5 102.7 104.0 104.5 104.2 104.1 105.1 107.6 108.6 113.0 114.9

2008 1 2 3 4 5

106.8 107.2 108.2 108.8 109.7

106.3 106.6 107.1 108.2 110.0

107.1 107.5 108.9 109.2 109.5

105.6 106.0 107.2 107.7 108.2

119.2 120.5 122.5 125.7 128.7

120.1 121.8 124.4 128.7 132.4

93.7 94.8 100.8 103.3 110.7

118.4 121.6 131.5 136.5 151.1

Y-o-Y change (%) 2006 2007

2.2 2.5

1.5 2.0

2.7 2.9

1.8 2.4

2.3 2.7

2.6 2.8

-8.2 -2.1

0.9 4.5

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 2.6 3.2 2.8 3.4 3.1 1.9 1.9 2.2

2.3 1.7 1.3 1.3 2.8 3.9 3.4 4.0 3.5 1.9 1.9 2.4

-9.8 -10.6 -9.3 -9.8 -7.2 -6.2 -8.3 -5.4 -6.9 -8.6 -8.5 -7.5

2.2 1.2 -0.0 0.2 4.4 3.8 2.5 3.4 -1.6 -2.3 -1.7 -0.6

2007 1 2 3 4 5 6 7 8 9 10 11 12

1.7 2.2 2.2 2.5 2.3 2.5 2.5 2.0 2.3 3.0 3.5 3.6

0.3 1.2 1.2 1.5 1.2 1.7 1.8 0.5 1.6 3.2 4.2 4.3

2.7 2.8 2.8 2.9 3.0 3.0 2.9 2.9 2.8 2.9 3.1 3.0

2.1 2.3 2.4 2.6 2.2 2.3 2.3 2.3 2.3 2.4 2.4 2.4

1.5 1.7 2.2 2.5 2.5 2.7 2.4 1.7 2.1 3.4 4.4 5.1

1.4 1.6 2.2 2.6 2.5 2.6 2.2 1.3 1.9 3.5 5.1 6.0

-5.7 -4.2 -3.3 -1.8 -1.4 -2.8 -2.6 -3.4 -2.6 -2.5 1.8 3.4

-1.4 1.6 4.4 4.2 2.8 1.6 0.1 -0.7 5.2 7.5 13.7 15.6

2008 1 2 3 4 5

4.0 3.7 4.1 4.3 5.1

4.9 4.3 4.8 5.4 7.2

3.3 3.3 3.7 3.7 3.8

2.9 2.9 3.4 3.6 4.1

5.9 6.8 8.0 9.7 11.6

6.9 8.3 9.8 12.1 14.5

5.8 7.6 13.4 15.7 24.0

21.2 22.2 28.0 31.3 44.6

Source: The Bank of Korea

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 2006 2007

23,978 24,216

23,151 23,433

4,167 4,119

17,181 17,569

3.5 3.2

2,666,550 2,823,220

2,594,830 2,772,786

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 3,502,448

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 3,745,800

2007 1 2 3 4 5 6 7 8 9 10 11 12

23,580 23,536 23,960 24,337 24,537 24,593 24,545 24,214 24,341 24,482 24,471 23,993

22,729 22,674 23,121 23,520 23,758 23,816 23,750 23,458 23,622 23,750 23,739 23,257

4,156 4,139 4,119 4,124 4,114 4,140 4,126 4,052 4,101 4,142 4,092 4,127

17,221 17,114 17,371 17,573 17,677 17,715 17,740 17,524 17,639 17,689 17,856 17,712

3.6 3.7 3.5 3.4 3.2 3.2 3.2 3.1 3.0 3.0 3.0 3.1

2,627,540 3,013,449 2,641,959 2,643,764 2,485,058 2,817,804 2,829,211 2,769,911 3,114,931 2,683,992 2,546,228 3,706,293

2,425,973 3,056,645 2,471,807 2,607,695 2,336,692 2,748,589 2,855,274 2,762,758 2,979,084 2,672,783 2,363,575 3,998,473

2008 1 2 3 4 5

23,738 23,703 24,114 24,495 24,492

22,964 22,884 23,305 23,711 23,939

4,125 4,116 4,100 4,099 4,097

17,549 17,409 17,632 17,829 17,931

3.3 3.5 3.4 3.2 3.0

Y-o-Y change (%) 2006 2007

1.0 1.0

1.3 1.2

-1.6 -1.1

2.3 2.3

5.6 5.9

5.6 6.8

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 4.6

24.1 -11.8 5.7 4.1 8.1 3.4 5.9 5.3 -0.2 13.1 6.1 6.9

2007 1 2 3 4 5 6 7 8 9 10 11 12

1.0 0.7 0.8 1.0 1.1 1.1 1.1 1.0 1.0 0.9 1.0 0.9

1.1 1.2 1.2 1.2 1.2 1.3 1.3 1.3 1.3 1.2 1.2 1.2

-1.1 -1.1 -1.4 -1.5 -1.3 -1.0 -1.3 -1.5 -0.8 -1.0 -1.1 -0.6

1.9 2.1 2.3 2.3 2.2 2.4 2.5 2.5 2.3 2.3 2.2 2.1

-8.3 22.9 6.5 5.5 5.5 4.9 6.9 6.2 11.4 -0.2 5.7 5.8

-13.5 28.6 6.4 7.6 6.1 6.5 10.0 9.1 12.5 -0.3 6.2 6.7

2008 1 2 3 4 5

0.7 0.7 0.6 0.7 0.6

1.0 0.9 0.8 0.8 0.8

-0.7 -0.5 -0.5 -0.6 -0.4

1.9 1.7 1.5 1.5 1.4

Source: Korea National Statistical Office

June 2008

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)

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 1,371.70 1,295.70 1,297.80 1,352.70 1,371.40 1,364.60 1,432.20 1,434.50

2007 1 2 3 4 5 6 7 8 9 10 11 12

4.6 4.6 4.6 4.7 4.6 4.5 4.7 4.9 5.0 5.0 5.0 5.0

4.9 5.0 4.9 5.0 5.0 5.0 5.1 5.2 5.3 5.3 5.4 5.7

5.3 5.3 5.2 5.3 5.5 5.6 5.8 5.7 5.9 6.0 6.2 6.7

5.0 4.9 4.8 4.9 5.1 5.2 5.4 5.3 5.4 5.4 5.5 5.9

5.0 4.9 4.8 5.0 5.1 5.4 5.4 5.3 5.4 5.5 5.6 5.9

1,360.20 1,417.30 1,452.60 1,542.24 1,700.91 1,743.60 1,933.27 1,873.24 1,946.48 2,064.95 1,906.00 1,897.10

2008 1 2 3 4 5

5.0 5.0 5.0 5.0 5.0

5.8 5.3 5.3 5.4 5.4

6.6 6.3 6.1 6.0 6.0

5.4 5.0 5.2 5.0 5.3

5.5 5.1 5.2 5.0 5.4

1,624.68 1,711.62 1,703.99 1,825.47 1,852.02

Source: The Bank of Korea

Economic Bulletin

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

Period

(billion won)

Reserve money

2006 2007

41,664.0 48,543.7

330,134.1 312,832.3

1,076,682.4 1,197,094.8

1,454,858.8 1,603,516.0

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 1,526,516.2

2007 1 2 3 4 5 6 7 8 9 10 11 12

47,851.4 49,493.5 48,936.8 47,485.3 48,092.5 47,914.3 47,500.5 47,823.9 48,870.6 49,370.6 48,831.0 50,353.8

353,494.2 350,734.7 335,446.8 305,602.5 301,184.5 302,511.7 302,375.6 298,066.1 299,048.0 297,999.3 299,714.7 307,809.3

1,143,814.9 1,154,108.8 1,162,429.3 1,165,291.0 1,171,148.4 1,190,080.2 1,200,892.7 1,208,052.8 1,219,265.1 1,229,742.1 1,250,790.1 1,269,522.5

1,536,010.8 1,547,512.8 1,557,701.9 1,564,339.3 1,575,635.4 1,596,407.1 1,606,424.5 1,618,788.3 1,631,969.6 1,649,987.5 1,668,328.3 1,686,063.4

2008 1 2 3 4

50,260.5 52,563.7 49,571.5 50,683.6

299,221.3 301,597.8 294,147.1 300,930.3 Y-o-Y change (%) -0.8 -5.2

1,295,781.1 1,315,172.2 1,316,505.1 1,350,862.3

1,712,839.5 1,728,493.7 1,739,546.1 1,776,888.2

8.3 11.2

7.9 10.2

2006 2007

7.4 16.5

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

2007 1 2 3 4 5 6 7 8 9 10 11 12

15.8 18.8 19.4 15.3 18.1 17.7 13.2 18.7 17.8 14.3 17.6 12.2

7.9 7.4 3.0 -5.7 -7.0 -7.5 -8.4 -8.6 -8.7 -10.7 -11.2 -12.5

11.3 11.5 11.5 11.1 10.9 10.9 10.9 11.4 11.0 10.8 11.3 11.5

9.8 9.9 10.2 10.1 10.1 10.4 10.0 10.3 10.3 10.4 10.4 10.6

2008 1 2 3 4

5.0 6.2 1.3 6.7

-14.0 -13.5 -5.3 -0.6

13.3 14.3 13.1 16.3

11.5 11.7 11.5 13.7

P: Preliminary Source: The Bank of Korea

June 2008

15. Exchange rates See graphs 9-2 & 9-3

₩ /US$

₩ /100￥

₩ /Euro

Period End-period

Average

End-period

Average

End-period

Average

2006 2007

929.6 938.2

955.5 929.2

781.8 833.3

821.5 789.8

1,222.2 1,381.3

1,199.3 1,272.7

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 2 3 4 5 6 7 8 9 10 11 12

940.9 938.3 940.3 929.4 929.9 926.8 923.2 939.9 920.7 907.4 929.6 938.2

936.4 937.0 943.3 931.5 927.9 928.3 918.9 933.8 932.4 915.9 917.0 930.2

773.1 793.9 797.0 778.3 764.8 752.4 774.6 809.9 796.7 791.1 846.5 833.3

777.9 776.8 804.8 783.7 768.5 757.1 755.6 799.8 810.6 790.7 826.2 828.4

1,220.1 1,241.9 1,253.9 1,266.9 1,249.0 1,246.0 1,266.9 1,282.3 1,302.9 1,309.9 1,371.8 1,381.3

1,217.0 1,225.1 1,249.4 1,257.7 1,254.1 1,244.9 1,260.0 1,272.4 1,291.2 1,303.3 1,345.6 1,355.2

2008 1 2 3 4 5

944.0 937.3 991.7 999.7 1,031.4

942.4 944.7 979.9 986.7 1,036.7

889.1 889.7 1,000.2 961.8 977.0

872.9 880.6 972.3 962.4 994.2

1,402.3 1,423.5 1,565.0 1,556.2 1,599.6

1,386.2 1,395.4 1,519.5 1,555.1 1,614.6

Y-o-Y change (%) 2006 2007

-8.2 0.9

-6.7 -2.8

-9.1 6.6

-11.7 -3.9

1.9 -13.0

-5.9 6.1

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 2 3 4 5 6 7 8 9 10 11 12

-3.1 -3.2 -3.7 -1.7 -1.9 -3.5 -3.1 -2.1 -2.6 -3.9 -0.0 0.9

-5.1 -3.4 -3.3 -2.4 -1.4 -2.8 -3.3 -2.8 -2.2 -4.0 -2.1 0.5

-6.3 -4.8 -4.2 -6.0 -9.2 -9.8 -6.7 -1.3 -0.7 -1.5 5.9 6.6

-8.9 -5.5 -3.2 -3.8 -8.8 -9.1 -8.0 -3.6 -0.5 -1.5 3.5 4.8

3.9 8.2 5.6 6.9 3.4 2.5 4.2 4.1 8.5 9.1 12.2 13.0

1.9 5.6 6.5 7.5 4.4 3.0 4.5 3.4 6.3 8.4 11.6 10.8

2008 1 2 3 4 5

0.3 -0.1 5.5 7.6 10.9

0.6 0.8 3.9 5.9 11.7

15.0 12.1 25.5 23.6 27.8

12.2 13.4 20.8 22.8 29.4

14.9 14.6 24.8 22.8 28.1

13.9 13.9 21.6 23.6 28.7

Source: The Bank of Korea

Economic Bulletin

Editor-in-Chief Kim, Kyu-Ok (MOSF) Editorial Board Rim, Jin-Hong (MOSF) Kim, Dong-Yule (KDI) Lee, In-Sook (KDI) Coordinators Oh, Hae-Young (MOSF) Kang, Ji-Eun (KDI) Editors Kim, Sun-Young (MOSF) Park, Jai-En (KDI)

Useful Internet Websites Economy-related Websites Recommended

Ministry of Strategy and Finance http://english.mofe.go.kr Ministry of Knowledge Economy http://www.mke.go.kr/language/eng Financial Supervisory Commission/Financial Supervisory Service http://english.fss.or.kr/fsseng/index.jsp Fair Trade Commission http://www.ftc.go.kr/eng Ministry of Labor http://english.molab.go.kr/english Bank of Korea http://www.bok.or.kr Korea National Statistical Office http://www.nso.go.kr/eng2006/emain/index.html