201009 by KOCIS

Vol. 32 | No. 9

Republic of Korea

Economic Bulletin The Green Book : Current Economic Trends Overview

1. Global economy

2. Private consumption

3. Facility investment

4. Construction investment

5. Exports and imports

6. Mining and manufacturing production

7. Service sector activity

8. Employment

9. Financial markets 9.1 Stock market 9.2 Exchange rate 9.3 Bond market 9.4 Money supply & money market

10. Balance of payments

11. Prices and international commodity prices 11.1 Prices 11.2 International oil and commodity prices

12. Real estate market 12.1 Housing market 12.2 Land market

13. Composite indices of business cycle indicators

Policy Issues 2010 Tax revision

Economic News Briefing

Statistical Appendices

The Green Book Current Economic Trends

Overview The Korean economy saw private sector employment expanding at a faster pace, backed by brisk exports and steadily recovering domestic demand. Mining and manufacturing production in July, thanks to robust exports, rose 1.1 percent monthon-month and 15.5 percent year-on-year. Service output lost 1.0 percent month-on-month affected by early fiscal spending in the first half, while gaining 3.4 percent year-on-year. Consumer goods sales, backed by steadily increasing consumer spending affected by a recovering job market, increased 1.2 percent month-on-month and 8.6 percent year-on-year. In July facilities investment dropped 3.1 percent month-on-month due to a high base effect of 8.0 percent increase, but year-on-year, the index rose 33.5 percent. Construction completed, while improving 3.5 percent year-on-year, shed 3.2 percent month-on-month, as early budget spending in the first half negatively affected civil engineering works. The total number of workers hired in July gained 473,000 year-on-year, led by the manufacturing and service sectors. The employment rate (seasonally adjusted) posted 59.1 percent, adding 0.5 percentage points year-on-year, while the unemployment rate (seasonally adjusted) landed at 3.7 percent, the same level as the previous year. Exports in August, led by semiconductors and automobiles, jumped 29.6 percent year-onyear. Imports rose 29.3 percent from a year earlier, as those of capital and consumer goods accelerated an increase. The consumer price in August posted a modest year-on-year increase at mid-2 percent level, as low prices of manufactured goods offset rising prices of agricultural products caused by bad weather conditions and an increase in some public utilities charges. In August, stock prices fell and foreign exchange rates rose, as worries over a possible slowing down of the global economic recovery revived appetite for safer assets. Housing prices in August continued to fall due to declining demand, in particular in the Seoul metropolitan area, while rental prices increased affected by the summer moving season. To sum up, although the Korean economy shows clear signs of improvement, external uncertainties grow as major economies slow down and international commodity prices become volatile. Given the external and internal economic situations, the Korean government will continue macroeconomic policies which facilitate sustainable growth, while pursuing a dynamic economy to absorb external shocks. On the other hand, the government will renew policy efforts to create more jobs, stabilize prices on the basis of a virtuous cycle, and make fair trade take hold between large enterprises and SMEs, all of which will lead to more security in the living of the working class. Economic Bulletin

1. Global economy Although the global economy continued a recovery track in terms of the real economy, the pace of the recovery slowed down, especially in the US and China. The US, China and Eurozone announced measures to keep the current monetary easing policies and froze base rates.

US real GDP in the second quarter revised down to 1.6 percent (annualized q-o-q, preliminary), with housing and job markets continuing to be sluggish, while industrial production and retail sales shifted to an increase. Both existing and new home sales dropped month-on-month in July by 27.2 percent and 12.4 percent, respectively, staying on a downward track since the expiration of the 2010 Home Buyer Tax Credits. The unemployment rate posted 9.6 percent in August, up 0.1 percentage point from the previous month, with those on non-farm payrolls decreasing 54,000, while the private sector added 67,000 jobs. Industrial production and retail sales shifted to an increase in July, and in August the Institute for Supply Management (ISM) manufacturing index improved. ISM manufacturing index (base= 50) 58.4 (Jan 2010)

56.5 (Feb)

59.6 (Mar)

60.4 (Apr)

59.7 (May)

56.2 (Jun)

55.5 (Jul)

56.3 (Aug)

The Federal Reserve at the FOMC meeting on August 10 decided to maintain the target for the federal fund rate at zero to 0.25 percent along with other quantitative easing measures revived. Fed chairman Bernanke mentioned on August 27 that the Fed is prepared to provide additional monetary accommodation if the economic outlook were to deteriorate significantly. (Percentage change from previous period) 2009 Annual Real GDP

2010 Q3

Jun

Jul

-2.6

-4.9

-0.7

1.6

5.0

3.7

1.6

-1.2

-0.5

-1.6

2.0

0.9

1.9

2.0

- Corporate fixed investment

-17.1

-35.2

-7.5

-1.7

-1.4

7.8

17.6

- Construction investment for housing

-22.9

-36.2

-19.7

10.6

-0.8

-12.3

27.2

Industrial production

-9.3

-4.7

-2.7

2.0

1.7

1.6

0.0

1.0

Retail sales

-6.3

-1.7

0.0

1.8

2.0

1.1

-0.3

0.4

New home sales

-22.5

-8.6

4.2

9.1

-7.0

-3.6

-6.5

12.1

-12.4

New non-farm payroll employment (thousand)2

-395

-753

-477

-261

-90

190

-175

-54

Consumer prices (y-o-y, %)

-0.3

-0.2

-1.0

-1.6

1.5

2.4

1.8

1.1

1.3

- Personal consumption expenditure

1. Annualized rate (%) 2. Monthly average Source: US Department of Commerce

September 2010

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

Chinaâ&#x20AC;&#x2122;s economy saw industrial production and fixed asset investment rise at a slower pace, while domestic consumption and exports continued an upward trend. Consumer prices went up 3.3 percent with the Manufacturing Purchasing Managers Index (PMI) shifting to an increase in four months, while housing prices decelerated an increase for the third straight month. Housing price (%, y-o-y) 10.7 (Feb 2010)

11.7 (Mar)

12.8 (Apr)

12.4 (May)

55.7 (Apr)

53.9 (May)

11.4 (Jun)

10.3 (Jul)

Manufacturing PMI (base = 50) 52.0 (Feb 2010)

55.1 (Mar) 2008 Annual

Real GDP

52.1 (Jun) 41.2 (Jul) 51.7 (Aug) (Percentage change from same period in previous year)

2009 Annual

2010 Q3

Jun

Jul

9.0

9.1

6.2

7.9

9.1

10.7

11.9

10.3

Industrial production

12.9

11.0

5.1

9.1

12.4

18.0

19.6

17.6

13.7

13.4

Fixed asset investment (accumulated)

26.1

30.5

28.6

33.6

33.3

30.5

26.4

25.5

24.9

Retail sales

21.6

15.5

14.9

15.0

15.4

16.9

17.9

18.2

18.3

17.9

Exports

17.2

-16.0

-19.7

-23.4

-20.3

0.2

28.7

40.9

43.9

38.1

Consumer prices

5.9

-0.7

-0.6

-1.5

-1.3

0.7

2.2

2.9

3.3

Producer prices

6.9

-5.4

-4.6

-7.2

-7.7

-2.1

5.2

6.8

6.4

4.8

Source: China National Bureau of Statistics

Japan

Japanâ&#x20AC;&#x2122;s economy decelerated the growth at 0.1 percent quarter-on-quarter in the second quarter of 2010 amid ongoing deflation, while the appreciating yen undermined export growth. The Bank of Japan and the Japanese government released additional monetary easing measures of 10 trillion yens and a stimulus package as large as 920 billion yens, respectively, on August 30. (Percentage change from previous period) 2008

2009

2010

Annual

Jun

Jul

Real GDP

-1.2

-5.2

-4.4

2.5

-0.3

1.0

1.1

0.1

Industrial and mining production

-3.4

-21.8

-20.1

6.6

5.3

5.9

7.0

1.5

-1.1

0.3

-2.2

-3.9

-0.9

-3.4

-0.7

3.8

1.7

-2.4

8.9

-3.0

-34.2

-47.8

-39.9

-35.5

-8.7

44.8

35.0

27.7

23.5

1.4

-1.4

-0.1

-1.0

-2.2

-2.0

-1.2

-0.9

-0.7

-0.9

Retail sales (y-o-y, %) Exports (y-o-y, %) Consumer prices (y-o-y, %) Source: Japan's Statistics Bureau and Statistics Centre

Eurozone

The eurozone economy grew faster in the second quarter of 2010, posting a 1.0 percent rise from the previous quarter, as major eurozone economies performed well including the German economy which posted 2.2 percent quarter-on-quarter growth. The European Central Bank (ECB) decided on September 3 to maintain the base rate at 1.0 percent and extend emergency liquidity supplies to early 2011. (Percentage change from previous period) 2008

2009

2010

Annual

Jun

Jul

0.8

-4.0

-2.5

-0.1

0.4

0.2

0.3

1.0

Industrial production

-1.8

-14.9

-9.3

-1.6

2.6

1.3

2.5

-0.2

Retail sales

-0.7

-2.3

-1.0

-0.1

-0.2

0.2

0.5

0.0

0.3

Exports (y-o-y, %)

3.9

-18.2

-21.1

-23.0

-19.6

-8.6

12.9

22.8

27.0

Consumer prices (y-o-y, %)

3.3

0.3

1.0

0.2

-0.4

0.4

1.1

1.5

1.4

1.7

Real GDP

Source: Eurostat

September 2010

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) increased 0.8 percent quarter-on-quarter and 3.7 percent year-on-year in the second quarter of 2010. (Percentage change from same period in previous year) 2008

Private consumption2 (Seasonally adjusted)3 1. Preliminary 2. National accounts Source: The Bank of Korea

2009

2010 1

Annual

1.3

-3.6

0.2

-4.4

-1.0

0.7

5.8

6.3

3.7

-4.5

0.3

3.3

1.7

0.4

0.7

0.8

3. Percentage change from previous period

Consumer goods sales in July, despite a drop in durable goods sales, rose 1.2 percent month-on-month, as the sales of semi-durable and non-durable goods increased. On a month-on-month basis, durable goods sales declined 1.2 percent affected by a 5.2 percent fall in automobile sales, while non-durable goods sales such as those of vehicle fuels and food & beverages substantially improved by 2.7 percent. On a year-on-year basis, the index increased 8.6 percent, as the sales of durable goods such as home electronics, semi-durable goods such as footwears and bags, and non-durable goods such as food & beverages all improved. (Percentage change from same period in previous year) 2008

2009

2010 1

Annual

Jun

Jul

Consumer goods sales

1.1

2.6

-4.7

1.5

2.8

10.8

9.9

4.9

3.8

8.6

(Seasonally adjusted)

1.0

5.1

0.3

4.1

0.5

0.0

2.4

1.2

1.6

8.1

-11.9

5.7

7.9

33.9

29.5

5.4

-0.2

18.1

- Durable goods

路Automobiles

-3.5

21.8

-20.6

20.1

24.1

76.9

48.6

-2.1

-16.7

13.9

- Semi-durable goods4

-3.0

0.3

-1.5

-0.6

-0.7

3.4

2.7

6.9

9.6

9.4

- Non-durable goods

1.4

1.2

-1.4

0.5

1.9

4.1

3.3

3.5

4.3

3.4

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 goods: Food, medicine, cosmetics, fuel, tobaccos, etc. Source: Statistics Korea

Sales at large discounters and specialized retailers rose at a faster pace, while those at department stores slowed down an increase slightly. (Percentage change from same period in previous year) Annual

2010 1

2009

2008 Annual

Jun

Jul

- Department stores

1.2

3.3

-0.8

0.4

4.2

9.1

9.0

10.4

12.8

10.9

- Large discounters

2.5

-2.0

-4.4

-2.9

-3.4

3.2

5.9

3.7

6.7

8.3

-1.8

2.9

-6.6

2.6

3.5

12.6

9.7

1.7

-0.7

6.9

- Specialized retailers2

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

September 2010

2-1

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

2-2

Consumer goods sales Source: Statistics Korea (industrial activity trend)

2-3

Consumer goods sales by type Source: Statistics Korea (industrial activity trend)

Economic Bulletin

Although consumer goods sales are projected to temporarily decrease month-on-month in August, affected by a high base effect in the last three consecutive months and unusual weather conditions, the year-on-year trend is expected to steadily rise given improving household income and strong consumer sentiment. Domestic credit card spending continued to post a year-on-year double digit increase. Sales at department stores and large discounters decelerated a rise by 3.1 percentage points and 4.9 percentage points, respectively. Domestic sales of Korean cars went up 20.7 percent year-on-year, along with those of gasoline increasing 6.4 percent. Value of credit card use (y-o-y, %) 19.1 (Mar 2010)

18.0 (Apr)

17.2 (May)

15.3 (Jun)

17.1 (Jul)

17.2 (Aug)

Department store sales (y-o-y, %) 4.6 (Mar 2010)

8.8 (Apr)

8.0 (May)

11.8 (Jun)

10.1 (Jul)

7.0 (Aug)

Discount store sales (y-o-y, %) 1.6 (Mar 2010)

0.3 (Apr)

2.3 (May)

6.0 (Jun)

8.2 (Jul)

3.3 (Aug)

Discount store sales (y-o-y, %) 29.6 (Mar 2010)

30.5 (Apr)

-6.6 (May)

-15.2 (Jun)

1.1 (Jul)

20.7 (Aug)

Domestic sales of gasoline (y-o-y, %) 6.3 (Mar 2010)

4.0 (Apr)

0.0 (May)

4.6 (Jun)

5.3 (Jul)

6.4 (Aug)

Source: Ministry of Knowledge Economy The Credit Finance Association Korea Automobile Manufacturers Association Korea National Oil Corporation Ministry of Strategy and Finance (for August data)

Rain might negatively affect retail sales in August, as the number of rainy days increased 10.2 days from 13.8 days of the monthly average to 24 days. Consumer sentiment in August, despite a slight fall from the previous month, stayed above the base, while household real income had increased at a faster pace since the fourth quarter of 2009. Household real income (y-o-y, %) -2.6 (Q3 2009)

2.4 (Q4)

4.4 (Q1 2010)

4.9 (Q2)

Consumer Sentiment Index (CSI, base=100) 110 (Mar 2010)

September 2010

110 (Apr)

111 (May)

112 (Jun)

112 (Jul)

110 (Aug)

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 sentiment index Source: The Bank of Korea

Economic Bulletin

3. Facility investment Facility investment (preliminary GDP) in the second quarter of 2010 posted a quarter-onquarter increase of 9.1 percent and a year-on-year gain of 30.2 percent. (Percentage change from same period in previous year) 2008

Facility investment

(Seasonally adjusted)

- Machinery - Transportation equipment 1. Preliminary 2. National accounts Source: The Bank of Korea

2009

20101

Annual

-1.0

2.0

5.3

-13.3

-9.1

-23.1

-17.3

-7.0

13.3

29.9

30.2

1.2

-1.0

-13.9

-10.5

9.0

10.8

5.3

2.4

9.1

-1.8

0.9

8.0

-14.4

-13.0

-23.2

-21.5

-14.8

10.0

32.5

38.7

1.8

5.9

-3.8

-9.8

4.7

-22.6

-2.9

22.9

24.2

19.4

4.8

3. Percentage change from previous period

Facility investment in July fell 3.1 percent month-on-month, led by machinery investment, due to a high base effect of an 8.0 percent increase from the month before, while rising 33.5 percent year-on-year. (Percentage change from same period in previous year) 2008

Facility investment (Seasonally adjusted)

- Machinery - Transportation equipment Domestic machinery orders - Public - Private

2009

2010 1

Annual

May

Jun

Jul

-3.0

-8.0

-12.9

-10.0

10.2

25.5

24.5

24.3

23.8

33.5

5.6

2.4

13.9

1.4

6.0

5.1

8.0

-3.1

-4.2

-12.9

-18.9

-17.0

8.8

29.3

32.2

34.4

31.5

41.6

2.1

12.0

11.8

20.0

15.5

11.9

0.0

-6.6

0.4

9.4

-13.8

-11.8

-17.7

3.4

20.0

10.5

24.2

57.5

1.8

-21.7

5.0

61.7

29.9

280.2

-27.2

-43.7

-41.2

26.8

-68.6

-90.1

-15.5

-19.9

-22.3

-16.0

35.2

22.9

34.9

59.8

24.1

30.1

- Machinery imports

6.4

-16.6

-27.4

-15.9

7.2

46.3

51.4

43.2

66.4

38.2

Facility investment adjustment pressure3

-1.7

-4.0

-8.9

1.2

12.8

21.7

14.4

16.4

11.7

9.5

1. Preliminary 2. Percentage change from previous period 3. Production growth rate minus production capacity growth rate in the manufacturing sector (%p) Sources: Statistics Korea & The Korea International Trade Association (machinery imports data)

Facility investment in August is expected to improve month-on-month considering a high operation ratio in the manufacturing industry, low base effect from the previous month, and improving investor confidence.

2010

Business survey indices (base=100) for manufacturing facility investment projections Source: The Bank of Korea

September 2010

Mar

Apr

May

Jun

Jul

Aug

103

104

107

106

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: Statistics Korea (industrial activity trend)

3-3

Machinery imports Source: Korea International Trade Association (KITA)

Economic Bulletin

4. Construction investment Construction investment (preliminary GDP) in the second quarter of 2010 declined 3.6 percent quarter-on-quarter and 2.9 percent year-on-year. (Percentage change from same period in previous year) 2008

2009

Annual

-2.8

-0.5

0.4

-7.7

4.4

2.8

5.1

-0.4

0.7

-3.3

5.9

1.8

- Building construction

-4.6

-0.8

0.2

-14.8

-1.8

-9.6

-2.4

- Civil engineering works

-0.2

0.8

1.6

13.3

26.1

15.7

Construction investment

(Seasonally adjusted)3

20101 Q3

4.4

5.0

2.3

-2.9

-0.7

-0.1

1.3

-3.6

1.2

2.5

1.7

-6.3

9.7

7.5

3.1

1.1

1. Preliminary 2. National accounts 3. Percentage change from previous period Source: The Bank of Korea

Construction completed (constant value) in July, while rising 3.5 percent year-on-year, fell 3.2 percent month-on-month, as civil engineering works declined due to early fiscal spending in the first half of 2010 and a high base effect produced by strong mid-year performance. (Percentage change from same period in previous year) 2008

Construction completed(constant value) (Seasonally adjusted)

- Building construction - Civil engineering works Construction orders (current value) - Building construction - Civil engineering works Building permit area

2010 1

2009

Annual

-8.1

1.7

4.5

1.8

5.0

2.0

-3.9

May

Jun

Jul

0.6

-5.9

3.5

-5.3

-1.3

5.4

-2.2

4.2

7.7

-3.2

-10.3

-6.5

-5.1

0.7

-0.1

-8.5

-5.0

-12.1

-5.9

2.2

-5.7

25.9

15.4

11.4

4.8

2.8

8.9

2.5

19.6

-7.6

3.0

-1.1

7.6

11.6

-6.9

-6.6

16.8

-15.8

22.2

-15.4

-16.0

-47.2

5.6

17.0

-0.4

60.1

68.2

34.3

3.3

13.5

41.9

140.9

10.6

3.7

-14.2

-51.5

-40.4

-49.3

52.7

-20.1

-12.9

-32.7

-4.6

13.1

12.1

47.4

72.7

14.0

1.7

1. Preliminary 2. Percentage change from previous period Source: Statistics Korea & The Ministry of Land, Transport and Maritime Affairs

Construction investment, despite a sluggish housing market, is projected to slightly rise month-on-month in August, as construction orders turned to an increase and a high base effect from the first half of 2010 due to an early fiscal spending would fade.

September 2010

4-1

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

4-2

Construction completed and housing construction Source: Statistics Korea (construction completed) Kookmin Bank (housing construction)

4-3

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

Economic Bulletin

5. Exports and imports Exports in August continued a brisk pace as it rose 29.6 percent year-on-year to US$37.53 billion amid continuing global economic recovery. The value of total exports fell from the previous month due to seasonal factors such as a drop in the number of working days caused by summer vacation. By export category, semiconductors, automobiles, and petroleum products jumped, while wireless communications devices decreased year-on-year. (US$ billion) 2008

2009

2010

Annual

Jul

Aug1

422.01

363.53

74.42

90.36

94.78

103.97

101.09

120.25

40.95

37.53

(y-o-y, %)

13.6

-13.9

-25.2

-21.1

-17.6

11.7

36.2

33.1

28.3

29.6

Average daily exports

1.53

1.30

1.10

1.30

1.32

1.49

1.51

1.76

1.67

1.56

435.27

323.09

71.42

73.97

84.85

92.85

98.11

105.90

35.44

35.45

(y-o-y, %)

22.0

-25.8

-32.7

-35.6

-31.0

1.4

37.4

43.1

28.0

29.3

Average daily imports

1.58

1.16

1.06

1.18

1.33

1.46

1.55

1.45

1.47

Exports

Imports

Source: Korea Customs Service

Imports in August rose 29.3 percent year-on-year to US$35.45 billion, as those of raw materials, capital goods, and consumer goods continued to soar amid the recovering economy. However, imports of raw materials increased at a slower rate due to falling unit prices of crude oil. Raw materials (y-o-y, %) 38.8 (Q1 2010); 54.0 (Apr)

64.9 (May)

43.2 (Jun)

31.4 (Jul)

27.0 (Aug)

30.8 (May)

38.9 (Jun)

25.1 (Jul)

32.7 (Aug)

36.0 (May)

10.5 (Jun)

28.3 (Jul)

31.7 (Aug)

Capital goods (y-o-y, %) 36.8 (Q1 2010); 27.3 (Apr)

Consumer goods (y-o-y, %) 29.5 (Q1 2010); 27.7 (Apr)

The trade balance in August posted a surplus of US$2.08 billion, staying in the black for seven straight months. (US$ billion) 2008

Trade Balance Source: Korea Customs Service

September 2010

2009

2010

Annual

Jul

Aug1

-13.27

40.45

3.00

16.39

9.94

11.12

2.98

14.44

5.51

2.08

5-1

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

5-2

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

5-3

Trade balance Source: Korea Customs Service & Ministry of Knowledge Economy (export and import trend)

Economic Bulletin

6. Mining and manufacturing production Mining and manufacturing production increased 1.1 percent in July from the previous month, posting a month-on-month increase for the ninth consecutive month, while rising 15.5 percent year-on-year. By business category, automobiles (up 6.8%) and semiconductors and parts (up 4.8%) were up month-on-month, while clothing and fur (down 15.9%) and refined petroleum (down 8.3%) went down. Although both shipments and inventories stayed in a positive territory year-on-year, inventories increased at a faster pace of 18.0 percent than shipments of 14.3 percent. By business category, the shipments of semiconductors and parts (up 26.0%), and machineries (up 52.4%) increased year-on-year, while those of other transportation equipment (down 12.8%) and computers (down 8.7%) declined. The inventories of semiconductors and parts (up 69.4%) and automobiles (up 38.0%) rose year-on-year, while those of clothing and fur (down 19.9%), and paper products (down 12.1%) fell. The average operation ratio of the manufacturing sector rose 0.9 percentage points from the previous month to 84.8 percent, the highest since January 1980 when the statistics was first produced. (Percentage change from same period in previous year) 2008 Annual Production (q-o-q, m-o-m)

Mining and manufacturing activity2

2009 Annual

2010 Q4

May

Jun

Jul

1.3

5.1

5.0

2.7

1.6

1.1

(y-o-y)

3.4

-0.8

16.2

25.8

19.4

21.7

17.1

15.5

- Manufacturing

3.4

-0.9

16.8

26.8

20.1

22.5

17.6

15.9

路ICT

3.4

7.8

46.3

46.1

26.9

28.3

22.3

21.8

9.1

-6.8

14.7

51.0

35.5

40.8

28.1

25.9

路Automobiles Shipment

2.6

-1.7

12.8

21.8

17.2

19.0

15.1

14.3

-0.4

-1.8

12.3

21.2

15.4

16.9

12.1

12.8

- Exports

7.2

-1.7

13.3

22.5

19.7

21.9

19.1

16.1

Inventory

7.1

-8.0

6.6

15.6

14.8

15.6

18.0

77.5

74.6

78.4

80.5

83.0

82.8

83.9

84.8

5.1

3.1

4.0

5.1

5.8

6.1

5.9

6.4

- Domestic demand

Manufacturing Average operation ratio (%) activity Production capacity 1. Preliminary 2. Including mining, manufacturing, electricity and gas industry 3. Information and Communications Technology 4. End-period Source: Statistics Korea

Mining and manufacturing production in August is expected to stay at around the same level as the previous month despite brisk exports, given the possible production adjustment due to the recent inventory increase. Exports (y-o-y, %) 36.0 (Q1 2010)

September 2010

33.1 (Q2)

28.3 (Jul)

29.6 (Aug)

6-1

Industrial production Source: Statistics Korea (industrial activity trend)

6-2

Average manufacturing operation ratio Source: Statistics Korea (industrial activity trend)

6-3

Inventory Source: Statistics Korea (industrial activity trend)

Economic Bulletin

7. Service sector activity Despite robustness in hotels & restaurants and wholesale & retail sales, service activity in July decreased 1.0 percent month-on-month as front-loaded fiscal spending dragged down educational services and professional, scientific & technical services. It grew 3.4 percent year-on-year. By business category, hotels & restaurants (up 2.4%) and wholesale & retail sales (up 1.5%) expanded month-on-month. On the other hand, educational services (down 12.0%) and professional, scientific & technical services (down 8.0%) went down significantly. (Percentage change from same period in previous year) Weight

2008

2009 Q1

Jun

Jul

Service activity index

100

3.6

2.0

-0.3

2.4

1.9

3.7

5.7

4.0

4.7

3.4

- Wholesale & retail

22.0

1.3

-0.4

-4.8

-2.2

0.3

5.4

7.4

5.5

4.8

6.6

- Transportation services

9.0

4.3

-6.6

-12.7

-10.0

-4.8

1.4

13.9

13.8

13.5

13.8

- Hotels & restaurants

7.8

0.7

-1.5

-2.6

-0.6

-2.5

-0.2

1.5

0.9

0.0

2.6

- Information & communication services

8.4

3.3

0.7

-1.4

1.6

1.4

1.8

1.2

0.5

1.8

1.9

15.3

9.7

8.0

6.9

10.3

9.0

5.7

6.5

2.4

4.6

3.6

- Real estate & renting

6.3

-2.1

5.3

-4.2

-2.2

6.7

21.3

10.4

-2.7

-16.0

-15.6

- Professional, scientific & technical services

4.8

2.0

1.0

-1.7

3.8

0.0

2.0

3.1

2.1

4.0

2.4

- Business services

2.9

4.4

-3.0

-4.9

-6.2

-0.8

0.0

5.4

7.9

9.6

6.4

10.8

1.7

2.8

9.4

16.5

-3.7

-9.6

-0.8

1.0

10.6

-3.6

- Healthcare & social welfare services

6.0

8.7

10.4

8.9

10.4

13.2

11.5

11.1

12.5

10.0

- Entertainment, cultural & sports services

2.9

2.2

-0.5

1.4

0.7

0.0

-3.8

-3.5

-0.1

-0.8

-0.4

- Membership organizations

3.8

0.1

-2.4

-3.8

-4.8

-1.4

2.4

1.3

6.0

7.9

4.3

- Sewerage & waste management

0.4

5.8

3.7

0.1

9.0

6.0

-0.2

7.2

5.3

7.5

4.5

- Financial & insurance services

- Educational services

Annual Annual

2010 1

1. Preliminary Source: Statistics Korea

Service activity in August is expected to increase from the previous month as temporary slowdown factors triggered by front-loaded fiscal spending in the first half have been removed and a recovery in the job market took hold. Changes in the number of employed (m-o-m, thousand) 267 (Mar 2010)

September 2010

401 (Apr)

586 (May)

314 (Jun)

473 (Jul)

7-1

Service industry Source: Statistics Korea (service industry activity trend)

7-2

Wholesale and retail sales Source: Statistics Korea (service industry activity trend)

7-3

July 2010 service industry by business Source: Statistics Korea (service industry activity trend)

Economic Bulletin

8. Employment The number of workers on payroll in July increased by 473,000 from a year earlier, while the employment rate (seasonally adjusted) rose by 0.5 percentage points year-on-year to 59.1 percent. By industry, employment in manufacturing (up 238,000), construction (up 118,000) and services (up 182,000) climbed while that of agriculture, forestry & fishery (down 40,000) declined. Hiring in manufacturing expanded at the highest pace since August 2000 as output in mining and manufacturing increased amid robust exports. The service sector continued to hire more workers amid domestic demand recovery and elevated consumption. By status of workers, wage workers (up 639,000) expanded growth as the number of regular workers (up 72,500) continued to increase while temporary workers (down 40,000) and daily workers (down 46,000) decelerated the decreasing pace. Non-wage workers (down 166,000) including self-employed workers (down 128,000) continued to decline.

2008

2009

Annual Annual Number of employed (million)

Jul

2010 Q2

May

Jun

Jul

23.58 23.51 23.83 22.90 23.74 23.75 23.63 23.04 24.17 24.31 24.28 24.30

Employment rate (%)

59.5

58.6

59.4

(seasonally adjusted)

59.5

58.6

Employment growth (y-o-y, thousand)

145

-72

-76

(Excluding agriculture, forestry & fishery)

182

-34

-54

- Manufacturing

-52

-126

- Construction

-37

57.4

59.3

59.1

58.7

57.0

59.6

60.0

59.8

58.8

58.6

58.7

58.5

58.3

58.9

59.1

58.9

59.1

-146

-134

-1

-6

132

433

586

314

473

-160

-109

110

296

51.8

673

353

513

-173

-163

-151

-143

-49

172

190

181

238

-91

-127

-43

-113

-103

-107

-61

118

- Services

260

179

240

154

261

313

325

460

126

182

- Agriculture, forestry & fishery

-37

-38

-22

-25

-116

-164

-85

-87

-39

-40

- Wage workers

236

247

226

175

356

385

371

623

770

457

639

路Regular workers

386

383

329

318

313

386

515

651

766

763

750

725

路Temporary workers

-93

-136

-5

125

105

-37

147

-116

-40

路Daily workers - Non-wage workers 路Self-employed workers

-57

-158

-195

-108

-133

-155

-235

-243

-185

-139

-177

-46

-92

-319

-302

-220

-309

-357

-391

-239

-189

-185

-143

-166

-79

-259

-229

-197

-286

-276

-279

-106

-91

-82

-85

-128

- Male

-30

-23

117

188

268

109

- Female

-103

-73

-124

-158

-34

-94

245

318

205

- 15 to 29

-119

-127

-112

-212

-99

-123

-77

-12

-58

-16

-85

-18

- 30 to 39

-26

-173

-202

-159

-213

-169

-149

-42

-13

-27

- 40 to 49

-24

-42

-27

-30

-46

-21

- 50 to 59

207

198

193

156

211

230

251

342

374

332

314

109

-44

114

162

- 60 or more Source: Statistics Korea

September 2010

8-1

Number of employed and employment growth Source: Statistics Korea (employment trend)

8-2

Share of employed by industry Source: Statistics Korea (employment trend)

8-3

Share of employed by status of workers Source: Statistics Korea (employment trend)

Economic Bulletin

The number of unemployed persons in July increased by 3,000 year-on-year to record 931,000 and the unemployment rate (seasonally adjusted) stood flat from a year earlier at 3.7 percent. By age, the unemployment rate edged up among people in their 20s and 40s as well as seniors aged 60 or more, albeit decreasing among other age brackets. The unemployment for youths aged 15 to 29 stayed at a similar level to the previous month, recording 8.5 percent.

2008 Annual Q3

2009

2010

Q4 Annual Jul

Number of unemployed (thousand)

769

752

757

889

928

908

943

886

817 1,130 868

Unemployment growth (y-o-y, thousand)

-14

-5

119

159

107

176

134

- Male

-12

115

116

83 -47

-1

-6

-1

139 -29

Unemployment rate (%)

3.2

3.1

3.6

3.7

3.8

3.6

3.3

4.7 3.5

(Seasonally adjusted)

3.2

3.6

3.7

3.5

3.9

3.7

3.5

- Youth aged 15 to 29

7.2

6.9

7.0

8.1

8.5

8.6

8.0

8.1

- Middle school graduate or under

2.2

2.1

2.5

2.3

2.9

2.6

- High school graduate

3.8

4.4

5.0

4.5

4.6

- College, univ. graduate or over

3.0

2.9

3.5

3.2

3.6

3.7

- Female

May Jun

Jul

793

878

931

222 -75 -145

-83

-88

-51

-22

-57

-32

3.2

3.5

3.7

4.3 3.4

3.2

3.5

3.7

7.6

9.5 7.7

6.4

8.3

8.5

2.2

2.3

5.1 2.5

2.3

2.6

2.8

4.6

4.0

5.0 3.8

3.4

4.0

4.3

3.3

3.2

4.2 3.6

3.4

3.5

Source: Statistics Korea

The economically inactive population in July was up 14,000 from a year earlier to post 15,380,000. Meanwhile, the labor force participation rate was up 0.4 percentage points yearon-year to 61.3 percent. The number of workers quitting jobs due to childcare (down 141,000) and reasons such as rest, time-off, and leisure (down 41,000) decreased. On the other hand, those who quit jobs due to housework (up 175,000) and old age (up 62,000) increased.

2008 Annual Q3

2009 Q4 Annual Jul

2010

May Jun

Jul

Economically inactive population (million) 15.25 15.15 15.37 15.70 15.37 16.09 15.35 15.53 15.83 16.25 15.49 15.43 15.42 15.38 Labor force participation rate (%)

61.5 61.8 61.3 60.6 61.7 59.7 61.7 61.3 60.7 59.8 61.8 61.9 62.0 62.1

(seasonally adjusted)

61.5 61.4 61.2 60.6 60.9 60.9 60.9 61.0 60.6 61.0 61.0 61.1 61.0 61.3

Growth in economically inactive population (y-o-y, thousand)

297

289

372

447

420

514

445

374

- Childcare

- Housework

148

129

131

125

100

235

237

175

148

246

175

- Old age

104

102

105

193

- Rest

-27

123

122

162

112

123 -187

-27

-64

-41

Source: Statistics Korea

September 2010

456

166

146

264

15 -118 -126 -124 -112 -141

8-4

Employment rate Source: Statistics Korea (employment trend)

8-5

Unemployment rate and youth unemployment rate Source: Statistics Korea (employment trend)

8-6

Economically active population Source: Statistics Korea (employment trend)

Economic Bulletin

9. Financial market 9.1 Stock market The Korean stock market in August fell with worries over slow global economic recovery. The KOSPI on August 3 hit a record high of 1,790.6 points this year as investment sentiment improved with the US ISM manufacturing index beating the expectations. After early August, however, concerns over global economy spread as the US Federal Open Market Committee (FOMC) downgraded the economic outlook and the US government released weak figures of employment, consumer spending and home sales. Slowed second quarter GDP growth in Japan added to concerns about the global economy. For the first time in three months, foreign investors shifted to a net-selling position, amounting to 0.6 trillion won, as uncertainties in the global economy boosted appetite for safe assets. (End-period, point, trillion won) KOSPI

KOSDAQ

Jul 2010

Aug 2010

Change

1,759.3

1,742.8

972.8

964.0

Average daily trade value

5.6

Foreign stock ownership

31.7

Stock price index Market capitalization

Jul 2010

Aug 2010

Change1

-16.6 (-0.9%)

481.5

464.7

-16.7 (-3.5%)

-8.9 (-0.9%)

87.4

84.9

-2.5 (-2.9%)

5.0

-0.6 (-10.7%)

1.5

0.0 (0.0%)

31.5

-0.2 (-0.6%)

8.5

8.6

+0.1 (+1.2%)

1. Change from the end of the previous month

9.2 Exchange rate The won/dollar exchange rate in August increased 15.4 won from 1,182.7 won at the end of July to wrap up the month at 1,198.1 won. Despite solid fundamentals including huge surpluses in the trade balance and the current account, the won/dollar exchange rate rose amid worries over global economic slowdown after the release of worsening economic data in the US. The won/yen exchange rate was up 55.1 won month-on-month as heightened concerns over global economic slowdown boosted appetite for safe assets, appreciating the yen. (End-period) 2006

2007

2008

2009

2010

Dec

Jul

Aug

Change1

Won/Dollar

929.8

936.1

1,259.5

1,164.5

1,182.7

1,198.1

-1.3

Won/100Yen

783.4

828.6

1,396.8

1,264.5

1,368.7

1,423.8

-3.9

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.

September 2010

9-1

Stock prices

9-2

Foreign exchange rate (month-end)

9-3

Recent foreign exchange rate

Economic Bulletin

9.3 Bond market Treasury bond yields plummeted in August with lingering uncertainties over domestic and overseas economies. Amid continuing worries over global economic slowdown spurred by sluggish economic data in the US, China and Japan, the bond yields fell due to solid demand for bonds with foreigners expanding their holding of long-term bonds. (End-period) 2006

2007

2008

2009

2010

Dec

Jun

Jul

Aug

Call rate (1 day)

4.60

5.02

3.02

2.01

2.03

2.28

CD (91 days)

4.86

5.82

3.93

2.88

2.46

2.63

2.66

Change1

Treasury bonds (3 yrs)

4.92

5.74

3.41

4.44

3.86

3.80

3.55

-25

Corporate bonds (3 yrs)

5.29

6.77

7.72

5.56

4.77

4.75

4.53

-22

Treasury bonds (5 yrs)

5.00

5.78

3.77

4.98

4.44

4.38

4.00

-38

1. Basis point changes in May 2010 from the previous month

9.4 Money supply & money market The M2 (monthly average) in June expanded 9.0 percent from a year earlier excluding cash management accounts (CMAs), which were included in M2 since July 2009. The year-on-year M2 growth accelerated in June from the previous month of 8.7 percent, driven by increasing money supply from the government including expanded fiscal spending and payments of matured bonds. (Percentage change from same period in previous year, average) 2008 M1

2009

2010

Annual

Jun

Jun1

-1.8

-12.4

-0.1

2.1

5.0

16.3

10.8

17.6

18.9

17.8

10.7

10.5

400

14.3

13.3

15.3

14.7

13.8

10.1

11.5

10.1

9.5

9.3

8.8

9.0

1,635

Lf 3

11.9

11.6

12.8

12.1

11.2

Upper 7

8.8

7.3

7.5

7.4

8.94

8.84

2,089

1. Balance at end June 2010, trillion won 2. M1 excluding corporate MMFs and individual MMFs while including CMAs 3. Liquidity aggregates of financial institutions (mostly identical with M3) 4. Preliminary

In July, bank deposits continued to expand while asset management company (AMC) deposits decreased. Bank deposits maintained the upward pace as the volume of time deposits increased due to higher interest rates following the key interest rate hike. Asset management company (AMC) deposits decreased significantly as VAT payments were made and fund inflows into money market funds (MMFs) were down. Increased redemption in equity funds with stock market rallies also contributed to a fall in AMC deposits. (Monthly change, end-period, trillion won) 2008

2009

2010

Annual

Jul

Annual

Jul

May

Jun

Jul

Jul1

Bank deposits

104.3

0.3

54.8

-0.6

18.6

5.4

3.5

1,048

AMC deposits

63.0

-0.3

-27.6

-2.2

4.2

-9.5

-6.5

323

1. Balance at end July, trillion won

September 2010

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 Korea’s current account surplus expanded in July to record US$5.88 billion thanks to robust exports. The goods account accelerated the surplus to post US$7.38 billion from the previous month’s US$6.35 billion due to robust exports of semiconductors and cars and expanded payments received for the delivery of exported ships. The service account deficit held steady to post US$1.66 billion from the previous month’s deficit of US$1.67 billion due to decreased payments for loyalties and business services although the travel account deficit expanded. The income account surplus expanded to US$440 million from US$330 million a month earlier while the current transfer account shifted to a deficit of US$230 million from the previous month’s US$30 million surplus. (US$ billion) 2008

2009

2010

Annual

Jun

Jul

Jan-Jul

Current account

-5.78

42.67

8.62

13.10

10.40

10.56

1.34

10.28

5.10

5.88

17.55

- Goods balance

5.67

56.13

8.31

17.58

14.70

15.54

7.43

15.65

6.41

7.38

30.53

- Service balance

-16.67

-17.20

-1.93

-4.17

-5.33

-5.77

-6.04

-4.17

-1.67

-1.66

-11.87

- Income balance

5.90

4.55

0.92

0.29

1.69

1.65

0.76

-0.75

0.33

0.44

- Current transfers

-0.67

-0.81

1.31

-0.60

-0.66

-0.86

-0.81

-0.45

0.03

-0.28

-1.55

Source: The Bank of Korea

Although banks’ repayments of loan increased, the capital and financial account in July contracted the deficit as foreign investors’ net-buying of Korean shares and bonds rose. Capital & financial account balance (US$ billion) 4.77 (Q4 2009)

5.71 (Q1 2010); 8.56 (Apr 2010)

-12.04 (May)

-1.23 (Jun)

-0.05 (Jul)

The direct investment account increased the net outflow to register US$1.9 billion from the previous month’s deficit of US$470 million as locals’ overseas investment increased. The portfolio investment account significantly expanded the net inflow to US$8.63 billion from US$1.89 a month earlier as foreigners bought more shares with expectations of Korea’s economic recovery. The financial derivatives account deficit shrank to post US$80 million from the previous month’s net outflow of US$450 million as losses from overseas financial derivative transactions decreased. The other investment account deficit expanded to US$6.7 billion from the previous month’s deficit of US$2.25 billion as banks’ repayments of short-term loan increased. The current account surplus in August is likely to decrease from the previous month to record around US$1.5 billion due to the contracting goods account surplus.

September 2010

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 Despite stabilized prices of industrial products, consumer prices in August increased 2.6 percent year-on-year and 0.3 percent month-on-month as prices of agricultural and livestock products and public utility charges increased. Core consumer prices, which exclude the prices of oil and agricultural products continued to stabilize with a year-on-year increase of 1.8 percent. Consumer prices for basic necessities, a barometer for perceived consumer prices, were up 2.6 percent compared to the same month of the previous year.

Consumer price inflation 2009

2010

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Month-on-Month (%)

0.4

0.1

-0.3

0.2

0.4

0.3

0.5

0.1

-0.2

0.3

Year-on-Year (%)

2.2

2.0

2.4

2.8

3.1

2.7

2.3

2.6

2.7

2.6

Core consumer prices(y-o-y)

3.1

2.7

2.6

2.5

2.2

2.1

1.9

1.5

1.6

1.7

1.8

(m-o-m)

0.1

0.2

0.1

0.2

0.1

0.2

0.3

0.2

Consumer prices for basic necessities (y-o-y)

1.3

1.7

1.5

2.3

3.3

3.8

3.4

2.9

3.2

3.0

2.8

2.7

2.6

Source: Statistics Korea

Although prices of livestock products stabilized with supply expansion, prices of agricultural and livestock products soared as seasonal factors including bad weather conditions pushed up prices for vegetables and fruits. Average temperature (Aug 1 to 20) 24.1â&#x201E;&#x192; (2010); 21.7â&#x201E;&#x192; (1971 to 2000)

Number of raining days (Aug 1 to 30, Taebaek area1) 21 (2010); 13 (2009) 1. North Eastern part of South Korea which usually has low rainfall Source: Korea Meteorological Administration

Prices of agricultural & livestock products in Aug (m-o-m, %) Radish (20.2), Chinese cabbage (15.0), spinach (46.6), lettuce (41.3), watermelon (39.8), peach (18.7), grape (-26.6), green onion (-9.3), chicken (-5.8)

Despite higher prices of some processed foods including sugar, overall prices of industrial products remained stable as prices of oil products fell. International oil prices (Dubai crude, US$/barrel) 73.6 (Feb 2010)

77.3 (Mar)

83.6 (Apr)

76.8 (May)

74.1 (Jun)

72.6 (Jul)

74.1 (Aug)

Won/dollar exchange rate (average) 1,157 (Feb 2010)

1,138 (Mar)

1,117 (Apr)

1,163 (May)

1,212 (Jun)

1,207 (Jul)

1,180 (Aug)

Public utility charges in August edged up from the previous month as the government raised electricity charges (up 2.0%) and other public utility charges. Personal service charges have risen for two consecutive months with an increase of 0.2 percent month-on-month.

Consumer price inflation in major sectors

Month-on-Month (%) Contribution (%p) Year-on-Year (%) Contribution (%p) Source: Statistics Korea

September 2010

Total

Agricultural, livestock & fishery products

0.3

2.8

0.0

-0.6

0.2

0.4

0.2

0.35

0.24

0.00

-0.04

0.02

0.06

Industrial products

Oil products

Housing rents

Public utility

Personal services

2.6

8.9

2.5

5.3

2.0

0.7

2.2

2.56

0.76

0.79

0.31

0.18

0.12

0.76

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

11-2 Consumer price inflation Source: Statistics Korea (consumer price trend)

11-3 Contribution to consumer price inflation Source: Statistics Korea (consumer price trend)

Economic Bulletin

11.2. International oil and commodity prices In August, international oil prices inched up month-on-month while domestic oil product prices edged down from the previous month. International oil prices (Dubai crude) in early August advanced up to the upper US$70 range as uncertainties over fiscal problems in the southern Europe eased. The increase, however, was limited during the month due to concerns over the possible slowdown of economic recovery in the US and other major countries. (US$/barrel, period average) 2007

2008

2009

Annual

Feb

Mar

Apr

May

Jun

Jul

Aug

Dubai crude

68.4

94.3

61.9

73.6

77.3

83.6

76.8

74.1

72.6

74.1

Brent crude

72.8

97.5

61.7

73.9

79.0

84.8

75.2

74.9

75.7

77.2

WTI crude

72.3

99.9

61.9

76.5

81.3

84.5

73.7

75.3

76.3

76.6

2010

Source: KOREAPDS

Record high oil prices (spot prices, US$/barrel) Dubai crude: 141 (Jul 4, 2008), Brent crude: 145 (Jul 3, 2008), WTI crude: 146 (Jul 14, 2008)

Although prices of international oil and oil products increased slightly, domestic prices of oil products edged down month-on-month as the wonâ&#x20AC;&#x2122;s value against the dollar stabilized. Won/dollar exchange rate (average) 1,207 (Jul 2010)

1,180 (Aug) (Won/liter, period average)

2007 Annual

2008 Annual

2009 Annual

Feb

Mar

Gasoline prices

1,526

1,692

1,601

1,664

1,691

Diesel prices

1,273

1,614

1,397

1,443

1,469

Apr

2010 May

Jun

Jul

Aug

1,725

1,732

1,715

1,722

1,716

1,507

1,522

1,509

1,518

1,513

Source: Korea National Oil Corporation

Prices of non-ferrous metals and grain in August increased due to robust demand in emerging markets such as China and concerns over supply disruption in major grain producing countries hit by aggravating weather conditions. Despite uncertainties over the pace of global economic recovery, prices of major non-ferrous metals such as tin and copper increased as Chinaâ&#x20AC;&#x2122;s demand for the metals remained strong. International prices of grain including wheat hiked with concerns over supply shortage due to a severe drought and the consequent ban on grain exports in Russia. Prices of non-ferrous metals and grain in Aug (m-o-m, %) Corn (8.8), wheat (23.5), soybean (6.3), raw sugar (7.0), copper (8.1), aluminum (5.7), nickel (9.7), lead (13.2), tin (13.7)

Reuters index*

(Period average)

2007

2008

2009

Annual

Feb

Mar

Apr

May

Jun

Jul

Aug

2,400

2,536

2,079

2,290

2,269

2,329

2,273

2,285

2,477

2,687

* A weighted average index of 17 major commodities Source: KOREAPDS

September 2010

2010

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

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

11-6 International commodity prices Source: Bloomberg (CRB) & The Bank of Korea (Reuters index) * CRB demonstrates futures price index of 21 commodities listed on the US Commodity Transaction Market, including beans and other crops, crude oil and jewelry.

Economic Bulletin

12. Real estate market 12.1 Housing market In August, nationwide apartment sales prices decreased 0.03 percent month-on-month. Apartment sales prices in the Seoul metropolitan area fell for the fifth consecutive month in August with a 0.5 percent decrease as market sentiment remained chilled. Apartment prices of Seoul retreated 0.5 percent in August while those in Gyeonggi province and Incheon decreased 0.6 percent and 0.3 percent, respectively. Meanwhile, apartment sales prices in areas excluding the Seoul metropolitan area continued to increase led by South Gyeongsang province (up 0.9%), Busan (up 0.8%) and North Jeolla province (up 0.6%). Apartment prices in 5 metropolitan cities and other cities advanced 0.4 percent from a month earlier.

Nationwide apartment sales prices

(Percentage change from previous period)

2006 2007

2008

Annual Annual

2009

2010

Mar

Apr

May Jun

Aug

0.0 -0.1

-0.0

Aug 21

Aug 91 Aug 161 Aug 231

Nationwide

13.8

2.1

2.3

1.6

0.9

0.3

0.2

Seoul

24.1

3.6

3.2

2.6

0.3

0.0

-0.2

-0.4 -0.6 -0.5

-0.5 -0.06 -0.10 -0.07 -0.14

Gangnam2

27.6

0.5

-1.9

3.9

0.2

0.0

-0.1

-0.4 -0.5 -0.5

-0.5 -0.08 -0.13 -0.06 -0.09

Gangbuk3

19.0

8.3

9.4

0.9

0.4

0.0

-0.3

-0.3 -0.6 -0.5

-0.4 -0.03 -0.07 -0.07 -0.19

24.6

4.0

2.9

0.7

0.2

0.0

-0.2

-0.4 -0.7 -0.7

-0.5 -0.06 -0.12 -0.08 -0.10

2.1

-0.6

1.0

2.8

1.9

0.7

0.8

Seoul metropolitan area 5 metropolitan cities 1. Weekly trends

2. Upscale area of Southern Seoul

0.1

Jul

0.6

0.5

0.4

0.00 -0.02

0.06

0.07

0.00

0.09

0.02

0.10

3. Northern Seoul Source: Kookmin Bank

Apartment rental prices in August were up 0.4 percent month-on-month led by areas excluding the Seoul metropolitan area due to strong seasonal demand during school vacation. In the Seoul metropolitan area, however, apartment rental prices remained stable with contracted transactions.

Nationwide apartment rental prices 2006 2007

(Percentage change from previous period) 2008

2009

Annual Annual Annual Annual Q4

Nationwide Seoul Gangnam

Gangbuk3 Seoul metropolitan area 5 metropolitan cities 1. Weekly trends

2010 Mar

Apr

May

Jun

Jul

Aug Aug 21 Aug 91 Aug 161 Aug 231

7.6

1.9

0.8

4.5

2.0

0.8

0.7

0.5

0.4

0.06

0.08 0.12

0.14

11.5

2.2

-1.8

8.1

2.3

0.7

0.5

0.3

0.2

0.1

0.2

0.01

0.04 0.08

0.14

11.3

0.5

-3.6

10.4

2.7

0.5

0.3

0.2

0.3

0.00

0.03 0.09

0.13

11.8

4.6

0.5

5.4

1.9

0.9

0.5

0.2

0.0

-0.1

0.1

0.02

0.04 0.07

0.16

11.7

2.1

-0.4

5.6

1.8

0.7

0.6

0.3

0.1

0.2

0.04

0.05 0.08

0.12

3.0

1.1

1.6

3.9

2.6

1.0

0.8

0.7

0.6

0.7

0.10

0.14 0.18

0.10

2. Upscale area of Southern Seoul 3. Northern Seoul Source: Kookmin Bank

Apartment sales transactions in July declined 5.1 percent from 65,197 a month earlier to post 61,878. The transactions were down 31.7 percent from a year earlier and 23.4 percent compared with the monthly average of 81,000 recorded in the same month for the past 3 years.

Apartment sales transactions 2007

(Monthly average, thousand)

2008

2009

Annual Annual Annual Jun Nationwide

Source: Korea Land & Housing Corporation

September 2010

2010

Jul

Aug

Sep

Oct

Nov Dec Jan Feb Mar 82

Apr

May

Jun

Jul

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 July remained unchanged month-on-month halting the upward trend in previous months. Land prices in July were 2.26 percent lower than the pre-crisis peak reached in October 2008. Land prices in the Seoul metropolitan area fell 0.04 percent from the previous month as Seoul (down 0.07%) accelerated the downward pace while Gyeonggi province (down 0.07%) and Incheon (down 0.07%) shifted to a decrease for the first time in 16 months. Land price increases in Seoul metropolitan area (m-o-m, %) 0.25 (Mar 2010)

0.15 (Apr)

0.11 (May)

0.03 (Jun)

-0.04 (Jul)

Also, land price increases in areas excluding the Seoul metropolitan area are steadily decelerating. Land price increases in areas excluding Seoul metropolitan area (m-o-m, %) 0.12 (Mar 2010)

0.11 (Apr)

0.09 (May)

0.07 (Jun)

0.06 (Jul)

Land prices by region 2007

(Percentage change from previous period) 2008

Annual Q4

Annual

2009 Q3

2010

Annual

Jan

Feb

Mar

Apr

May

Jun

Jul 0.00

Nationwide

3.88 1.15 -0.31 1.18

0.96

-1.20

0.35

0.88

0.94

0.25

0.23

0.21

0.14

0.10

0.05

Seoul

5.88 1.90 -1.00 1.59

1.40

-1.38

0.68

1.30

0.81

0.25

0.26

0.21

0.05

0.00

-0.03 -0.07

Gyeonggi

4.22 1.14 -0.26 1.28

1.22

-1.62

0.37

1.13

1.36

0.35

0.32

0.29

0.25

0.19

0.09 -0.01

Incheon

4.86 1.13

1.99

-1.39

0.53

1.16

1.70

0.45

0.33

0.30

0.21

0.17

0.06 -0.01

1.37 2.01

Source: Korea Land & Housing Corporation

Nationwide land transactions in July recorded 171,000 land lots, down 6.6 percent from the previous month, which is equivalent to 78.0 percent of a monthly average of 220,000 in the same month of the past 5 years. Land transactions decreased in all areas excluding North Gyeongsang province (up 23.4%) and South Jeolla province (up 9.3%) in terms of land lots.

Land sales transactions

(Land lot, thousand)

2007 2008

2009

Annual1 Annual1 Annual1 Nationwide

2010

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

208

203

222

206

226

212

207

241

170

168

213

203

177

183

171

Seoul

Gyeonggi

Incheon

Source: Korea Land & Housing Corporation 1. Monthly average

September 2010

12-4 Land and consumer prices since 1970s Source: Korea Land Corporation (land prices) & Statistics Korea (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 indices of business cycle indicators The cyclical indicator of coincident composite index increased 0.5 points month-on-month in July, showing the continuous upward trend of the economy since March 2009. Among components of coincident composite index, only the service activity index decreased while the other seven components such as the value of construction completed and the wholesale & retail sales index increased. Components of coincident composite index in July (m-o-m) Service activity index (-1.0), value of construction completed (2.7%), wholesale & retail sales index (2.0%), volume of imports (1.9%), mining & manufacturing production index (1.8%), domestic shipment index (1.6%), manufacturing operation ratio index (1.0%), number of non-farm payroll employment (0.2%)

The year-on-year leading composite index in July climbed 0.8 percentage points from the previous month but declined by 0.4 percentage point year-on-year due to last yearâ&#x20AC;&#x2122;s high base effect. Only the indicator of inventory cycle of the index went down, while the other seven components such as the value of construction orders received, the value of machinery orders received, and the value of capital goods imports were up. Components of the leading composite index in July (m-o-m) Indicator of inventory cycle (-3.5%p), value of construction orders received (13.8%), value of machinery orders received (4.3%), value of capital goods imports (2.7%), ratio of job openings to job seekers (2.6%p), consumer expectations index (2.2p), composite stock price index (0.7%), liquidity in the financial institutions (0.4%), net terms of trade index (0.0%), spreads between long & short term interest rates (0.0%p)

2010

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

Jan

Feb

Mar

Apr1

May1

Jun1

Jul1

0.8

1.2

0.9

0.7

0.8

0.9

99.3

100.0

100.6

101.1

101.4

101.7

102.2

(m-o-m, p)

0.4

0.7

0.6

0.5

0.3

0.5

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

0.3

-0.2

0.2

-0.2

0.5

0.4

0.8

12 month smoothed change in leading composite index (%)

11.3

10.3

9.7

8.6

7.9

7.1

6.7

(m-o-m, %p)

-0.3

-1.0

-0.6

-1.1

-0.7

-0.8

-0.4

1. Preliminary

September 2010

13-1 Cyclical indicator of coincident composite index Source: Statistics Korea

13-2 Leading composite index Source: Statistics Korea

13-3 Coincident and leading composite indices Source: Statistics Korea

Economic Bulletin

Policy Issues 2010 Tax Revision

Background Although the Korean economy posted a 7.6 percent growth in the first half of 2010, the fruit of the economic performance has not trickled down enough to the real economy. Against this backdrop, the Korean government prioritizes creating jobs and supporting the working class in revising the tax system : Corporations creating jobs will be given tax incentives, nonessential tax exemptions and reductions will be lifted to improve fiscal situation as there have been worries over narrowing tax base and welfare spending will be increased to prepare for an ageing society. In addition, the government revises the tax system in a way to avoid tax evasion.

Key revisions First, tax incentives are given to the companies creating jobs: 1) investment tax credit to be given on the basis of the number of people hired rather than on the basis of the amount of money invested, 2) up to 20 percent of tax reduction for the investment given to enterprises and those with FDI if they increase hiring, 3) industries with a significant labor-inducing effect to be added to the list of SMEs eligible for tax incentives, and 4) companies closing overseas business and returning to Korea to be offered income and corporate tax reductions at the same level as given to companies with FDI.

September 2010

Second, the tax revision is directed toward trickling down the economic recovery to the working class: 1) withholding tax rate for low income daily workers to be reduced from eight percent to six percent, 2) the tax deductions for small-and medium-sized businesses, such as credit card sales tax deduction and VAT deduction for restaurant owners on their purchase of agricultural and marine products, not to sunset until 2012, 3) new tax deduction to be introduced on the funds set up to guarantee cooperation between conglomerates and SMEs, 4) a sunset clause on tax credit given to companies offering cash settlement to SMEs to be extened until 2013, and 5) income tax deduction ceilings for donation to be raised. Third, the tax revision is aimed at supporting sustainable growth by nurturing new growth engines and increasing support to raise corporate competitiveness, and preparing for an ageing society: 1) R&D tax credit to be expanded to cover 3D technologies, next generation LCD technologies, and IT convergence technologies, 2) reduced tariff rates to be applied to the imports of materials and parts used in new growth engine related industries, 3) corporate restructuring-related tax incentives to be extended, 4) child tax credit given to households with more than two children to be doubled, and 5) tax credit for retirement pension and savings to be increased. Fourth, the tax revision is aimed at broadening the tax base by withdrawing unnecessary tax exemptions and reductions: 1) 16 out of 50 tax exemptions and reductions to expire, 2) sales tax credit for the reported sales increase to be abolished and tax exemptions for dividend yields given to long-term stock owners to sunset, 3) those who earn more than 0.5 billion won annually subject to bookkeeping investigation by tax accountants, and 4) VATs to be imposed on aesthetic plastic surgeries, veterinarian treatment, and private educational institutions for adults.

Details of measure â&#x2026; . Revisions to facilitate creating jobs

The current investment-centered tax incentives will be changed into tax incentives to support job creation, with which companies actively creating jobs will receive incentives. 1. Designing employment-friendly tax policies - Current investment tax credit will be replaced by a tax system that will facilitate job creation. - Ceilings on tax support for companies in special districts or with FDI will be set at around 50 percent to 70 percent of the investment amount. In cases where those companies increase employment, they will receive support of up to 20 percent of the personnel expenses. - In considering the standard for legal qualification as a small business, the current personnel-based standard will be replaced with a total sales-based standard, as the former

Economic Bulletin

may be a deterrent to job creation. - SMEs will be encouraged to expand flexible work hours with the different method to count part-time workers. - To help family businesses keep hiring at the time of inheritance, the scope of and requirement for inheritance tax exemptions will be expanded and eased. 2. Increasing support for industries with a high job-creation potential - Industries with a high employment inducement effect such as cleaning, security, market and public opinion survey, and personnel supply services will be considered as SMEs eligible for SME tax incentives. - Companies which close down foreign factories and return to Korea to establish businesses will receive income and corporate tax deductions of 100 percent for the first three years and 50 percent for the next two years. - To promote provincial economic activities, individual consumption tax exemptions for membership golf courses in the regions outside the Seoul and Gyonggi province will be extended from the end of 2010 to the end of 2012. 3. Supporting job creation for the vulnerable class - New tax incentives for employing handicapped persons will be adopted, by which companies will receive 50 percent income and corporate tax deduction for four years if conditions are met. - Social enterprises employing workers from vulnerable classes will be eligible for the minimum tax rate of 7 percent as are SMEs, along with the three year extension of the social enterprise tax exemption to the end of 2013. â&#x2026;Ą. Supporting low and middle income classes

1. Supporting low income class - The withholding tax rate for daily workers will be lowered from 8 percent to 6 percent. - College studentsâ&#x20AC;&#x2122; work scholarships will be non-taxable to prevent those students from losing basic livelihood support because of the income from the scholarship. 2. Supporting farmers, fishermen, and the handicapped - To stabilize the income of elderly farmers as well as to support farming, the transfer tax deduction for self-cultivated farmland which is eligible for farming transfer support will be extended form the end of 2010 to the end of 2012. - VATs for farmers and fishermen will be lowered by expanding the scope of agricultural machinery eligible for oil tax exemption and equipment and materials eligible for VAT refund. - The brewery business will be promoted by allowing more ingredients and additives. - Oil tax refund for small cars will be extended from the end of 2010 to the end of 2012. - Audio books will be included in the aids for the disabled, allowing such books the lowest tax bracket.

September 2010

3. Supporting small- and medium-sized businesses - Tax deduction for credit card payment will be extended from the end of 2010 to the end of 2012 to reduce the tax burden on small to medium sized businesses including accommodations and restaurants. Restaurants will be eligible for deemed input VAT until the end of 2012. - When small business owners who gave up their businesses restart business or get jobs, they are eligible for income tax or VAT exemptions of up to 5 million won applied to those without any property, and the tax exemption will be extended until the end of 2012. 4. Supporting small- and medium-sized enterprises (SMEs) - To encourage cooperation between large enterprises and SMEs as well as support SMEs, the new tax deduction of 7 percent for contributions to the Mutual Support Guarantee Fund will be introduced. - Corporate tax exemptions for dividend large enterprises receive on investment in partner SMEs will be extended from the end of 2010 to the end of 2013. - Tax exemptions given to large enterprises when they make cash or cash equivalent payments to SMEs will be extended until the end of 2013. - To support SME establishment and family business inheritance, tax deductions of 500 million won for up to 3 billion won SME startup donations and for up to 3 billion won stock donations for family business inheritance will be extended until the end of 2013, along with the low donation tax rate of 10 percent. - Smaller breweries will be eligible for a liquor license, which is expected to lower market entry for those breweries. 5. Encouraging donations - Income tax deduction rates for donations will be simplified from three levels to two levels, along with deduction ceilings for donations being raised from 20 percent of the donation to 30 percent for private donations and from 5 percent to 10 for corporate donations. - Bona fide stock donations made through non-profit organizations will be exempted from donation taxes even when the donation exceeds the share holding limitation on one company. â&#x2026;˘. Supporting sustainable growth

1. Nurturing future growth engines - Investment tax deductions for R&D of new growth engines and fundamental technologies, such as LED applications, biopharmaceuticals, and medical instruments will be increased to a level much larger than for general R&D investment. - Tariff rates for 46 primary raw materials and components used in new growth engine industries will be reduced, while 50 percent tariff reduction for digital TV broadcast equipment imported by broadcasting businesses will be extended from the end of 2010 to the end of 2012. - Tax incentives for low carbon, green growth technologies will be increased, with related

Economic Bulletin

technologies such as carbon reduction and environment-friendly vehicles becoming eligible for foreign investment tax reduction if conditions are met. - The VAT exemption for research services by Industry-Academic Cooperation Foundation in universities will be extended until the end of 2013. - The tax deduction of 3 percent for overseas resources development investment and that of 7 percent for facility investment to improve pharmaceutical quality control will be extended until the end of 2013. 2. Enhancing corporate competitiveness - The expiration of tax incentives to promote corporate structural reform will be pushed back 2 years to the end of 2013. - As the Korean International Financial Reporting Standards (K-IFRS) will be compulsory from 2011, the corporate tax acts will be revised to facilitate the adoption of the new standards. 3. Improving universitiesâ&#x20AC;&#x2122; financial health - Tax incentives for corporate investment in universities, which allow the investment to be counted as expenses if the investment is made by university-owned corporations of which the shares the universities hold 100 percent, will be extended until the end of 2013. - The suspension of the transfer tax incurred in case of for-profit asset transactions by universities will be extended until the end of 2013. - The VAT exemption for private investment in building private university facilities will be extended until the end of 2012. 4. Dealing with low birth rates and an ageing society - Households with more than two children will receive tax deduction of 1 million won, an increase from 500,000 won, and two million won per child from the third child. - Tax deduction for investment in building welfare facilities including at-work childcare facilities will be increased from 7 percent to 10 percent, along with 7 percent tax deduction for building rest and sport facilities at work place. - The pension tax deduction will be increased from 3 million won to 4 million won. - The tax deduction for lump-sum retirement payments will be reduced from 45 percent to 40 percent to encourage transferring into a pension program. - To improve welfare for the elderly, nursing homes will be eligible for SME special tax reduction of 5 to 30 percent. â&#x2026;Ł. Revisions to improve fiscal situations

1. Broadening tax base by encouraging honest reporting - Those who are obliged to issue receipts for cash payment and earn 0.5 billion won a year are responsible for proving the reliability of their bookkeeping by tax accountants when they report their income. - Income tax reductions for education and medical fees given to self employed business owners will not sunset as scheduled at the end of 2010, but be effective until the end of

September 2010

2012, if conditions are met: the owners need to accept credit cards, issue receipts for cash payment, use double-entry bookkeeping, and honestly report their income. In addition, if those responsible for double-entry bookkeeping do not practice what is required, they will be subject to more tax with halved tax reduction for essential business expenses. - The tax rate applied to business owners for not issuing receipts will be increased from additional 1 percent to 2 percent, while those who make fake receipts are subject to 2 percent additional tax. - Those who write fake contracts to avoid the real estate transfer tax will not be eligible for tax exemption or reduction related to the transactions, which will help the reporting of real estate transaction based on market price take hold. 2. Lifting unnecessary tax exemptions and reductions - Tax exemptions and reductions will be lifted or revised when their purposes have been achieved, and their effect is not satisfactory. The tax exemptions and revision will be revised in a way to help create jobs and nurture green growth engines. - Investment tax deductions on the basis of the amount of money will be replaced with the investment tax deductions based on the jobs the investment can create. - Tax deductions for facility investment will be given to limited number of companies. - Sales tax credit for the reported sales increase will expire. - Individual consumption tax exemptions will be abolished for luxurious restaurants. - Tax exemptions for dividend yields from stocks owned for more than three years will sunset. - Tax credits for ship fund, scheduled to expire at the end of 2010, will be extended until the end of 2013, while the size of the funds eligible for the tax credit will be reduced from 0.3 billion won to 0.1 billion won. - Investment tax credits for venture funds or companies will expire. - Transportation tax credits will be reduced for bio-diesel consumption, while bio-diesel made from recycled cooking oil will receive tax exemption until the end of 2012. - Stock transactions by Korea Post will be taxed. - Tariff reduction on imports of national defense products and plane navigation products will be abolished. 3. Introducing new taxes - VAT will be adopted to aesthetic plastic surgeries, veterinarian treatment, and education by private institutions for adults. - Individual consumption tax will be applied when purchasing off site tickets for horse, bicycle, and boat racings

Economic Bulletin

Economic News Briefing

IMF expands credit line as part of the G-20 discussions On August 30, the International Monetary Fund (IMF) expanded and enhanced its lending facilities to help prevent financial crises. As part of the efforts to enhance the organization’s crisis-prevention mechanism, the IMF decided to double the duration of the credit line, remove the cap on lending under the existing Flexible Credit Line (FCL) and establish a new Precautionary Credit Line (PCL) for members with sound policies who nevertheless may not meet the FCL’s high qualification requirements. These reforms come as the G-20 has made the strengthening of the global financial safety net one of the agenda items for the G-20 Summit in November. The Korean government has taken a leading role in advancing this issue.

Korea grows 1.4% in the second quarter (Preliminary) Korea’s real GDP grew 1.4 percent in the second quarter of 2010 (preliminary) compared to the previous quarter. This is a 0.1 percentage point downward revision from the advance estimates released on July 26.

September 2010

On the production side, the manufacturing sector was up 5.2 percent from the previous quarter thanks to the growth in machinery equipment, fabricated metal products and automobile manufacturing. On the expenditure side, private consumption rose by 0.8 percent while facility investment and exports of goods continued robust growth by increasing 9.1 percent and 7.0 percent, respectively.

(Percentage change from previous period)

2008

2009

20101

Annual

GDP

2.3

0.2

2.4

3.2

0.2

2.1(8.1) 2

1.4 (7.2)

Agriculture, forestry and fishery

5.6

1.6

-0.1

-0.4

2.9

0.4

-4.9 (-1.9)

0.1 (-2.2)

Manufacturing

2.9

-1.6

-2.5

8.0

9.4

-1.7

4.2 (20.7)

5.2 (18.0)

Construction

-2.5

1.9

4.4

1.2

-1.0

-0.6

1.9 (1.5)

-0.9 (-0.5)

Services3

2.8

1.0

0.3

1.0

0.9

1.6 (4.4)

0.1 (3.6)

Private consumption

1.3

0.2

0.3

3.3

1.7

0.4

0.7 (6.3)

0.8 (3.7)

Government consumption

-2.4

5.8 (3.8)

0.1 (3.2)

4.3

5.0

2.9

0.7

0.0

Facility investment

-1.0

-9.1

-10.5

9.0

10.8

5.3

2.4 (29.9)

9.1 (29.0)

Construction investment

-2.8

4.4

5.9

1.8

-0.7

-0.1

1.3 (2.3)

-3.6 (-2.9)

Goods exports4

4.6

0.0

-1.7

13.5

5.1

-1.5

3.7 (21.6)

7.0 (14.9)

Goods imports

4.5

-7.9

-5.8

8.7

8.0

-1.3

5.1(21.8)

9.5 (22.1)

-1.2

1.7

0.1

4.7

1.4

2.8

1.1 (9.2)

0.5 (6.0)

GDI

*At 2005 chained prices in seasonally adjusted terms 1. Preliminary 2. Percentage changes from the same period in the previous year in original terms 3. Wholesale & retail sales, hotels & restaurants, transportation & storage, communication services, financial & insurance services, real estate & renting, business services, public administration, defense & social security, educational services, healthcare & social welfare services, entertainment, cultural & sports services and other services are included. 4. FOB basis

IMF upgrades Koreaâ&#x20AC;&#x2122;s growth forecast for 2010 The International Monetary Fund (IMF) on September 1 upgraded its 2010 growth forecast for the Korean economy to 6.1 percent from 5.75 percent projected in July. The IMF assessed that Koreaâ&#x20AC;&#x2122;s growth has rebounded impressively since the global recession in the second half of 2008 primarily thanks to supportive macroeconomic and financial sector policies. According to the organization, inflationary pressures and asset prices in Korea remain although capital inflows have rebounded with the country and other Asian economies leading the global economic recovery. In addition, Korean banks have raised their average capital adequacy ratio to 14.6 percent, up 2 percentage points from the pre-crisis level and foreign exchange reserves have risen by close to US$75 billion from their lows during the crisis, standing at US$274 billion as of the end of June 2010.

Economic Bulletin

Korea and Bolivia hold summit in Seoul President Lee Myung-bak and Bolivian President Juan Evo Morales Ayma held a summit in Seoul on August 26, 2010. At the summit, the Presidents had discussions on ways to enhance cooperation in various areas such as trade and investment, resources and industrial development as well as international affairs. In particular, the two presidents signed a memorandum of understanding (MOU) on the research and development of the lithium reserve in Bolivia, which is expected to contribute to a stable supply of lithium to Korea.

Korea and Peru reach free trade deal On August 30, Korea and Peru finalized the free trade agreement (FTA) after five rounds of negotiations that started in March 2009. Under the trade deal, all tariffs between the two nations will be eliminated within 10 years. The two countries acknowledged that the KoreaPeru FTA creates an institutional framework and favorable environment for trade and investment, providing better market access as well as giving incentives to promote foreign direct investment (FDI). Both sides agreed to promptly proceed with initialing, signing, and other follow-up measures to bring the Korea-Peru FTA into effect.

Bank of Korea to introduce Monetary Stabilization Accounts The Bank of Korea (BOK) decided to introduce market-friendly Monetary Stabilization Accounts (MSAs) to carry out liquidity absorption operations, complementing the existing Monetary Stabilization Bonds (MSBs). As non-residents’ investments in domestic securities increased, the scale of liquidity adjustment should be widened. However, the augmentation of MSB issuance may lead to difficulties in flexible liquidity adjustments. In particular, market’s appetite for MSBs might fall short of the expanded issuance volume. And if the BOK responded to this market situation by offering higher yields on newly-issued MSBs, this could have adverse effects on market interest rates and the central bank’s bottom line. The operation of market-friendly MSAs as a new monetary policy tool is expected to support smooth liquidity management operations and to ease mounting pressures on MSB issuance.

September 2010

Korea offers more incentives to enhance free economic zones The Ministry of Knowledge Economy on September 1 announced measures to stimulate foreign investments in free economic zones (FEZs). Under the new plan, the government will give more incentives to foreign investors operating business in FEZs and enhance supervision on the zones. For instance, each FEZ will be required to sell or lease at least 10 percent of its industrial sites to foreign firms. Currently, only foreign firms in manufacturing, tourism, distribution, medical services and research & development are offered this benefit. The government also plans to include engineering and IT businesses in industrial sectors eligible for tax reductions for foreign investing firms. In addition, the government will ease regulations on foreign education and medical facilities in the FEZs.

Korea eases regulations to boost housing market Korea unveiled a package of policy measures to bolster the housing market on August 29. According to the plan, the debt-to-income ratio (DTI) restriction will be temporarily suspended until March 2011 for those who own only one residence or none and plan to buy a home costing no more than 900 million won outside the three speculative districts in southern Seoul. In addition, the waiver for capital gain tax will be extended for two years until 2012 and low rates for acquisition & registration tax will be maintained for one additional year. The government will also provide up to 200 million won in low interest loans for first-time home buyers and expand the amount of easy loans provided to those who look for rental homes. Meanwhile, the government will issue 3 trillion won worth of primary collateralized bond obligations (P-CBO) and collateralized loan obligations (CLO) to help small-sized construction companies avoid temporary financial distress.

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 indices of business cycle indicators and BSI 9. Balance of payments (I) 10. Balance of payments (II) 11. Prices 12. Employment 13. Financial indicators 14. Monetary indicators 15. Exchange rates

Economic Bulletin

1. National accounts (year-on-year change, %, chained 2005 year prices) Real GDP Period

2003 2004 2005 2006 2007 2008 2009P

Gross fixed capital formation

Final consumption expenditure

Agri., fores. & fisheries

Manufacturing

2.8 4.6 4.0 5.2 5.1 2.3 0.2

-5.4 9.1 1.3 1.5 4.0 5.6 1.6

5.4 10.0 6.2 8.1 7.2 2.9 -1.6

0.5 1.0 4.6 5.1 5.1 2.0 1.3

Construction

Facilities

4.4 2.1 1.9 3.4 4.2 -1.9 -0.2

8.5 1.3 -0.4 0.5 1.4 -2.8 4.4

-1.5 3.8 5.3 8.2 9.3 -1.0 -9.1

2003

I II III IV

3.5 1.8 2.0 3.9

0.7 -1.6 -9.6 -8.0

5.4 3.1 4.3 8.5

2.0 0.3 0.0 -0.4

5.1 4.7 2.8 5.0

8.2 8.4 8.3 9.0

2.9 -0.7 -5.8 -2.2

2004

I II III IV

5.2 5.9 4.8 2.7

8.2 7.6 8.3 11.6

10.9 12.9 10.4 6.2

-0.1 1.3 1.0 1.8

2.3 4.9 3.1 -1.4

5.3 4.2 1.2 -3.5

-0.6 6.4 7.7 1.8

2005

I II III IV

2.7 3.4 4.5 5.1

0.4 4.8 3.8 -3.1

4.8 3.9 6.7 9.3

2.7 4.7 5.9 4.9

-0.3 1.8 1.5 3.9

-3.1 0.9 -0.3 0.3

3.4 2.8 4.1 10.8

2006

I II III IV

6.1 5.1 5.0 4.6

3.9 -0.3 -1.4 4.2

9.4 9.1 8.7 5.4

5.8 4.9 4.6 5.1

3.8 0.1 4.0 5.7

1.9 -4.2 -0.5 5.1

7.2 8.0 12.0 5.7

2007

I II III IV

4.5 5.3 4.9 5.7

1.6 7.0 8.2 -0.7

4.5 7.2 6.3 10.2

5.1 5.4 5.3 4.7

7.3 5.7 1.5 3.1

4.4 2.0 -0.2 0.4

12.6 13.0 4.0 8.0

2008

I II III IV

5.5 4.4 3.3 -3.3

7.8 4.6 4.3 6.5

8.9 8.3 5.3 -9.4

4.3 3.0 2.4 -1.7

-0.6 0.6 2.1 -8.7

-2.5 -0.5 0.4 -7.7

2.8 2.0 5.3 -13.3

2009P

I II III IV

-4.3 -2.2 1.0 6.0

1.5 -1.3 3.3 2.8

-13.6 -7.2 1.7 13.0

-2.0 0.7 1.7 4.7

-7.4 -2.3 0.4 7.1

2.8 5.1 4.4 5.0

-23.1 -17.3 -7.0 13.3

2010P

I II

8.1 7.2

-1.9 -2.3

20.7 18.0

5.7 3.6

11.4 6.4

2.3 -2.9

29.9 30.2

P: Preliminary Source: The Bank of Korea

September 2010

Growth rate by economic activity

Growth rate by expenditure on GDP

Economic Bulletin

2. Production, shipment and inventory See graphs 6-1, 6-3, 7-1, 7-2 & 7-3 (constant prices, 2005 = 100)

Period

2008 2009

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 (%)

119.8 118.9

3.4 -0.8

118.3 116.3

2.6 -1.7

125.5 115.5

7.1 -8.0

116.1 118.4

3.6 2.0

2008

I II III IV

121.9 125.5 119.6 112.4

11.2 9.2 5.9 -11.0

119.8 123.0 118.0 112.4

9.3 6.8 5.5 -9.9

123.6 133.2 132.0 125.5

8.4 16.3 17.1 7.1

114.0 116.0 116.4 118.1

6.8 4.3 3.4 0.0

2009

I II III IV

102.8 117.8 124.7 130.5

-15.7 -6.1 4.3 16.2

101.9 115.9 120.5 126.8

-14.9 -5.8 2.1 12.8

115.9 110.6 113.3 115.5

-6.2 -16.9 -14.2 -8.0

113.7 118.8 118.6 122.5

-0.3 2.4 1.9 3.7

2010

I IIP

129.3 139.7

25.8 19.5

124.1 134.7

21.8 17.1

123.6 127.2

6.6 15.2

120.2 123.6

5.7 4.0

2008

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

126.3 111.1 128.3 126.5 126.5 123.5 123.4 116.2 119.1 126.7 110.3 100.0

12.0 10.9 10.9 11.2 9.2 7.3 8.9 2.2 6.7 -1.5 -13.6 -18.4

121.9 109.9 127.6 124.8 123.7 120.5 121.6 114.7 117.6 124.2 109.8 103.2

10.5 8.1 9.2 8.9 6.6 4.9 8.0 2.0 6.3 -1.7 -12.9 -15.1

123.9 124.3 123.6 124.6 128.7 133.1 132.4 132.1 132.0 134.7 133.2 125.5

4.5 7.5 8.4 11.4 12.7 16.2 14.5 14.3 17.1 17.1 15.9 7.1

114.3 109.6 118.1 116.1 116.7 115.1 117.4 114.2 117.5 118.9 113.3 122.2

8.0 6.6 6.0 6.1 4.1 2.7 4.7 1.2 4.2 3.1 -2.0 -1.0

2009

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

93.8 99.8 114.7 116.1 115.0 122.2 124.3 117.4 132.3 127.0 130.3 134.2

-25.7 -10.2 -10.6 -8.2 -9.1 -1.1 0.7 1.0 11.1 0.2 18.1 34.2

93.1 99.4 113.3 114.7 112.8 120.1 120.0 113.5 127.9 123.4 126.8 130.2

-23.6 -9.6 -11.2 -8.1 -8.8 -0.3 -1.3 -1.0 8.8 -0.6 15.5 26.2

123.7 117.6 115.9 112.4 111.4 110.6 112.3 112.8 113.3 112.6 113.7 115.5

-0.2 -5.4 -6.2 -9.8 -13.4 -16.9 -15.2 -14.6 -14.2 -16.4 -14.6 -8.0

112.4 109.5 119.2 119.9 118.5 118.0 118.1 115.5 122.3 118.3 118.1 131.0

-1.7 -0.1 0.9 3.3 1.5 2.5 0.6 1.1 4.1 -0.5 4.2 7.2

128.5 118.7 140.7 139.4 139.9 143.1 143.6

37.0 18.9 22.7 20.1 21.7 17.1 15.5

123.0 113.7 135.6 134.9 134.2 138.2 137.1

32.1 14.4 19.7 17.6 19.0 15.1 14.3

119.2 122.5 123.6 124.6 127.9 127.9 132.5

-3.6 4.2 6.6 10.9 14.8 15.6 18.0

117.3 117.5 125.8 124.4 122.9 123.6 122.1

4.4 7.3 5.5 3.8 3.7 4.7 3.4

2010

1 2 3 4 5P 6P 7P

P: Preliminary Source: Statistics Korea

September 2010

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

Period

Y-o-Y change (%)

Operation ratio index (2005=100)

Y-o-Y change (%)

Average operation ratio (%)

115.3 118.9

5.1 3.1

97.2 93.5

-3.2 -3.8

77.5 74.6

Production capacity index (2005=100)

2008 2009 2008

I II III IV

113.8 115.1 116.0 116.4

5.9 6.3 5.3 3.4

99.3 103.1 95.5 91.1

2.2 0.5 -0.7 -13.6

81.5 80.8 78.3 69.6

2009

I II III IV

116.8 117.8 119.7 121.1

2.6 2.3 3.2 4.0

81.4 94.6 97.8 100.3

-18.0 -8.2 2.4 10.1

66.9 74.2 78.8 78.4

2010

I IIP

122.7 124.6

5.1 5.8

97.7 106.5

20.0 12.6

80.5 83.0

2008 1 2 3 4 5 6 7 8 9 10 11 12

113.8 113.8 113.9 114.3 115.4 115.7 115.7 116.0 116.2 116.3 116.3 116.7

6.2 5.9 5.8 5.9 6.7 6.2 5.5 5.3 4.9 3.6 3.4 3.3

103.2 89.5 105.1 104.7 103.3 101.2 99.8 92.2 94.5 104.1 89.4 79.7

3.4 1.5 1.4 3.2 -0.6 -1.3 1.5 -4.6 0.7 -4.8 -16.8 -20.1

82.1 80.6 81.7 82.1 80.1 80.1 79.3 78.3 77.3 76.9 69.1 62.8

2009 1 2 3 4 5 6 7 8 9 10 11 12

116.8 116.7 117.0 117.6 117.6 118.3 119.1 119.5 120.4 120.6 120.8 121.9

2.6 2.5 2.7 2.9 1.9 2.2 2.9 3.0 3.6 3.7 3.9 4.5

73.5 79.5 91.1 93.4 92.6 97.9 98.6 91.1 103.6 99.1 100.6 101.1

-28.8 -11.2 -13.3 -10.8 -10.4 -3.3 -1.2 -1.2 9.6 -4.8 12.5 26.9

62.8 67.7 70.3 72.4 73.6 76.6 78.7 77.7 79.9 77.3 78.2 79.6

2010

122.1 122.4 123.6 123.8 124.8 125.3 126.7

4.5 4.9 5.6 5.3 6.1 5.9 6.4

97.4 88.4 107.2 106.6 104.8 108 106.8

32.5 11.2 17.7 14.1 13.2 10.3 8.3

78.9 80.3 82.4 82.2 82.8 83.9 84.8

1 2 3 4 5P 6P 7P

P: Preliminary Source: Statistics Korea

Economic Bulletin

4. Consumer goods sales index See graphs 2-2, 2-3, 2-4 & 2-5 (constant prices, 2005 = 100)

Period

2008 2009

Consumer goods sales index

Y-o-Y change (%)

Durable goods

Y-o-Y change (%)

Semi-durable goods

Y-o-Y change (%)

Non-durable goods

Y-o-Y change (%)

110.6 113.5

1.1 2.6

126.4 136.7

1.6 8.1

104.9 105.2

-3.0 0.3

110.0 111.3

1.4 1.2

2008

I Il III IV

111.5 111.7 108.8 110.4

4.5 2.9 1.4 -4.2

129.9 134.1 125.8 115.7

8.7 8.0 -0.1 -9.6

103.6 107.2 94.0 115.0

4.0 -2.7 0.3 -10.7

109.2 108.8 112.3 109.5

2.3 1.3 1.5 0.2

2009

I II III IV

106.3 113.4 111.9 122.3

-4.7 1.5 2.8 10.8

114.4 141.8 135.7 154.9

-11.9 5.7 7.9 33.9

102.0 106.6 93.3 118.9

-1.5 -0.6 -0.7 3.4

107.7 109.3 114.4 114.0

-1.4 0.5 1.9 4.1

2010

I IIP

116.8 118.9

9.9 4.9

148.1 149.4

29.5 5.4

104.8 114.0

2.7 6.9

111.3 113.1

3.3 3.5

2008 1 2 3 4 5 6 7 8 9 10 11 12

111.7 107.3 115.4 113.4 115.1 106.5 109.6 106.2 110.7 109.7 108.9 112.7

5.4 3.5 4.6 6.3 3.3 -0.7 4.2 2.2 -1.8 -3.3 -4.6 -4.8

128.3 117.8 143.6 139.1 136.0 127.1 140.7 121.5 115.2 123.9 108.9 114.4

8.1 6.1 11.4 15.6 7.9 0.6 7.9 -4.7 -3.8 -0.5 -15.3 -12.5

104.4 97.8 108.5 108.5 112.1 100.9 97.6 86.2 98.1 111.6 120.3 113.1

6.7 7.2 -1.3 -2.8 -3.7 -1.8 3.5 8.8 -8.9 -10.1 -7.7 -14.3

108.8 108.4 110.5 109.5 112.3 104.5 106.1 112.0 118.8 106.6 107.7 114.3

4.3 0.6 2.2 4.5 2.0 -2.7 1.0 2.0 1.6 -2.2 1.2 1.5

2009 1 2 3 4 5 6 7 8 9 10 11 12

108.5 100.9 109.4 108.6 117.0 114.6 110.9 106.7 118.1 120.4 119.5 127.0

-2.9 -6.0 -5.2 -4.2 1.7 7.6 1.2 0.5 6.7 9.8 9.7 12.7

103.9 115.8 123.6 123.7 144.0 157.8 138.3 122.7 146.0 144.7 153.2 166.8

-19.0 -1.7 -13.9 -11.1 5.9 24.2 -1.7 1.0 26.7 16.8 40.7 45.8

102.6 96.1 107.4 108.3 112.1 99.4 94.3 85.6 100.1 114.9 120.7 121.2

-1.7 -1.7 -1.0 -0.2 0.0 -1.5 -3.4 -0.7 2.0 3.0 0.3 7.2

114.8 99.0 109.2 107.1 113.0 107.8 111.1 112.9 119.1 116.8 109.3 116.0

5.5 -8.7 -1.2 -2.2 0.6 3.2 4.7 0.8 0.3 9.6 1.5 1.5

2010

116.0 114.1 120.2 116.5 121.3 118.9 120.4

6.9 13.1 9.9 7.3 3.7 3.8 8.6

145.6 140.1 158.6 144.1 146.7 157.5 163.4

40.1 21.0 28.3 16.5 1.9 -0.2 18.1

107.3 98.6 108.5 112.7 120.5 108.9 103.2

4.6 2.6 1.0 4.1 7.5 9.6 9.4

108.8 112.2 112.8 110.6 116.2 112.4 114.9

-5.2 13.3 3.3 3.3 2.8 4.3 3.4

1 2 3 4 5P 6P 7P

P: Preliminary Source: Statistics Korea

September 2010

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

Period

2008 2009

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

Durable goods

Y-o-Y change (%)

Non-durable goods

Y-o-Y change (%)

Consumer sentiment index

114.8 115.5

1.6 0.6

126.8 133.9

1.8 5.6

109.9 108.1

1.4 -1.6

2008

I II III IV

117.5 115.7 113.8 111.9

5.8 4.2 2.2 -5.7

133.3 136.5 123.0 114.4

11.3 11.4 0.1 -13.9

111.1 107.4 110.1 111.0

3.3 0.9 3.2 -1.8

2009

I II III IV

106.7 114.1 118.8 122.5

-9.2 -1.4 4.4 9.5

112.7 138.0 138.0 147.0

-15.5 1.1 12.2 28.5

104.3 104.5 111.1 112.6

-6.1 -2.7 0.9 1.4

2010

I IIP

117.6 119.2

10.2 4.5

136.1 139.8

20.8 1.3

110.2 111.0

5.7 6.2

2008 1 2 3 4 5 6 7 8 9 10 11 12

125.4 106.5 120.6 119.8 115.7 111.7 117.8 111.7 112.0 119.7 107.0 109.1

9.1 2.1 5.7 7.3 2.4 2.9 7.4 -1.1 0.6 -1.6 -9.3 -6.3

132.6 123.1 144.2 144.2 136.9 128.5 134.3 118.6 116.1 127.7 111.0 104.4

12.4 8.3 12.8 20.3 9.3 5.0 8.0 -5.1 -2.8 -6.4 -15.8 -19.8

122.5 99.8 111.1 110.1 107.2 105.0 111.1 108.9 110.3 116.6 105.4 111.0

7.8 -0.7 2.3 1.7 -0.7 2.0 6.9 0.7 2.1 0.8 -6.2 0.1

84 96 96 88 84 81

2009 1 2 3 4 5 6 7 8 9 10 11 12

106.4 102.7 110.9 111.3 112.7 118.2 118.1 110.0 128.2 120.2 118.8 128.4

-15.2 -3.6 -8.0 -7.1 -2.6 5.8 0.3 -1.5 14.5 0.4 11.0 17.7

98.6 115.1 124.4 119.1 138.9 156.1 144.3 124.6 145.0 138.8 146.0 156.1

-25.6 -6.5 -13.7 -17.4 1.5 21.5 7.4 5.1 24.9 8.7 31.5 49.5

109.5 97.7 105.6 108.2 102.2 103.0 107.7 104.2 121.5 112.7 107.9 117.3

-10.6 -2.1 -5.0 -1.7 -4.7 -1.9 -3.1 -4.3 10.2 -3.3 2.4 5.7

84 85 84 98 105 106 109 114 114 117 113 113

2010 1 2 3 4 5 6 7 8

122.3 109.5 121.0 119.5 116.3P 121.8P 120.9P -

14.9 6.6 9.1 7.4 3.2P 3.0P 2.4P -

135.5 129.1 143.8 135.2 135.5P 148.6P 145.9P -

37.4 12.2 15.6 13.5 -2.4P -4.8P 1.1P -

117.0 101.7 111.9 113.2 108.7P 111.1P 110.9P -

6.8 4.1 6.0 4.6 6.4P 7.9P 3.0P -

113 111 110 110 111 112 112 110

P: Preliminary Source: Statistics Korea & The Bank of Korea

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

2009

Estimated facility investment index (2005=100)

Domestic machinery shipment excluding ship (2005=100)

Total

Public

Private

20,718

3,735

16,983

9,111

109.3

110.4

Manufacturing

2009

I ll III IV

5,033 4,942 5,591 5,152

932 696 1,345 763

4,101 4,246 4,246 4,389

1,992 2,212 2,321 2,586

97.0 110.4 107.7 122.2

98.7 112.7 107.5 122.6

2010

I llP

5,563 6,136

525 409

5,038 5,727

2,956 3,509

121.7 137.5

119.6 147.7

2009 1 2 3 4 5 6 7 8 9 10 11 12

1,575 1,682 1,775 1,457 1,377 2,108 2,494 1,340 1,757 1,541 1,942 1,669

232 518 181 91 96 508 1,073 71 200 84 433 246

1,344 1,164 1,594 1,366 1,280 1,600 1,421 1,268 1,557 1,458 1,509 1,422

714 531 746 678 658 883 754 653 914 836 941 810

89.0 95.8 106.1 105.0 107.0 119.1 101.9 100.7 120.4 112.4 121.4 132.9

85.2 97.8 113.1 110.9 104.2 123.0 107.5 98.2 116.8 109.1 116.3 142.3

2010

1,752 1,630 2,181 1,823 2,168 2,145 1,953

169 107 249 127 122 160 106

1,583 1,523 1,932 1,696 2,046 1,986 1,848

1,010 880 1,065 1,053 1,331 1,125 1,087

107.6 114.5 142.9 131.9 133.0 147.5 136.0

111.6 105.7 141.5 143.1 145.7 155.3 144.8

-11.8

61.7

-19.9

-27.2

-8.2

-5.2

1 2 3 4 5P 6P 7P

Y-o-Y change (%) 2009 2009

I ll III IV

-35.5 -17.7 3.4 20.0

150.8 29.9 280.2 -27.2

-44.8 -22.3 -16.0 35.2

-59.1 -27.6 -19.4 51.5

-18.3 -12.9 -9.9 10.0

-12.7 -8.0 -6.4 6.4

2010

I llP

10.5 24.2

-43.7 -41.2

22.9 34.9

48.4 58.6

25.5 24.5

21.2 31.1

2009 1 2 3 4 5 6 7 8 9 10 11 12

-49.1 -27.5 -25.5 -27.4 -25.4 -2.0 6.1 -19.6 26.5 -7.9 56.2 21.2

56.5 661.0 16.8 -4.1 8.9 44.5 498.5 -17.4 127.5 -79.0 110.1 -44.5

-54.4 -48.3 -28.4 -28.5 -27.1 -11.1 -34.6 -19.7 19.7 14.3 45.5 52.4

-64.6 -65.8 -42.6 -39.1 -26.6 -16.6 -38.1 -30.7 27.3 16.5 74.6 79.5

-21.8 -12.4 -20.2 -18.5 -16.1 -3.7 -18.3 -15.6 5.3 -0.5 10.1 20.8

-20.7 -6.1 -11.4 -9.2 -15.8 1.1 -10.9 -9.9 1.6 -5.3 4.0 20.1

2010

11.2 -3.1 22.9 25.1 57.5 1.8 -21.7

-27.1 -79.4 37.2 39.0 26.8 -68.6 -90.1

17.8 30.9 21.3 24.2 59.8 24.1 30.1

41.4 65.7 42.7 57.0 102.3 27.3 44.2

20.9 19.5 34.7 25.6 24.3 23.8 33.5

31.0 8.1 25.1 29.0 39.8 26.3 34.7

1 2 3 4 5P 6P 7P

P: Preliminary Source: Statistics Korea

September 2010

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

Period

Type of order

Private

Public

Private

32,393

52,562

107,011

50,771

51,914

Public

89,863

2009

Type of order

Domestic construction orders received (total)

Value of construction completed (total)

2009

I ll llI lV

19,130 23,628 22,106 25,000

6,570 8,665 7,875 9,284

11,544 13,577 13,029 14,412

18,104 26,392 19,719 42,795

9,219 17,747 8,826 14,980

8,263 7,760 9,971 25,920

2010

I llP

20,066 24,196

7,317 9,171

11,870 14,011

16,848 24,649

7,646 6,746

8,335 16,453

6,063 6,102 6,964 7,433 7,227 8,971 6,988 6,719 8,398 7,301 8,060 9,639

2,150 2,039 2,381 2,636 2,597 3,431 2,362 2,427 3,085 2,585 2,780 3,919

3,623 3,751 4,170 4,416 4,208 4,953 4,252 3,929 4,848 4,354 4,854 5,204

5,674 4,949 7,481 7,513 7,151 11,728 6,009 4,660 9,050 10,570 14,538 17,688

2,679 2,758 3,782 5,752 4,434 7,561 3,314 1,756 3,756 4,700 5,101 5,179

2,728 2,065 3,471 1,488 2,596 3,677 2,398 2,807 4,766 5,616 8,853 11,451

6,414 6,051 7,602 7,355 7,784 9,057 7,731

2,222 2,236 2,859 2,623 2,858 3,690 2,856

6,643 4,615 5,590 6,418 8,354 9,877 7,346

2,286 2,109 3,252 1,735 1,613 3,398 3,830

4,074 2,163 2,099 4,356 6,521 5,576 3,315

3.3

21.2

3.0

60.9

-21.9

2009

2010

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

2009

3,924 3,589 4,357 4,473 4,564 4,973 4,532 Y-o-Y change (%) -5.7

2009

I ll llI lV

4.3 6.4 -1.2 3.7

24.5 31.9 21.3 10.7

-5.3 -5.9 -11.8 0.4

-12.0 -1.1 7.6 11.6

33.1 182.9 78.9 11.6

-37.3 -60.2 -14.3 17.3

2010

I llP

4.9 2.4

11.4 5.8

2.8 3.2

-6.9 -6.6

-17.1 -62.0

0.9 112.0

-0.5 11.2 3.1 5.5 -1.6 14.6 -2.8 -8.2 6.8 -5.9 3.2 12.9

25.2 34.2 16.7 34.0 16.8 44.4 16.6 14.1 31.9 3.5 8.1 18.3

-11.4 1.0 -5.0 -5.2 -11.4 -1.3 -11.6 -18.9 -5.4 -10.1 1.7 9.8

0.3 -19.0 -14.9 -10.7 -17.9 22.7 -1.8 -27.0 55.3 28.8 78.8 -19.6

64.4 39.7 13.8 234.8 70.5 286.7 135.8 6.7 99.6 90.8 63.3 -33.9

-31.2 -47.3 -34.5 -77.1 -55.5 -48.9 -42.7 -36.6 57.4 16.2 92.5 -9.6

5.8 -0.8 9.2 -1.1 7.8 1.0 10.6

3.4 9.6 20.1 -0.5 10.0 7.5 20.9

8.3 -4.3 4.5 1.3 8.5 0.4 6.6

17.1 -6.7 -25.3 -14.6 16.8 -15.8 22.2

-14.7 -23.5 -14.0 -69.8 -63.6 -55.1 15.6

49.4 4.7 -39.5 192.8 151.2 51.7 38.2

2009

2010

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

P: Preliminary Source: Statistics Korea

Economic Bulletin

8. Composite indices 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 (results)

BSI (prospects)

109.1 110.0 110.4 111.1 111.4 112.3 113.3 114.0 114.7 115.4 116.2 116.6

5.3 5.8 5.8 6.0 5.8 6.2 6.7 7.0 7.1 7.2 7.4 7.2

110.7 111.1 111.7 112.3 112.9 113.8 114.7 115.5 115.7 116.2 116.9 118.0

101.3 101.3 101.4 101.5 101.6 101.9 102.4 102.6 102.3 102.4 102.6 103.1

85.6 87.5 109.4 105.8 104.1 100.2 95.8 94.4 101.5 108.3 106.0 98.9

96.5 93.4 112.3 107.7 110.9 105.6 99.3 102.5 111.8 116.3 112.4 103.4

2008 1 2 3 4 5 6 7 8 9 10 11 12

116.3 115.6 115.2 115.1 115.1 114.6 114.0 113.8 113.6 112.7 111.1 110.4

6.3 5.0 3.9 3.2 2.6 1.5 0.5 -0.1 -0.7 -1.8 -3.4 -4.2

119.1 119.3 119.7 119.7 119.9 119.7 119.9 120.2 120.5 120.3 118.7 116.0

103.6 103.4 103.3 102.8 102.6 102.0 101.8 101.6 101.4 100.8 99.1 96.4

95.2 95.6 101.1 101.7 98.1 79.1 80.8 83.1 76.8 64.6 53.7 52.4

103.0 94.8 102.1 98.1 104.7 95.3 83.2 80.8 98.3 84.9 63.7 55.0

2009 1 2 3 4 5 6 7 8 9 10 11 12

110.8 112.2 113.5 115.4 117.6 120.3 122.1 123.2 123.9 124.7 126.1 127.0

-3.9 -2.6 -1.4 0.4 2.7 5.5 7.6 8.8 9.6 10.3 11.3 11.6

113.7 113.9 115.3 117.3 118.4 120.5 121.8 122.8 123.6 124.1 124.7 125.2

94.1 93.9 94.6 95.9 96.3 97.7 98.3 98.7 98.9 98.9 99.0 98.9

58.1 62.4 89.0 93.7 100.9 96.6 98.5 96.0 110.5 107.5 103.8 104.8

52.0 66.0 76.1 86.7 103.8 100.2 98.7 99.8 117.0 116.5 109.0 105.9

2010 1 2 3 4 5 6 7 8 9

127.4 127.1 127.3 127.1 127.7 128.2 129.2 -

11.3 10.3 9.7 8.6 7.9 7.1 6.7 -

126.2 127.7 128.9 130.1 131.0 132.0 133.2 -

99.3 100.0 100.6 101.1 101.4 101.7 102.2 -

99.2 98.7 113.1 108.9 111.9 109.4 105.0 98.6 -

103.1 102.3 116.2 111.2 113.4 108.9 107.3 100.7 111.1

Period

Leading index (2005=100)

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

P: Preliminary Source: Statistics Korea & The Federation of Korean Industries

September 2010

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

Period

2008 2009 P

Current balance

Goods trade balance

Exports

-5,776.3 42,667.6

5,669.1 56,127.6

Imports

Services trade balance

Income trade balance

Current transfers

422,007.3 363,533.6

435,274.7 323,084.5

-16,671.5 -17,202.7

5,900.0 4,553.6

-673.9 -810.9

2008

I II III IV

-4,866.4 -411.5 -8,329.7 7,831.3

-1,375.4 5,526.4 -3,230.5 4,748.6

99,444.5 114,492.0 115,000.1 93,070.6

106,052.9 114,792.8 122,901.0 91,528.0

-4,936.9 -4,460.5 -5,837.8 -1,436.3

1,979.7 -521.1 1,503.3 2,938.1

-533.8 -956.3 -764.7 1,580.9

2009P

I II III IV

8,618.2 13,097.4 10,395.5 10,556.5

8,308.8 17,576.0 14,702.5 15,540.3

74,421.4 90,360.4 94,780.5 103,971.3

71,417.5 73,970.2 84,845.1 92,851.8

-1,926.2 -4,167.7 -5,334.5 -5,774.3

922.3 292.7 1,690.7 1,647.9

1,313.3 -603.6 -663.2 -857.4

2010P

I II

1,335.2 10,337.9

7,434.7 15,710.4

101,092.9 120,525.4

98,112.8 105,896.8

-6,041.0 -4,165.9

756.0 -753.5

-814.5 -453.1

2008

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

-2,343.6 -2,372.0 -150.8 -1,578.8 -566.7 1,734.0 -2,433.9 -4,676.2 -1,219.6 4,644.8 2,408.2 778.3

-935.1 -524.2 83.9 1,733.1 367.0 3,426.3 487.2 -2,926.8 -790.9 2,102.2 1,230.4 1,416.0

32,274.6 31,178.2 35,991.8 37,850.2 39,383.2 37,258.6 40,961.2 36,610.6 37,428.3 37,111.1 28,841.6 27,117.9

36,318.0 32,624.3 37,110.6 38,260.4 38,704.5 37,827.9 42,952.5 40,420.4 39,528.1 36,098.8 28,853.6 26,575.6

-1,957.3 -2,205.7 -773.9 -1,072.9 -1,215.3 -2,172.3 -2,719.6 -1,962.9 -1,155.3 180.5 -70.0 -1,546.8

840.3 792.3 347.1 -1,914.2 563.5 829.6 350.0 427.4 725.9 1,590.6 757.4 590.1

-291.5 -434.4 192.1 -324.8 -281.9 -349.6 -551.5 -213.9 0.7 771.5 490.4 319.0

2009P 1 2 3 4 5 6 7 8 9 10 11 12

-1,612.3 3,585.8 6,644.7 4,274.1 3,442.6 5,380.7 4,419.5 1,922.1 4,053.9 4,757.3 4,277.7 1,521.5

-1,762.2 3,100.1 6,970.9 6,105.2 4,872.3 6,598.5 6,114.5 3,319.5 5,268.5 5,675.1 5,842.3 4,022.9

21,133.4 25,397.1 27,890.8 30,326.5 27,823.8 32,210.0 31,908.5 28,949.6 33,922.4 33,970.0 33,991.6 36,009.6

24,898.8 22,598.1 23,920.6 24,873.8 23,407.0 25,689.3 27,679.8 27,408.2 29,757.1 30,396.5 29,534.7 32,920.5

-710.5 -540.4 -675.3 -1,117.3 -1,524.4 -1,526.0 -1,898.0 -1,803.4 -1,633.1 -1,312.6 -1,662.7 -2,799.0

596.4 510.5 -184.6 -803.1 389.6 706.2 511.1 617.7 561.9 559.4 390.0 698.5

264.0 515.6 533.7 89.3 -294.9 -398.0 -308.1 -211.7 -143.4 -164.6 -291.9 -400.9

2010 P 1 2 3 4 5 6 7

-630.8 167.6 1,798.4 1,421.6 3,818.4 5,097.9 5,875.8

1,376.4 1,557.9 4,500.4 5,124.4 4,171.4 6,414.6 7,382.1

30,739.9 33,037.9 37,315.1 39,309.7 38,994.2 41,948.5 40,948.6

31,510.9 31,308.5 35,563.4 35,518.6 34,917.5 35,460.7 35,443.0

-2,164.4 -1,777.9 -2,098.7 -1,850.8 -642.7 -1,672.4 -1,660.2

465.4 547.9 -257.3 -1.378.3 298.3 326.5 437.3

-308.2 -160.3 -346.0 -473.7 -8.6 29.2 -283.4

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

Economic Bulletin

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

Period

Capital & financial account

Direct investment

Portfolio investment

Financial derivative

2008 2009P

-50,083.6 26,447.9

-15,632.6 -9,065.8

-2,405.6 50,681.6

-14,769.9 -5,538.1

-17,384.8 -10,817.1

109.3 1,187.3

56,446.0 -69,061.1

-586.1 -54.4

I ll III IV

1,990.3 -3,160.7 -6,286.4 -42,626.8

-5,781.5 -4,140.0 -3,661.1 -2,050.0

-4,401.5 8,356.7 -9,421.3 3,060.5

-1,249.5 -1,240.7 -3,550.4 -8,729.3

13,533.2 -5,909.9 10,564.1 -35,572.2

-110.4 -226.8 -217.7 664.2

3,850.0 5,717.7 12,883.1 33,995.2

-973.9 -2,145.5 1,733.0 800.3

2009P I II III IV

-1,399.2 8,682.0 14,399.1 4,766.0

-2,045.4 -172.1 -2,137.6 -4,710.7

3,532.3 16,740.2 19,914.7 10,494.4

-4,893.6 -614.9 -1,296.5 1,266.9

1,282.5 -7,566.0 -2,258.0 -2,275.6

725.0 294.8 176.5 -9.0

-9,017.4 -19,541.8 -23,886.9 -16,615.0

1,798.4 -2,237.6 -907.7 1,292.5

2010P I II

5,713.7 -4,714.0

-2,645.7 -2,235.2

10,547.5 6,789.0

407.9 -1,144.7

-2,420.4 -8,150.2

-175.6 27.1

-6,863.3 -5,600.2

-185.6 -23.7

2008 1 2 3 4 5 6 7 8 9 10 11 12

1,171.9 202.3 616.1 -835.4 -113.8 -2,211.5 -6,014.3 5,113.2 -5,385.3 -23,462.3 -13,488.5 -5,676.0

-3,002.7 -90.9 -2,687.9 -2,561.0 -683.4 -895.6 -1,465.4 -1,428.7 -767.0 -978.9 -615.2 -455.9

-949.8 -3,144.5 -307.2 4,093.1 9,168.1 -4,904.5 -7,025.3 -343.4 -2,052.6 5,004.0 -2,524.0 580.5

-130.4 -298.1 -821.0 -560.3 -627.6 -52.8 -551.2 -69.3 -2,929.9 -3,888.3 -1,347.1 -3,493.9

5,313.5 3,750.7 4,469.0 -1,720.5 -7,921.8 3,732.4 3,204.5 7,062.4 297.2 -23,952.6 -9,215.7 -2,403.9

-58.7 -14.9 -36.8 -86.7 -49.1 -91.0 -176.9 -107.8 67.0 353.5 213.5 97.2

1,436.1 1,703.1 710.8 2,411.3 2,264.6 1,041.8 9,171.4 -1,215.2 4,926.9 19,988.1 10,904.2 3,102.9

-264.4 466.6 -1,176.1 2.9 -1,584.1 -564.3 -723.2 778.2 1,678.0 -1,170.6 176.1 1,794.8

2009P 1 2 3 4 5 6 7 8 9 10 11 12

4,655.2 -3,216.5 -2,837.9 2,193.3 6,707.8 -219.1 2,200.5 5,296.9 6,901.7 1,582.9 1,544.2 1,638.9

-538.7 -785.8 -720.9 112.4 -574.5 290.0 -1,323.9 -276.1 -537.6 -509.0 -2,835.0 -1,366.7

5,678.8 161.4 -2,307.9 7,133.0 4,263.5 5,343.7 7,940.1 4,063.5 7,911.1 6,130.5 3,389.4 974.5

-248.5 -2,312.2 -2,323.9 -679.8 1,341.1 -1,276.2 -272.7 -721.0 -302.8 -572.9 848.7 991.1

-379.9 -609.6 2,272.0 -4,532.5 1,586.6 -4,620.1 -4,379.0 2,177.0 -56.0 -3,477.9 193.9 1,008.4

143.5 338.7 242.8 160.2 91.1 43.5 236.0 53.5 -113.0 12.2 -52.8 31.6

-4,488.6 -1,260.0 -3,268.8 -5,444.1 -10,248.6 -3,849.1 -5,573.6 -7,095.2 -11,218.1 -7,966.2 -5,637.4 -3,011.4

1,445.7 890.7 -538.0 -1,023.3 98.2 -1,312.5 -1,046.4 -123.8 262.5 1,626.0 -184.5 -149.0

2010 P 1 2 3 4 5 6 7

4,631.0 -433.0 1,515.7 8,557.3 -12,037.5 -1,233.8 -47.3

-1,679.9 -763.5 -202.3 -1.216.1 -548.7 -470.4 -1,899.6

316.0 2,442.1 7,789.4 5,496.5 -592.6 1,885.1 8,628.8

49.8 254.5 103.6 -250.2 -445.5 -449.0 -80.0

6,015.1 -2,322.9 -6,112.6 4,647.6 -10,522.0 -2,245.8 -6,696.3

-70.0 -43.2 -62.4 -120.5 101.3 46.3 -0.2

-5,250.9 714.7 -2,327.1 -9,290.2 7,083.3 -3,393.3 -6,020.9

1,250.7 -449.3 -987.0 -688.7 1,135.8 -470.8 192.4

2008

P: Preliminary Source: The Bank of Korea

September 2010

Capital transfers Other & acquisition of investment non-financial assets

Errors and omissions

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

Consumer prices

Export & import prices

Period All Items

Commodity

Service

Core

All items

Commodity

Export

Import

2008 2009

109.7 112.8

109.9 113.6

109.6 112.2

108.6 112.5

111.1 110.9

112.5 111.9

109.5 109.2

143.7 137.7

2008 7 8 9 10 11 12

111.2 111.0 111.1 111.0 110.7 110.7

112.9 112.2 112.1 111.7 110.3 110.2

110.1 110.3 110.4 110.6 110.9 111.0

109.2 109.4 109.9 110.1 110.4 110.9

115.5 115.2 114.8 114.4 111.8 109.9

118.1 117.6 117.0 116.7 113.3 110.9

112.1 110.5 115.6 124.5 120.4 115.0

156.8 149.9 153.4 159.7 149.1 140.6

2009 1 2 3 4 5 6 7 8 9 10 11 12

110.8 111.6 112.4 112.7 112.7 112.6 113.0 113.4 113.5 113.2 113.4 113.8

110.4 112.1 113.3 113.8 113.6 113.3 113.9 114.5 114.6 113.9 114.2 115.0

111.1 111.2 111.8 112.0 112.0 112.1 112.5 112.7 112.7 112.8 112.9 113.0

111.1 111.5 112.0 112.2 112.4 112.5 112.7 112.8 112.9 113.0 113.2 113.3

109.6 110.3 110.8 111.0 110.1 109.8 111.1 111.7 111.8 110.9 111.3 111.9

110.4 111.5 112.1 112.1 111.0 110.5 112.1 112.9 113.0 111.8 112.5 113.1

111.1 116.5 118.4 112.2 106.3 108.3 109.0 109.3 107.3 104.0 104.3 105.1

138.1 143.5 145.4 134.1 130.0 136.7 136.6 139.5 136.8 135.3 137.9 138.6

2010 1 2 3 4 5 6 7 8

114.2 114.6 115.0 115.6 115.7 115.5 115.9 116.3

115.6 116.1 116.9 118.1 118.1 117.6 118.3 119.0

113.3 113.6 113.8 114.0 114.1 114.2 114.4 114.6

112.7 113.0 113.7 114.6 115.2 114.8 114.9 115.2

113.9 114.5 115.3 116.4 117.1 116.6 116.7 117.1

103.5 104.7 104.0 103.8 106.7 109.9 109.4 107.4

136.9 137.6 139.2 140.9 144.7 147.6 147.0 147.4

2008 2009

4.7 2.8

6.2 3.4

3.7 2.4

113.4 113.6 113.7 113.9 114.2 114.4 114.6 114.8 Y-o-Y change (%) 4.2 3.6

8.6 -0.2

10.8 -0.5

21.8 -0.2

36.2 -4.1

2008 7 8 9 10 11 12

5.9 5.6 5.1 4.8 4.5 4.1

9.3 8.4 7.1 6.3 5.1 4.4

3.9 4.0 3.9 3.9 4.1 4.0

4.6 4.7 5.1 5.2 5.3 5.6

12.5 12.3 11.3 10.7 7.8 5.6

16.1 15.6 14.4 14.0 9.9 6.9

25.1 21.9 27.4 38.6 31.5 25.0

50.6 42.6 42.6 47.1 32.0 22.4

2009 1 2 3 4 5 6 7 8 9 10 11 12

3.7 4.1 3.9 3.6 2.7 2.0 1.6 2.2 2.2 2.0 2.4 2.8

3.9 5.2 5.8 5.2 3.3 1.6 0.9 2.0 2.2 2.0 3.5 4.4

3.7 3.4 2.7 2.6 2.3 2.2 2.2 2.2 2.1 2.0 1.8 1.8

5.2 5.2 4.5 4.2 3.9 3.5 3.2 3.1 2.7 2.6 2.5 2.2

4.7 4.4 3.5 1.5 -1.3 -3.1 3.8 -3.0 -2.6 -3.1 -0.4 1.8

5.7 5.5 4.3 1.6 -1.9 -4.3 -5.1 -4.0 -3.4 -4.2 -0.7 2.0

18.6 22.9 17.4 7.7 -4.1 -3.3 -2.7 -1.1 -7.2 -16.5 -13.4 -8.6

16.7 18.0 10.6 -1.8 -13.9 -11.9 -12.9 -7.0 -10.8 -15.3 -7.5 -1.4

2010 1 2 3 4 5 6 7 8

3.1 2.7 2.3 2.6 2.7 2.6 2.6 2.6

4.7 3.6 3.2 3.8 4.0 3.8 3.9 3.9

2.0 2.2 1.8 1.8 1.9 1.9 1.7 1.7

2.1 1.9 1.5 1.5 1.6 1.7 1.7 1.8

2.8 2.4 2.6 3.2 4.6 4.6 3.4 3.1

3.2 2.7 2.9 3.8 5.5 5.5 4.1 3.7

-6.9 -10.2 -12.2 -6.7 0.4 1.5 0.3 -1.7

-0.9 -4.1 -4.3 5.1 11.3 8.0 7.5 5.7

Source: The Bank of Korea

Economic Bulletin

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

Wage workers (thous.)

Economically active persons (thous.) Period

Employed persons (thous.)

Unemployment (%) Regular

Temporary

Daily

All industry Manufacturing S.O.C&service 2008 2009

24,347 24,394

23,577 23,506

3,963 3,836

17,906 17,998

3.2 3.6

16,206 16,454

9,007 9,390

5,079 5,101

2,121 1,963

2008 7 8 9 10 11 12

24,673 24,380 24,456 24,582 24,566 24,032

23,903 23,617 23,734 23,847 23,816 23,245

3,975 3,899 3,928 3,945 3,897 3,888

18,088 17,872 17,951 18,005 18,086 17,935

3.1 3.1 3.0 3.0 3.1 3.3

16,363 16,104 16,221 16,314 16,377 16,189

9,054 9,107 9,142 9,138 9,111 9,068

5,163 4,970 5,015 5,034 5,071 5,082

2,146 2,027 2,064 2,142 2,195 2,040

2009 1 2 3 4 5 6 7 8 9 10 11 12

23,709 23,667 24,062 24,456 24,658 24,927 24,756 24,525 24,630 24,655 24,625 24,063

22,861 22,742 23,110 23,524 23,720 23,967 23,828 23,620 23,805 23,856 23,806 23,229

3,895 3,842 3,813 3,846 3,846 3,836 3,802 3,761 3,810 3,858 3,855 3,872

17,663 17,539 17,701 17,899 18,016 18,251 18,210 18,048 18,155 18,130 18,267 18,104

3.6 3.9 4.0 3.8 3.8 3.9 3.7 3.7 3.4 3.2 3.3 3.5

16,053 15,953 16,076 16,353 16,484 16,736 16,589 16,479 16,687 16,690 16,790 16,555

9,102 9,194 9,174 9,227 9,316 9,340 9,383 9,472 9,606 9,628 9,603 9,632

4,982 4,862 4,941 5,051 5,076 5,281 5,255 5,117 5,151 5,170 5,256 5,074

1,969 1,897 1,961 2,076 2,092 2,115 1,952 1,890 1,931 1,892 1,931 4,860

2010 1 2 3 4 5 6 7

24,082 24,035 24,382 24,858 25,099 25,158 25,232

22,865 22,867 23,377 23,924 24,306 24,280 24,301

3,924 3,886 3,924 3,991 4,036 4,017 4,040

17,796 17,762 18,047 18,285 18,499 18,422 18,489

5.0 4.9 4.1 3.8 3.2 3.5 3.7

16,297 16,282 16,617 16,994 17,255 17,193 17,228

9,712 9,786 9,926 10,011 10,078 10,089 10,107

4,860 4,838 4,976 5,147 5,223 5,165 5,215

1,725 1,657 1,714 1,836 1,953 1,938 1,905

2008 2009

0.5 0.2

0.6 -0.3

-1.3 -3.2

1.3 0.5

1.5 1.5

4.5 4.3

-1.8 0.4

-2.6 -7.4

2008 7 8 9 10 11 12

0.5 0.7 0.5 0.4 0.4 0.2

0.6 0.7 0.5 0.4 0.3 -0.1

-1.2 -1.2 -1.6 -2.3 -2.2 -3.3

1.3 1.3 1.1 1.2 0.7 0.6

1.5 1.4 1.0 1.0 1.0 0.5

4.4 3.9 3.6 3.5 3.6 3.6

-1.7 -1.5 -1.7 -1.7 -2.0 -1.8

-2.4 -2.3 -3.2 -2.8 -2.5 -6.3

2009 1 2 3 4 5 6 7 8 9 10 11 12

-0.1 -0.2 -0.2 -0.2 -0.1 0.8 0.3 0.6 0.7 0.3 0.2 0.1

-0.4 -0.6 -0.8 -0.8 -0.9 0.0 -0.3 0.0 0.3 0.0 0.0 -0.1

-3.2 -4.4 -4.7 -3.9 -3.5 -3.9 -4.3 -3.5 -3.0 -2.2 -1.1 -0.4

0.1 0.2 -0.2 -0.2 -0.2 1.0 0.7 1.0 1.1 0.7 1.0 0.9

0.1 0.7 0.5 0.6 0.5 2.1 1.4 2.3 2.9 2.3 2.5 2.3

3.3 4.4 3.1 3.7 3.4 3.3 3.6 4.0 5.1 5.4 5.4 6.2

-2.6 -3.8 -1.6 -1.5 -1.7 2.9 1.8 3.0 2.7 2.7 3.7 -0.2

-6.3 -4.1 -5.4 -7.2 -6.2 -4.5 -9.1 -6.7 -6.5 -11.7 -12.0 -9.3

2010 1 2 3 4 5 6 7

1.6 1.6 1.3 1.6 1.8 0.9 1.9

0.0 0.5 1.2 1.7 2.5 1.3 2.0

0.8 1.2 2.9 3.8 4.9 4.7 6.2

0.8 1.3 2.0 2.2 2.7 0.9 1.5

1.5 2.1 3.4 3.9 4.7 2.7 3.9

6.7 6.4 8.2 8.5 8.2 8.0 7.7

-2.4 -0.5 0.7 1.9 2.9 -2.2 -0.8

-12.4 -12.6 -12.6 -11.5 -6.6 -8.4 -2.4

Y-o-Y change (%)

Source: Statistics Korea

September 2010

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)

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 6 7 8 9 10 11 12

5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.2 5.2 4.9 4.0 3.3

5.8 5.3 5.3 5.4 5.4 5.4 5.5 5.8 5.8 6.0 5.6 4.7

6.6 6.3 6.1 5.9 6.2 6.7 7.0 7.1 7.5 8.0 8.6 8.4

5.4 5.1 5.2 5.0 5.3 5.7 6.0 5.8 5.8 5.1 5.0 4.0

5.5 5.1 5.2 5.0 5.4 5.8 6.0 5.8 5.8 5.2 5.2 4.3

1,624.68 1,711.62 1,703.99 1,825.47 1,852.02 1,674.92 1,594.67 1,474.24 1,448.06 1,113.06 1,076.07 1,124.47

2009 1 2 3 4 5 6 7 8 9 10 11 12

2.4 2.1 1.8 1.8 1.9 1.9 1.9 2.0 2.0 2.0 2.0 2.0

3.2 2.7 2.5 2.4 2.4 2.4 2.4 2.5 2.6 2.8 2.8 2.8

7.3 7.1 6.1 5.7 5.2 5.2 5.5 5.7 5.6 5.6 5.4 5.4

3.4 3.8 3.7 3.8 3.8 4.1 4.1 4.4 4.4 4.5 4.3 4.2

4.0 4.6 4.5 4.4 4.5 4.7 4.6 4.9 4.9 4.9 4.8 4.8

1,162.11 1,063.03 1,206.26 1,369.40 1,395.89 1,390.07 1,577.29 1,591.85 1,673.14 1,580.69 1,555.60 1,682.77

2010 1 2 3 4 5 6 7 8

2.0 2.0 2.0 2.0 2.0 2.0 2.2 2.3

2.9 2.9 2.8 2.5 2.5 2.5 2.6 2.6

5.4 5.3 5.0 4.7 4.5 4.7 4.8 4.7

4.3 4.2 3.9 3.8 3.7 3.8 3.9 3.7

4.8 4.8 4.5 4.4 4.4 4.4 4.5 4.3

1,602.43 1,594.58 1,692.85 1,741.56 1,641.25 1,698.29 1,759.33 1,742.75

Source: The Bank of Korea

Economic Bulletin

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

Period

(billion won)

Reserve money

2008 2009

52,272.8 61,739.6

307,273.6 357,344.1

1,367,713.4 1,508,550.4

1,794,841.2 1,937,336.0

2008 7 8 9 10 11 12

50,600.6 51,981.0 53,303.9 52,976.5 54,254.5 59,300.7

306,584.4 304,538.7 307,067.8 310,565.5 316,330.9 323,725.9

1,378,914.3 1,386,101.1 1,395,719.2 1,403,984.2 1,426,165.1 1,436,298.3

1,801,540.6 1,810,535.1 1,831,313.4 1,845,717.7 1,859,348.8 1,864,111.6

2009 1 2 3 4 5 6 7 8 9 10 11 12

64,040.6 63,061.7 65,669.5 61,379.9 60,082.5 59,530.3 59,420.2 60,570.3 59,650.3 63,681.7 61,154.5 62,633.2

331,358.0 334,521.7 342,777.0 350,446.0 355,922.0 362,111.3 363,421.4 361,012.4 367,070.3 371,531.7 370,979.7 376,977.3

1,440,275.8 1,457,931.3 1,470,443.1 1,482,009.7 1,491,542.7 1,501,898.3 1,512,822.5 1,524,879.7 1,535,279.8 1,551,319.5 1,564,175.8 1,570,027.1

1,868,843.3 1,879,102.7 1,889,071.5 1,897,923.7 1,913,084.5 1,925,418.1 1,940,223.0 1,956,130.6 1,972,408.5 1,990,372.5 2,000,503.6 2,014,950.4

2010 1 2 3 4 5 6 7

65,054.7 66,563.8 65,643.6 64,274.7 67,835.1 66,250.8 66,958.2

381,218.2 387,858.6 386,015.4 388,174.7 394,880.2 400,132.8 403,785.1

1,574,215.8 1,595,403.8 1,607,896.1 1,621,176.9 1,630,904.7 1,647,981.2 1,653,057.5

2,019,563.5 2,041,164.1 2,056,233.7 2,069,616.1 2,084,007.4 2,104,724.0 2,111,649.2

Y-o-Y change (%) 2008 2009

7.7 18.1

-1.8 16.3

14.3 10.3

11.9 7.9

2008 7 8 9 10 11 12

6.5 8.7 9.1 7.3 11.1 17.8

1.4 2.2 2.7 4.2 5.5 5.2

14.8 14.7 14.5 14.2 14.0 13.1

12.1 11.8 12.2 11.9 11.4 10.4

2009 1 2 3 4 5 6 7 8 9 10 11 12

27.4 20.0 32.5 21.1 19.0 16.1 17.4 16.5 11.9 20.2 12.7 5.6

8.3 9.8 14.3 17.4 17.0 18.5 18.5 18.5 19.5 19.6 17.3 16.4

12.0 11.4 11.1 10.6 9.9 9.6 9.7 10.0 10.0 10.5 9.7 9.3

9.2 8.8 8.4 7.7 7.3 7.0 7.7 8.0 7.7 7.8 7.6 8.1

2010 1 2 3 4 5 6 7

1.6 5.6 0.0 4.7 12.9 11.3 12.7

15.0 15.9 12.6 10.8 10.9 10.5 11.1

9.3 9.4 9.3 9.4 9.3 9.7 9.3

8.1 8.6 8.8 9.0 8.9 9.3 8.8

P: Preliminary Source: The Bank of Korea

September 2010

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

₩ /US$

₩ /100￥

₩ /Euro

Period End-period

Average

End-period

Average

End-period

Average

2008 2009

1,257.5 1,167.6

1,102.6 1,276.4

1,393.9 1,262.8

1,076.6 1,363.1

1,776.2 1,674.3

1,606.8 1,774.4

2008 7 8 9 10 11 12

1,008.5 1,081.8 1,187.7 1,291.4 1,482.7 1,257.5

1,019.1 1,041.5 1,130.4 1,326.9 1,390.1 1,373.8

932.9 987.9 1,144.2 1,306.0 1,553.8 1,393.9

954.2 953.0 1,060.6 1,327.1 1,435.1 1,503.3

1,571.0 1,590.3 1,707.2 1,664.4 1,912.6 1,776.2

1,606.4 1,561.6 1,627.6 1,765.3 1,768.9 1,846.1

2009 1 2 3 4 5 6 7 8 9 10 11 12

1,368.5 1,516.4 1,377.1 1,348.0 1,272.9 1,284.7 1,240.5 1,244.9 1,188.7 1,200.6 1,167.4 1,167.6

1,346.1 1,429.5 1,462.0 1,341.9 1,258.7 1,261.4 1,264.0 1,238.4 1,219.2 1,175.3 1,164.2 1,166.5

1,521.0 1,541.1 1,414.8 1,382.9 1,314.1 1,336.3 1,299.2 1,332.8 1,318.8 1,312.6 1,348.3 1,262.8

1,487.2 1,546.1 1,495.7 1,356.2 1,304.5 1,305.5 1,338.1 1,304.3 1,332.4 1,300.8 1,304.4 1,300.8

1,768.7 1,930.1 1,816.4 1,786.8 1,772.7 1,809.3 1,745.9 1,779.1 1,734.3 1,781.3 1,751.7 1,674.3

1,793.8 1,829.9 1,904.0 1,771.6 1,719.1 1,767.8 1,778.8 1,776.3 1,774.2 1,742.9 1,736.6 1,703.7

2010 1 2 3 4 5 6 7 8

1,156.5 1,158.4 1,130.8 1,115.5 1,200.2 1,210.3 1,187.2 1,189.1

1,138.8 1,157.1 1,137.6 1,117.1 1,163.1 1,212.3 1,207.3 1,179.9

1,287.0 1,299.3 1,217.7 1,186.8 1,318.5 1,364.6 1,370.0 1,406.0

1,248.3 1,281.7 1,255.8 1,195.3 1,265.2 1,333.6 1,377.7 1,380.2

1,614.6 1,569.2 1,518.2 1,479.3 1,474.2 1,475.4 1,552.4 1,505.9

1,627.5 1,584.5 1,544.9 1,501.7 1,460.7 1,480.9 1,540.3 1,523.3

2008 2009

34.0 -7.1

18.7 15.8

36.3 26.6

28.6 -5.7

26.2 10.4

2008 7 8 9 10 11 12

9.2 15.1 29.0 42.3 59.5 34.0

10.9 11.5 21.2 44.9 51.6 47.7

20.4 22.0 43.6 65.1 83.6 67.3

26.3 19.2 30.8 67.8 73.7 81.5

24.0 24.0 31.0 27.1 39.4 28.6

27.5 22.7 26.1 35.5 31.5 36.2

2009 1 2 3 4 5 6 7 8 9 10 11 12

45.0 61.8 38.9 34.8 23.4 23.1 23.0 15.1 0.1 -7.0 -21.3 -7.1

42.8 51.3 49.2 36.0 21.4 22.5 24.0 18.9 7.9 -11.4 -16.2 -15.1

71.1 73.2 41.5 43.8 34.5 36.1 39.3 34.9 15.3 0.5 -13.2 -9.4

70.4 75.6 53.8 40.9 31.2 35.6 40.2 36.9 25.6 -2.0 -9.1 -13.5

26.1 35.6 16.1 14.8 10.8 9.9 11.1 11.9 1.6 7.0 -8.4 -5.7

29.4 31.1 25.3 13.9 6.5 10.4 10.7 13.1 9.0 -1.3 -1.8 -7.7

2010 1 2 3 4 5 6 7 8

-15.5 -23.6 -17.9 -17.2 -5.7 -5.8 -4.3 -4.5

-15.4 -19.1 -22.2 -16.8 -7.6 -3.9 -4.5 -4.7

-15.4 -15.7 -13.9 -14.2 0.3 2.1 5.4 5.5

-16.1 -17.1 -16.0 -11.9 -3.0 2.2 3.0 5.8

-8.7 -18.7 -16.4 -17.2 -16.8 -18.5 -11.1 -15.4

-9.3 -13.4 -18.9 -15.2 -15.0 -16.2 -13.4 -13.8

Y-o-Y change (%) 67.3 -9.4

Source: The Bank of Korea

Economic Bulletin

Editor-in-Chief Yoon, Yeo-Kwon (MOSF) Editorial Board Kim, Young-Min (MOSF) Shim, Jae-Hak (KDI) Lee, In-Sook (KDI) Coordinators Kim, Dae-Hyun (MOSF) Cho, Hyun-Joo (KDI) Editors Lim, Keun-Hyuk (MOSF) Kang, Ji-Eun (KDI)

Useful Internet Websites Economy-related Websites Recommended

Ministry of Strategy and Finance http://english.mosf.go.kr Ministry of Knowledge Economy http://www.mke.go.kr/language/eng Financial Services Commission http://www.fsc.go.kr/eng Financial Supervisory Service http://english.fss.or.kr Fair Trade Commission http://eng.ftc.go.kr Ministry of Labor http://english.molab.go.kr/english The Bank of Korea http://www.bok.or.kr Statistics Korea http://kostat.go.kr