201607

ISSN 2287-7266

Republic of Korea

eb.kdi.re.kr

Vol.38 No.7 July 2016

CONOMIC U L L E T I N

The Green Book: Current Economic Trends Policy Issue Economic Policies for the Second Half of 2016 Service Sector Development Plan 2016 Supplementary Budget

Economic News Briefing Government Announces 10th Round of Measures to Boost Investment Korea Joins Paris Club Government to Make Fundraising Easier for SMEs FDI Reaches Record High in First Half of 2016

Statistical Appendices

02 The Green Book: Current Economic Trends Overview

03

01. External economic situation

04

02. Private consumption

08

03. Facility investment

11

04. Construction investment

13

05. Exports and imports

15

06. Mining and manufacturing production

18

07. Service sector activity

20

08. Employment

21

09. Financial markets

25

9.1 Stock market

25

9.2 Exchange rate

26

9.3 Bond market

27

9.4 Money supply and money market

28

10. Balance of payments

29

11. Prices

32

11.1 Consumer prices

32

11.2 International oil and commodity prices

33

12. Real estate market

36

12.1 Housing market

36

12.2 Land market

38

13. Composite indices of business cycle indicators

contents

40

42 Policy Issue Economic policies for the second half of 2016 Service sector development plan 2016 supplementary budget

55 Economic News Briefing Government announces 10th Round of Measures to Boost Investment Korea joins Paris Club Government to make fundraising easier for SMEs FDI reaches record high in first half of 2016

57 Statistical Appendices

Editor-in-Chief Kim Joo-Hoon (KDI) Jung Moo-Kyung (MOSF) Editorial Board Jung Yeu-Jin (MOSF) Lee Jae-Yeal (KDI) Yu Seong-Im (KDI) Coordinators Kim Dae-Hyun (MOSF) Lee Ji-Youn (KDI) Editors Jeon Aram (MOSF) Kim Hanul (MOSF) Kang Ji-Eun (KDI)

The Green Book: Current Economic Trends Overview

01. External economic situation

02. Private consumption 03. Facility investment 04. Construction investment 05. Exports and imports 06. Mining and manufacturing production 07. Service sector activity 08. Employment 09. Financial markets 10. Balance of payments 11. Prices 12. Real estate market 13. Composite indices of business cycle indicators 02

The Green Book : Current Economic Trends

Overview

The Korean economy has seen domestic demand improving, backed by increasing consumption, while employment growth has slowed and production remains weak.

The economy added more jobs in May than the previous month (252,000 → 261,000, y-o-y), led by the service sector.

Consumer price inflation stayed flat in June compared with the previous month at 0.8 percent year-onyear, even though oil product prices declined at a slower pace, due to falling agricultural product prices.

Mining and manufacturing production rose 2.5 percent month-on-month in May, after declining for two consecutive months, due to a low base effect.

Service output grew slightly in May, up 0.1 percent month-on-month, backed by an increase in real estate & renting and stock transactions. Retail sales rose 0.6 percent as sales of durable and semi-durable goods were lifted by a temporary holiday and a luxury sales tax cut on cars.

Facility investment remained unchanged month-on-month in May as strong transportation equipment investment was offset by a decline in machinery investment. Construction completed rose 2.9 percent led by residential housing.

In May, the cyclical indicator of the coincident composite index rose 0.2 points, and the cyclical indicator of the leading composite index stayed unchanged.

Exports continued to fall in June, but at a slower rate compared with the previous month (down 6.0% → down 2.7%, y-o-y) as vessel and semiconductor exports improved.

Financial market volatility increased in June following the Brexit referendum: Stock prices fell, and Korea Treasury bond yields declined following the BOK’s key interest rate cut and due to an increase in demand for safe-haven assets. The Korean won strengthened against the US dollar and weakened against the Japanese yen.

Housing prices increased at a faster pace month-on-month in June (up 0.03% → up 0.04%), while Jeonse (lump-sum deposits with no monthly payments) prices rose at the same rate as the previous month (up 0.11%).

The economic recovery may slow as growing internal and external risks, including Brexit, could hurt employment and economic sentiment.

The government will closely monitor internal and external economic developments as well as examine uncertainties and their possible impact on domestic financial markets, and will be prepared to make appropriate responses if necessary. The government will implement the economic policies for the second half of 2016, including a supplementary budget, in order to stimulate the economy and support job creation.

July 2016

03

1. External economic situation

The global economy faces increased risk following the Brexit referendum in the UK, while the US and other major economies have yet to build up recovery momentum, and emerging economies including China continue to struggle.

US

The US economy continued to recover as the housing market improved and private consumption remained strong, even though industrial production fell in May due to weak exports.

Industrial production fell 0.4 percent month-on-month in May led by automotive products (down 4.4%), while the ISM Manufacturing Index for June rose to 53.2.

ISM Manufacturing Index (base=50) 48.4 (Nov 2015) → 48.0 (Dec) → 48.2 (Jan 2016) → 49.5 (Feb) → 51.8 (Mar) → 50.8 (Apr) → 51.3 (May) → 53.2 (Jun)

Retail sales rose 0.5 percent month-on-month in May, increasing for the second consecutive month. The Conference Board Consumer Confidence Index for June increased compared to the previous month.

University of Michigan Consumer Sentiment Index (1966=100) 92.6 (Dec 2015) → 92.0 (Jan 2016) → 91.7 (Feb) → 91.0 (Mar) → 89.0 (Apr) → 94.7 (May) → 93.5 (Jun) Conference Board Consumer Confidence Index (1985=100) 96.3 (Dec 2015) → 97.8 (Jan 2016) → 94.0 (Feb) → 96.1 (Mar) → 94.7 (Apr) → 92.4 (May) → 98.0 (Jun)

Existing home sales grew 1.8 percent (annualized m-o-m, 5,530,000 transactions), the highest increase in nine years, while home prices continued to rise.

Case-Shiller Home Price Index (y-o-y, %) 5.4 (Oct 2015) → 5.7 (Nov) → 5.6 (Dec) → 5.7 (Jan 2016) → 5.4 (Feb) → 5.5 (Mar) → 5.4 (Apr) New home sales (m-o-m, %) -9.5 (Sep 2015) → 4.6 (Oct) → 6.3 (Nov) → 5.9 (Dec) → -2.2 (Jan 2016) → -0.2 (Feb) → -0.6 (Mar) → 12.3 (Apr) → -6.0 (May)

The unemployment rate was 4.7 percent, falling from the previous month, while nonfarm payrolls grew at a slower pace, adding 38,000 jobs, due to sluggish growth in service sector employment.

Nonfarm payroll increase (m-o-m, thousands) 280 (Nov 2015) → 271 (Dec) → 168 (Jan 2016) → 233 (Feb) → 186 (Mar) → 123 (Apr) → 38 (May)

04

The Green Book : Current Economic Trends

(Percentage change from previous period)

2013

2014

2015 Q2 3.9

Q3 2.0

Q4 1.4

Q1 1.1

3.0

2.4

1.5

-

Real GDP

1.5

2.4

Q4 2.1

2.4

Q1 0.6

- Personal consumption expenditure

1.7

2.7

4.3

3.1

1.8

3.6

Annual Annual 1

Annual

2016 Mar Apr -

May -

-

-

- Nonresidential fixed investment

3.0

6.2

0.7

2.9

1.6

4.1

2.6

-2.1

-4.5

-

-

-

- Residential fixed investment

9.5

1.8

10.0

5.8

10.1

9.3

8.2

10.1

15.6

-

-

-

Industrial production

1.9

2.9

0.9

0.3

-0.5

-0.7

0.4

-0.8

-0.4

-1.0

0.6

-0.4

Retail sales

3.8

4.1

0.6

2.3

-0.7

1.5

0.9

0.3

-0.1

-0.3

1.3

0.5

Existing home sales

9.1

-3.1

1.8

6.3

-0.7

4.6

2.3

-3.8

1.9

5.7

1.3

1.8

Unemployment rate²

7.4

6.2

5.7

5.3

5.5

5.4

5.2

5.0

4.9

5.0

5.0

4.7

Consumer prices (y-o-y)

1.5

1.6

1.2

0.1

-0.1

0.0

0.1

0.4

1.1

0.9

1.1

1.0

1. Annualized rate (%) 2. Seasonally adjusted (%) Sources: US Department of Commerce, Bloomberg

US GDP growth and industrial production

Sources: US Department of Commerce, Federal Reserve Board

10 8

(%)

6 4 2 0 -2 -4 -6 -8 -10 2006.Q1

2007.Q1

2008.Q1

2009.Q1

2010.Q1

2011.Q1

2012.Q1

2013.Q1

2014.Q1

GDP (q-o-q, annualized rate)

2015.Q1

2016.Q1

Industrial production (q-o-q)

US nonfarm payroll growth and unemployment rate Source: US Department of Labor 800

12 (thousands)

(%)

600 10 400 200

8

0 6

-200 -400

4

-600 2

-800 -1,000

0 2006.1

2007.1

2008.1

US nonfarm payroll growth (m-o-m, left)

2009.1

2010.1

2011.1

2012.1

2013.1

2014.1

2015.1

2016.1

Unemployment rate (right)

July 2016

05

China

China’s economy slowed as production and investment remained weak due to falling exports, while consumption and service sector growth continued to be stable.

Manufacturing PMI (base=50) 50.2 (Mar 2016) → 50.1 (Apr) → 50.1 (May) Services PMI (base=50) 53.5 (Apr 2016) → 53.1 (May) → 53.7 (Jun)

(Percentage change from same period in previous year)

2013

2014

Real GDP

7.7

7.3

Q4 7.3

Industrial production

Annual Annual

Annual

6.9

Q1 7.0

2015 Q2 7.0

Q3 6.9

Q4 6.8

Q1 6.7

2016 Mar Apr -

May -

9.7

8.3

7.6

6.1

6.4

6.3

5.9

5.9

5.8

6.8

6.0

6.0

Fixed asset investment (accumulated, nominal)

19.6

15.7

15.7

10.7

13.5

11.4

10.3

10.0

10.7

10.7

10.5

9.6

Retail sales (nominal)

13.1

12.0

11.7

10.0

10.6

10.2

10.7

11.1

10.3

10.5

10.1

10.0

Exports

8.6

5.5

8.6

-2.5

4.7

-2.1

-5.9

-5.0

-9.6

11.5

-1.8

-4.1

Consumer prices1

2.6

2.0

1.5

1.4

1.2

1.4

1.7

1.5

2.1

2.3

2.3

2.0

Producer prices

-1.9

-1.9

-2.7

-5.2

-4.6

-4.8

-5.7

-5.9

-4.8

-4.3

-3.4

-2.8

1

1. Quarterly Change: average of monthly change Source: China National Bureau of Statistics

China’s GDP growth and fixed asset investment

Source: China National Bureau of Statistics

18

70 (%)

(%)

16

60

14 50 12 40

10 8

30

6 20 4 10

2 0 2006.Q1

2007.Q1

2008.Q1

2009.Q1

2010.Q1

2011.Q1

GDP (y-o-y, left)

06

The Green Book : Current Economic Trends

2012.Q1

2013.Q1

2014.Q1

2015.Q1

2016.Q1

0

Fixed asset investment (accumulated, y-o-y, right)

Japan

The Japanese economy slowed as industrial production, which was forecast to decline by 0.1 percent, fell more than expected due to declining exports caused by a strong yen, and retail sales stayed flat for the second consecutive month.

The yen strengthened and stock prices fell following the Brexit referendum held on June 23.

Dollar-yen exchange rate 106.2 (Jun 23) → 101.3 (Jul 6) Nikkei Index 16,238 (Jun 23) → 15,379 (Jul 6)

Consumer prices fell 0.4 percent year-on-year in May, falling for the third consecutive month.

(Percentage change from previous period)

2013

2014 0.6

Q1 1.3

Q3 0.4

Q4 -0.4

Q1 0.4

2016 Mar Apr -

May -

Real GDP

1.4

0.0

Q4 0.5

Industrial production

-0.6

2.1

0.8

-1.2

1.1

-1.3

-1.0

0.0

-1.1

3.8

0.5

-2.3

Retail sales

1.2

1.7

1.0

-0.4

-1.7

0.2

1.0

-0.2

-2.3

1.5

-0.1

0.0

Exports (y-o-y)

9.5

4.8

9.1

3.5

9.0

6.7

3.7

-4.6

-7.9

-6.8

-10.1

-11.3

Consumer prices (y-o-y)

0.4

2.7

2.6

0.8

2.3

0.5

0.1

0.3

0.1

-0.1

-0.3

-0.4

Annual Annual

Annual

2015 Q2 -0.4

Sources: Japan's Cabinet Office, Ministry of Economy, Trade and Industry, Ministry of Finance, Statistics Bureau of Japan

Japan’s GDP growth and industrial production

Sources: Japan's Cabinet Office, Ministry of Economy, Trade and Industry

6

25 (%)

(%) 20

4

15 10

2

5 0

0

-5 -2

-10 -15

-4

-20 -25

-6 2006.Q1

2007.Q1

GDP (q-o-q, left)

2008.Q1

2009.Q1

2010.Q1

2011.Q1

2012.Q1

2013.Q1

2014.Q1

2015.Q1

2016.Q1

Industrial production (q-o-q, right)

July 2016

07

Eurozone

The eurozone economy recovered as domestic demand improved due to expansionary monetary policy and low oil prices, while concerns over high unemployment rates and deflationary pressures continued.

Manufacturing PMI (base=50) 52.8 (Nov 2015) → 53.2 (Dec) → 52.3 (Jan 2016) → 51.2 (Feb) → 51.6 (Mar) → 51.7 (Apr) → 51.5 (May) → 52.8 (Jun) (Percentage change from previous period)

2013

2014 1.7

Q1 0.6

2015 Q2 0.4

Q3 0.3

Q4 0.4

Q1 0.6

Mar -

2016 Apr -

May -

1.0

-0.7

1.1

-

Real GDP

-0.3

0.9

Q4 0.4

Industrial production

-0.6

0.9

0.6

1.5

0.9

0.1

0.2

0.4

Retail sales

-0.6

1.4

1.0

2.8

1.0

0.6

0.7

0.1

0.7

-0.6

0.2

0.4

Exports (y-o-y)

1.0

2.2

4.4

5.4

5.5

8.2

4.4

3.5

-1.1

-2.3

-0.9

-

Consumer prices (y-o-y)

1.4

0.4

0.3

0.0

-0.3

0.2

0.1

0.2

0.0

0.0

-0.2

-0.1

Annual Annual

Annual

Sources: Eurostat, Bloomberg

Eurozone’s GDP growth and industrial production

Source: Eurostat

3

10 (%)

(%)

8 2

6 4

1

2 0

0 -2

-1

-4 -6

-2

-8 -10

-3 2006.Q1

2007.Q1

2008.Q1

2009.Q1

2010.Q1

2011.Q1

GDP (q-o-q, left)

2. Private consumption

2012.Q1

2013.Q1

2014.Q1

2015.Q1

2016.Q1

Industrial production (q-o-q, right)

Private consumption (preliminary GDP) in the first quarter of 2016 fell 0.2 percent compared to the previous quarter and rose 2.2 percent compared to a year ago.

08

The Green Book : Current Economic Trends

Private consumption

Source: Bank of Korea (national accounts)

12 (%) 10 8 6 4 2 0 -2 -4 -6 2006.Q1

2007.Q1

2008.Q1

2009.Q1

2010.Q1

2011.Q1

2012.Q1

2013.Q1

2014.Q1

Private consumption (q-o-q)

2015.Q1

2016.Q1

Private consumption (y-o-y)

(Percentage change from previous period)

2013

2014

Annual Annual

Private consumption² (y-o-y)

1.9

1.7

Q1 0.4

-

-

2.8

2015

-0.3

Q3 0.7

Q4 0.3

Annual¹ 2.2

Q1¹ 0.8

1.7

1.4

1.1

-

1.5

Q2

-0.1

Q3¹ 1.1

Q4¹ 1.4

2016 Q1¹ -0.2

1.7

2.2

3.3

2.2

Q2¹

1. Preliminary 2. National accounts Source: Bank of Korea

Retail sales in May rose 0.6 percent month-on-month, as sales of durable goods (up 1.1%), such as automobiles, sales of semi-durable goods (up 1.2%), such as clothing, and sales of nondurable goods (up 0.1%), such as food, all increased. Year-on-year, the index rose 5.1 percent.

Retail sales

Source: Statistics Korea (industrial activity trends)

20 (%) 15

10

5 0

-5

-10

2006.1

2007.1

Retail sales (m-o-m)

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

2014.1

2015.1

2016.1

Retail sales (y-o-y)

July 2016

09

(Percentage change from previous period)

2014 Annual Annual Q3 1.4 2013

Retail sales (y-o-y)

0.7

Q4 0.3

Annual

-

Q1 1.0

2015 Q2 0.7

Q3 1.3

Q4 3.1

Q1¹ -1.0

2016 Apr¹ -0.5

May¹ 0.6

6.1

4.6

4.2

5.1

2.0

2.0

2.4

3.9

2.2

3.4

3.6

- Durable goods

0.3

5.1

3.2

0.4

10.2

4.3

0.8

2.0

8.2

-6.3

-2.0

1.1

· Automobiles

2.1

16.4

5.1

0.3

21.3

7.0

5.4

3.5

11.2

-11.8

-6.4

6.3

- Semi-durable goods

2.1

-0.8

3.9

-2.3

-1.2

-2.0

-1.0

1.8

2.8

-2.0

-0.2

1.2

- Nondurable goods4

0.4

1.6

-0.8

1.3

2.5

0.6

1.2

0.7

0.3

2.6

0.4

0.1

2

3

1. Preliminary 2. Durable goods: Automobiles, electronic appliances, furniture, telecommunications devices, etc.

3. Semi-durable goods: Clothing, footwear, etc.

4. Nondurable goods: Food, medicine, cosmetics, fuel, tobacco, etc.

Source: Statistics Korea

Retail sales by type

Source: Statistics Korea (industrial activity trends)

50 (y-o-y, %) 40 30 20 10 0 -10 -20 -30 2006.1

2007.1

2008.1

2009.1

2010.1

Durable goods

2011.1

2012.1

2013.1

2014.1

2015.1

2016.1

Nondurable goods

Semi-durable goods

Retail sales in June are expected to rise backed by increases in domestic sales of cars, department store sales and domestic sales of gasoline.

(Percentage change from same preriod in previous year)

2015 Nov

2016 Dec

Jan

Feb

Mar

Apr

May

Jun

Credit card use

9.8

8.5

15.8

14.2

13.9

7.2

22.7

12.9

Department store sales

4.1

-3.8

9.6

-0.1

4.8

8.0

1.5

13.5

Large discount store sales

-0.6

-2.1

13.4

-5.4

-1.4

0.2

-5.5

2.9

Domestic sales of gasoline

4.8

4.3

8.5

-1.1

-0.7

1.6

7.2

4.6

16.3

17.7

-4.5

9.0

18.9

5.8

20.8

24.1

Domestic sales of cars

Sources: Credit Finance Association of Korea, Korea National Oil Corporation, Korea Automobile Manufacturers Association, data provided by retail industries

10

The Green Book : Current Economic Trends

3. Facility investment

Facility investment (preliminary GDP) fell 7.4 percent quarter-on-quarter and 4.5 percent year-on-year in the first quarter of 2016.

2013 Annual Annual

Facility investment²

(Percentage change from previous period)

Q1

2014 Q2

Q3

Q4

Annual¹

Q1¹

2015 Q2¹

Q3¹

Q4¹

2016 Q1¹

-0.8

6.0

-1.1

1.3

0.3

3.5

5.3

0.5

0.8

1.8

0.5

-7.4

-

-

7.4

7.9

4.4

4.4

-

5.8

5.1

6.7

3.9

-4.5

- Machinery

-2.3

5.0

-2.9

0.9

0.9

5.2

2.1

0.1

-2.9

0.8

-3.0

-6.4

- Transportation equipment

3.1

8.3

3.5

2.2

-1.0

-0.4

12.5

1.5

9.3

3.7

7.4

-9.4

(y-o-y)

1. Preliminary 2. National accounts Source: Bank of Korea

Facility investment

Source: Bank of Korea (national accounts)

40 (%) 30

20

10

0

-10

-20

-30 2006.Q1

2007.Q1

2008.Q1

2009.Q1

2010.Q1

2011.Q1

2012.Q1

2013.Q1

2014.Q1

2015.Q1

Facility investment (q-o-q)

2016.Q1

Facility investment (y-o-y)

(Percentage change from previous period)

2015

2014 Facility investment index (y-o-y)

Q4 -1.2

Q1 -8.7

Feb -7.1

2016 Mar 6.1

Apr1 3.1

May1 0.0

-7.1

-7.9

-7.2

-2.8

2.9

5.2

6.3

Q1 -0.2

-2.2

Q3 5.2

-

-

9.2

4.5

10.2

1.6

Annual Annual

Q2

- Machinery

3.9

2.9

-0.1

-6.0

0.7

-2.6

-5.3

-3.7

4.5

0.5

-5.0

- Transportation equipment

8.8

14.9

-1.0

8.8

16.5

1.0

-14.3

-15.5

11.0

9.2

8.4

1. Preliminary Source: Statistics Korea

July 2016

11

The facility investment index in May remained unchanged month-on-month as machinery investment fell while transportation equipment investment rose. The index increased 2.9 percent year-on-year.

Facility investment by type Source: Bank of Korea (national accounts) 50 (y-o-y, %) 40

30

20

10

0

-10

-20

-30

2006.Q1

2007.Q1

2008.Q1

2009.Q1

2010.Q1

2011.Q1

2012.Q1

2013.Q1

2014.Q1

2015.Q1

Transportation equipment

2016.Q1

Machinery

Facility investment outlooks are mixed as facility investment adjustment pressure increased while domestic machinery orders, machinery imports and the average manufacturing operation ratio remain low.

Leading indicators of facility investment Sources: Statistics Korea (machinery orders), Korea International Trade Association (machinery imports) 60

10 (trillion won)

(y-o-y, %)

9 40 8

7

20

6 0

5

4 -20 3

2 2006.Q1

2007.Q1

2008.Q1

2009.Q1

2010.Q1

2011.Q1

Machinery orders (left)

12

The Green Book : Current Economic Trends

2012.Q1

2013.Q1

2014.Q1

2015.Q1

-40 2016.Q1

Machinery imports (right)

(Percentage change from same period in previous year)

2015

2014 Annual Annual

Domestic machinery orders

14.8

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

-3.6

Q1 -3.0

Q2

14.9

Q3 -27.1

Q4 6.9

Q1 0.9

Feb 22.7

2016 Mar Apr1 8.4 -28.8

May1 0.6

-

-

-0.1

8.6

-10.0

9.2

-6.3

36.4

-8.0

-10.9

7.1

- Public

94.2

-61.7

-66.9

61.7

-85.3

-19.8

56.9

80.7 110.8

49.3

-14.1

- Private

4.8

10.0

11.4

12.5

4.7

10.8

-2.9

18.0

1.2

-32.6

2.1

Machinery imports

5.8

0.3

8.5

-1.1

2.3

-6.4

-13.0

-17.2

-17.4

-5.6

1.7

Average manufacturing operation ratio

76.1

74.3

74.3

74.3

74.9

73.6

73.2

73.5

73.8

71.3

72.8

Facility investment adjustment pressure²

-1.4

-1.8

-2.8

-2.8

-1.2

-0.6

-0.8

1.6

-1.0

-3.2

4.0

1. Preliminary 2. Production growth rate minus production capacity growth rate in the manufacturing sector (%p) Sources: Statistics Korea, Korea International Trade Association

4. Construction investment

Construction investment (preliminary GDP) in the first quarter of 2016 rose 6.8 percent quarter-onquarter and 9.6 percent year-on-year.

(Percentage change from previous period)

2013 1.1

Q1 3.3

2014 Q2 1.0

Q3 -0.3

Q4 1.4

Annual Annual

Construction investment²

5.5

(y-o-y)

3.9

Q1¹ 5.5

2015 Q2¹ 1.8

Q3¹ 3.3

Q4¹ -2.4

2016 Q1¹ 6.8

Annual¹

-

-

4.1

0.2

2.3

-1.5

-

0.9

1.0

5.6

7.5

9.6

- Building construction

11.2

6.3

2.7

3.6

2.2

-4.9

6.3

2.5

4.9

5.6

0.3

3.6

- Civil engineering works

-2.5

-7.3

4.5

-3.0

-6.1

-4.7

-7.3

11.4

-3.8

-1.4

-8.0

14.0

1. Preliminary 2. National accounts Source: Bank of Korea

Construction investment

Source: Bank of Korea (national accounts)

15 (%) 10 5 0 -5 -10 -20

2006.Q1

2007.Q1

2008.Q1

Construction investment (q-o-q)

2009.Q1

2010.Q1

2011.Q1

2012.Q1

2013.Q1

2014.Q1

2015.Q1

2016.Q1

Construction investment (y-o-y)

July 2016

13

The value of construction completed (constant) in May rose 2.9 percent month-on-month as both civil engineering works and building construction increased. The index rose 20.2 percent year-on-year.

Construction investment by type Source: Bank of Korea (national accounts) 50 (y-o-y, %) 40 30 20 10 0 -10 -20 -30 2006.Q1

2007.Q1

2008.Q1

2009.Q1

2010.Q1

2011.Q1

2012.Q1

2013.Q1

2014.Q1

Residential buildings

Building construction

2015.Q1

2016.Q1

Civil engineering works

(Percentage change from previous period)

2014 Annual Annual

Construction completed (constant) -0.7 (y-o-y) - Building construction 7.8 - Civil engineering works -12.3

2.3 6.0 -3.8

Q1 4.1 -2.0 4.4 3.7

2015 Q2 -2.1 -3.9 -0.7 -4.4

Q3 6.4 5.9 9.5 0.9

Q4 0.0 8.0 2.6 -5.0

Q1 9.4 14.8 9.0 10.2

Feb 2.0 10.1 2.7 0.5

2016 Mar 7.4 23.5 1.7 19.5

Apr1 -6.3 17.1 -3.2 -11.8

May1 2.9 20.2 2.9 2.9

1. Preliminary Source: Statistics Korea

Leading indicators of construction investment Sources: Statistics Korea (construction orders), Ministry of Land, Infrastructure and Transport (building permit area) 300 (y-o-y, %) 250 200 150 100 50 0 -50 -100

2006.1

2007.1

2008.1

2009.1

2010.1

Construction orders

14

The Green Book : Current Economic Trends

2011.1

2012.1

2013.1

2014.1

2015.1

2016.1

Building permit area

(Percentage change from same period in previous year)

2015 Q1

Q2

Q3

Q4

Q1

Feb

2016 Mar

Apr1

May1

48.2

57.4

49.1

50.4

40.1

13.8

84.3

-6.3

19.3

-25.5

2014 Annual Annual

Construction orders (current value) (q-o-q, m-o-m)

16.3 -

-

47.4

11.6

21.3

-26.5

17.7

44.3

-12.5

4.1

-23.9

- Building construction

24.5

50.1

89.5

49.3

42.5

37.8

13.1

136.3

-12.0

34.2

-31.0

- Civil engineering works

-4.4

42.9

1.7

48.3

83.6

45.9

16.0

-8.8

17.6

-25.7

9.2

Building permits²

11.2

34.3

11.0

25.1

57.0

40.4

19.7

27.8

9.9

-1.5

9.9

1. Preliminary 2. Floor area Sources: Statistics Korea, Ministry of Land, Infrastructure and Transport

Construction investment is expected to increase given increases in building permits, apartment presales and shipments of intermediate building materials. However, a fall in new construction orders may have a negative impact in the long run.

Apartment presales (thousands, Real Estate 114) 76 (Nov 2015) → 58 (Dec) → 8 (Jan 2016) → 9 (Feb) → 39 (Mar) → 34 (Apr) → 53 (May) → 41 (Jun) Domestic shipments of cement (million tons) 4.18 (Nov 2015) → 4.61 (Dec) → 3.01 (Jan 2016) → 2.89 (Feb) → 5.50 (Mar) → 5.00 (Apr) → 5.10 (May)

5. Exports and imports

Exports (preliminary) declined 2.7 percent year-on-year to US $45.30 billion in June.

Exports fell at a slower pace in June compared with the previous month backed by strong vessels and other major items which fell at a slower rate, in particular semiconductors. By region, shipments to Latin America and Japan fell at a slower pace than the previous month.

Export growth by region (y-o-y, %) -0.6 (Latin America), -3.4 (Japan), -7.0 (US), -9.4 (China), -10.3 (ASEAN countries), -16.3 (EU), -18.9 (Middle East) Export growth by item (y-o-y, %) 29.6 (vessels), -0.5 (semiconductors), -1.4 (mobile phones), -2.3 (steel products), -12.3 (automobiles), -27.3 (oil products)

Average daily exports, an indicator adjusted to days worked, increased month-on-month to US $1.97 billion in June.

Average daily exports (US $ billion) 1.62 (Jan 2016) → 1.80 (Feb) → 1.79 (Mar) → 1.82 (Apr) → 1.85 (May) → 1.97 (Jun)

July 2016

15

(US $ billion)

2014 Exports (y-o-y, %) Average daily exports

2015

2016

Annual

Annual

Q1

Q2

Q3

Q4

Jun 46.55

Q1 115.60

Q21 126.15

May 39.79

Jun1 45.30

572.66

526.76

133.40

135.10

128.23

130.02

2.3

-8.0

-3.0

-7.3

-9.5

-12.0

-2.7

-13.3

-6.6

-6.0

-2.7

2.11

1.93

2.01

1.99

1.87

1.86

1.98

1.74

1.88

1.85

1.97

1. Preliminary Source: Korea Customs Service

Exports by item

Sources: Korea Customs Service, Ministry of Trade, Industry and Energy (export and import trends)

160 140

(y-o-y, %)

120 100 80 60 40 20 0 -20 -40 -60 -80 2006.1

2007.1

2008.1

Export growth rate

2009.1

2010.1

2011.1

2012.1

Semiconductors

2013.1

2014.1

2015.1

Automobiles

2016.1

Steel

Imports (preliminary) in June fell 8.0 percent year-on-year to US $33.66 billion.

Imports fell at a slower pace compared with the previous month (down 9.0% → down 8.0%) as commodities decreased at a slower rate, despite a decrease in capital goods imports.

Import growth by category (y-o-y, %, May → Jun) -19.6 → -14.1 (commodities), 1.4 → -4.9 (capital goods), 6.9 → 4.8 (consumer goods)

(US $ billion)

2014 Imports (y-o-y, %) Average daily imports

2015

2016

Annual

Annual

Q1

Q2

Q3

Q4

Jun

Q1

Q21

May

Jun1

525.51

436.50

111.77

110.50

107.96

106.27

36.60

93.58

98.68

32.81

33.66

1.9

-16.9

-15.6

-15.6

-18.7

-17.8

-13.8

-16.3

-10.7

-9.0

-8.0

1.94

1.60

1.68

1.62

1.58

1.52

1.56

1.41

1.47

1.53

1.46

1. Preliminary Source: Korea Customs Service

16

The Green Book : Current Economic Trends

Imports by category

Sources: Korea Customs Service, Ministry of Trade, Industry and Energy (export and import trends)

100 (y-o-y, %) 80 60 40 20 0 -20 -40 -60 -80

2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

Import growth rate

2012.1

2013.1

2014.1

2015.1

Commodities

2016.1

Capital goods

The trade balance (preliminary) posted a surplus of US $11.64 billion in June, staying in the black for the 53rd consecutive month. Surpluses increased compared with the previous month.

(US $ billion)

2014 Trade balance

2015

2016

Annual

Annual

Q1

Q2

Q3

Q4

Jun

Q1

Q21

May

Jun1

47.15

90.26

21.63

24.61

20.28

23.74

8.60

22.03

27.47

6.98

11.64

1. Preliminary Source: Korea Customs Service

Exports and imports

Sources: Korea Customs Service, Ministry of Trade, Industry and Energy (export and import trends)

60 (US$ billion) 50

40

30

20

10

0

-10

2006.1

2007.1

Trade balance

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

2014.1

2015.1

2016.1

Exports

Imports

July 2016

17

6. Mining and manufacturing production

Mining and manufacturing production rose 2.5 percent month-on-month in May, backed by strong semiconductors and automobiles, despite decreases in communications equipment and textiles.

Compared to the same period of the previous year, the index increased 4.3 percent.

Industrial production Source: Statistics Korea (industrial activity trends) 50 (%) 40 30 20 10 0

-10 -20 -30 2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

2014.1

Industrial production (m-o-m)

2015.1

2016.1

Industrial production (y-o-y)

(Percentage change from previous period)

2015 Annual

Mining (q-o-q, m-o-m) (y-o-y) Manufacturing (q-o-q, m-o-m) Mining and (y-o-y) manufacturing Shipment activity² - Domestic consumption - Exports Inventory³ Manufacturing Average operation ratio (%) indicators Production capacity (y-o-y)

-0.6 -0.6 -0.2 0.4 -1.0 2.9 74.3 1.2

Q1 -0.3 -1.1 -0.3 -1.2 -0.7 0.4 -2.0 3.0 74.3 1.6

1. Preliminary 2. Including mining, manufacturing and electricity & gas industry Source: Statistics Korea

2016 Q4 -0.9 -0.1 -0.7 0.1 -0.5 -0.4 -0.6 -5.3 73.6 0.7

May -1.2 -3.0 -1.3 -3.0 -0.8 -1.0 -0.7 -1.2 73.5 1.5

Q1 -0.6 -0.2 -0.7 -0.4 -1.8 -0.9 -3.1 3.9 73.2 0.4

Mar -1.2 -0.5 -1.1 -0.6 2.4 4.0 0.4 0.0 73.8 0.4

Apr¹ -1.2 -2.6 -1.1 -2.6 -1.6 -2.7 0.1 -2.2 71.3 0.6

May¹ 2.5 4.3 2.6 4.5 1.0 0.8 1.3 0.3 72.8 0.5

3. End-period

Compared to the previous month, production of semiconductors (up 9.9%), automobiles (up 3.7%) and electronic parts (up 4.4%) rose, while communications equipment (down 11.0%), textiles (down 2.5%) and leather & shoes (down 4.7%) fell.

Compared to a year ago, production of semiconductors (up 28.3%), refined petroleum (up 12.3%) and chemical products (up 5.1%) rose, while communications equipment (down 30.2%), electronic parts (down 7.1%) and leather & shoes (down 22.3%) declined.

18

The Green Book : Current Economic Trends

The manufacturing inventory-shipment ratio fell 0.9 percentage points month-on-month to 123.1 percent as inventories rose 0.3 percent and shipments increased 1.0 percent.

Inventories of chemical products (up 3.9%), audio-visual equipment (up 14.9%) and automobiles (up 0.9%) rose, while semiconductors (down 2.9%), electronic parts (down 4.3%) and primary metals (down 1.4%) declined.

Shipments of automobiles (up 4.2%), semiconductors (up 4.6%) and other transportation equipment (up 7.3%) rose, while communications equipment (down 14.7%), refined petroleum (down 1.1%) and precision medical optics (down 5.5%) fell.

Shipment and inventory 10

Source: Statistics Korea (industrial activity trends)

(m-o-m, %)

8 6 4 2 0 -2 -4 -6 -8 -10 -12

2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

2014.1

2015.1

Shipment growth

2016.1

Inventory growth

The average operation ratio of the manufacturing sector fell 1.5 percentage points month-on-month to 72.8 percent.

Average manufacturing operation ratio

Source: Statistics Korea (industrial activity trends)

100 (%)

90

80

70

60

50 2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

2014.1

2015.1

July 2016

2016.1

19

Mining and manufacturing production may decrease in June due to Brexit and other external uncertainties as well as a high base effect in May, although exports have been falling at a slower rate.

7. Service sector activity

Service output in May increased 0.1 percent month-on-month and 3.4 percent year-on-year.

Service sector activity

Source: Statistics Korea (industrial activity trends)

15 (%) 10

5

0

-5

-10 2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

2014.1

Service sector activity (m-o-m)

2015.1

2016.1

Service sector activity (y-o-y)

(Percentage change from previous period)

Weight Service activity index 100.0 - Wholesale & retail 21.6 - Transportation services 8.5 - Hotels & restaurants 7.2 - Publishing & communications services 8.4 - Financial & insurance services 14.7 - Real estate & renting 5.3 - Professional, scientific & technical services 5.6 - Business services 3.3 - Education services 10.9 - Healthcare & social welfare services 7.5 - Entertainment, cultural & sports services 2.9 - Membership organizations & personal services 3.6 - Sewerage & waste management 0.6

2013 2014 Annual Annual Annual

1.5 0.1 1.0 0.5 2.2 0.5 2.5 3.3 2.1 0.8 5.2 -0.7 6.1 -0.4

1. Preliminary Source: Statistics Korea

20

The Green Book : Current Economic Trends

2.3 0.4 1.7 1.5 2.0 5.2 6.2 2.3 2.5 1.3 6.3 -1.0 -0.5 1.0

2.8 1.7 1.4 -2.0 -0.6 9.0 8.1 -0.4 3.9 0.9 6.2 1.1 -0.5 7.2

Q1

0.5 0.7 -0.2 -0.6 -1.9 1.6 -0.8 -2.9 2.3 1.0 1.9 1.5 0.7 0.6

2015 Q2 Q3 Q4 0.5 1.2 1.2 0.3 0.9 2.2 -2.6 1.9 1.9 -3.4 2.1 0.8 -0.5 3.0 1.1 3.8 1.2 -0.4 6.4 0.9 -0.5 -0.1 1.6 0.3 0.4 -1.0 3.4 -0.6 0.0 1.0 0.0 1.4 3.1 -2.5 1.0 3.2 1.6 -0.2 -2.7 3.6 4.6 -4.6

Q1 -0.2 -0.8 1.1 -0.2 -0.5 2.0 -3.8 -2.7 0.1 -0.2 0.4 -2.4 1.4 1.5

2016 Mar Apr1 0.4 0.5 3.3 0.5 -3.3 0.6 -1.7 0.7 1.8 1.3 -4.7 3.0 2.1 0.2 8.0 -4.2 0.2 -1.8 1.5 -0.8 0.8 0.8 -0.9 3.6 -1.9 -0.6 12.0 -4.0

May1 0.1 -1.1 0.4 -0.9 -3.3 1.4 3.3 1.6 1.4 -0.4 2.0 -1.7 0.8 -0.5

Month-on-month, healthcare & social welfare services (up 2.0%), financial & insurance services (up 1.4%) and professional, scientific & technical services (up 1.6%) increased, while publishing & communications services (down 3.3%), wholesale & retail (down 1.1%) and hotels & restaurants (down 0.9%) decreased.

May 2016 service output by business

Source: Statistics Korea (industrial activity trends)

12 (y-o-y, %)

8

4

Health & social welfare services

Financial & insurance services

Total index

Transportation services

Sewerage & waste management

Publishing & communications services

Professional, scientific & technical Business services services Real estate & renting

0

Wholesale & retail Hotels & restaurants

Education services

Entertainment, cultural & sports services Membership organizations & personal services

-4

The service output outlook for June is positive as domestic sales of cars and average daily stock transactions increased.

Average daily stock transactions (trillion won) 8.9 (Aug 2015) → 8.1 (Sep) → 8.7 (Oct) → 8.3 (Nov) → 7.1 (Dec) → 8.3 (Jan 2016) → 7.8 (Feb) → 7.5 (Mar) → 8.1 (Apr) → 8.5 (May) → 9.1 (Jun)

8. Employment

The number of workers on payroll in May increased by 261,000 from a year earlier to 26,450,000, and the employment rate rose 0.2 percentage points to 66.3 percent.

By industry, services continued to lead employment growth.

By employment status, permanent workers continued to drive employment growth, while daily workers fell at a faster pace, and self-employed workers kept decreasing.

July 2016

21

Number of persons employed and employment growth 1,000

Source: Statistics Korea (employment trends) 27

(millions)

(thousands)

800

26

600 25 400 24 200 23

0

22

-200 -400 2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

Employment growth (y-o-y, left)

2014.1

2015.1

21

2016.1

Number of employed (seasonally adjusted, right)

Employment rate Source: Statistics Korea (employment trends) 64 (%) 63 62 61 60 59 58 57 56 55 2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

2014.1

2015.1

Original data

2016.1

Seasonally adjusted rate

Employment by industry

Source: Statistics Korea (employment trends)

(%)

100

80

60

71.1 71.2 70.6 69.7 69.4 69.3 69.6 69.7 69.6 69.5 69.8 70.8 71.5 71.4 70.8 70.2 70.0 69.9 69.9 70.2 70.2 70.1 70.6 71.2 71.5 71.5 70.9 70.7 70.6

40 6.8

6.7

6.8

6.9

7.1

7.1

7.1 7.0

7.1

7.1 7.2

7.2 7.0

6.9

7.0

7.1 7.1

7.1

7.1 7.0

7.0

6.9 7.0

7.1

7.0

6.8

6.8

6.9

7.0

20 17.3 17.2 17.0 16.7 16.8 16.8 16.8 16.7 16.8 16.8 16.8 17.4 17.6 17.6 17.3 17.2 17.0 17.1 17.2 17.2 17.2 17.4 17.3 17.6 17.9 17.9 17.5 17.3 17.1 0 4.4 4.5 2014.1 2

Services

22

5.3 3

6.1 6.4 4

5

6.5

6.2

6.2

6

7

8

6.2 6.2 9

10

5.8 11

4.2 3.9 4.1 12 2015.1 2

Construction

The Green Book : Current Economic Trends

4.9

5.5

5.9

5.9

5.8

5.7

3

4

5

6

7

8

Manufacturing

5.7 5.6 9

10

5.1 4.0 3.6 3.8 11 12 2016.1 2

4.8 5.2 3

4

5.4 5

Agriculture, forestry & fisheries

2012 2013 Number of employed (millions)

2015 Q2 Q3

2014

Annual Annual Annual Q3

Q4 Annual Q1

Q4

May

Q1

2016 Apr Apr

24.68 25.07 25.60 25.93 25.77 25.94 25.27 26.10 26.24 26.14 26.19 25.55 26.15 26.45

Employment rate (%)

59.4 59.5 60.2 60.9 60.4 60.6 59.0 60.7 60.9 60.5 60.9 59.7 60.3 61.0

(Seasonally adjusted)

59.4 59.5 60.2 60.3 60.3 60.3 60.5 59.9 60.3 60.5 59.9 60.5 60.1 60.0

Employment growth (y-o-y, thousands)

437

386

533

517

422

337

354

308

310

376

379

287

252

261

(Excluding agriculture, forestry & fisheries)

451

394

601

638

531

444

441

435

419

482

501

341

312

360

14

79

146

194

129

156

139

147

164

176

140

126

48

50

- Manufacturing - Construction

22

-19

42

57

72

27

72

44

11

-19

42

-7

-37

-22

- Services

416

318

424

403

336

250

222

235

234

309

315

216

302

325

- Agriculture, forestry & fisheries

-14

-8

-87 -127 -115 -106 -123

-54

-60

-99

-68 -121 -109 -107

Source: Statistics Korea

Employment by status of workers Source: Statistics Korea (employment trends) 100 4.2

80

4.6

4.8

5.0

5.0 5.0

5.0

4.9 4.9

4.7

4.1 4.0

4.1

4.3

4.5 4.6

4.7

4.7

4.6

4.6

4.6

4.4

3.7

3.9

3.8

4.2

4.3

(%) 4.4

22.1 22.0 22.3 22.2 22.1 22.1 22.1 22.4 22.2 22.1 21.9 21.5 21.5 21.5 21.9 21.8 21.8 21.6 21.5 21.5 21.3 21.2 21.0 20.8 20.9 20.9 21.3 21.2 21.3 6.3

60

4.3

6.0

5.7

6.0

6.1

6.1 6.0

5.8

6.1 6.2

6.4

6.2 6.0

6.0

5.7

6.2 6.5

6.1

6.2

5.9

5.8

5.9

5.7

5.7

5.9

5.5

5.3

5.5

5.4

19.2 19.4 19.5 19.7 19.2 19.4 19.6 19.7 19.7 19.5 20.1 19.7 19.8 19.7 19.7 19.7 19.5 19.4 19.5 19.4 19.3 19.5 19.7 19.5 19.7 19.8 20.2 19.8 19.3

40

20

0

48.3 48.2 47.8 47.3 47.1 47.2 46.8 47.0 47.1 47.2 47.3 48.5 49.0 49.0 48.5 48.1 47.8 47.9 48.0 48.5 48.6 48.7 48.7 49.7 50.4 50.6 49.9 49.4 49.1

2014.1 2

3

4

5

Unpaid family workers

6

7

8

9

10

11

12 2015.1 2

Self-employed workers

3

4

5

6

7

Daily workers

2012 2013

9

10

11

12 2016.1 2

Temporary workers

2014

Employment growth (y-o-y, thousands)

437

386

533

517

Q4 Annual Q1 422 337 354

- Wage workers

Annual Annual Annual Q3

8

3

4

5

Permanent workers

2015 Q2 Q3 308 310

Q4 May Q1 376 379 287

2016 Apr May 252 261

315

483

548

519

476

487

442

422

521

565

460

427

386

358

路 Permanent workers

436

615

443

333

355

432

355

332

505

536

351

505

459

470

路 Temporary workers

-2

-96

140

226

141

54

82

3

1

129

-27

15

96

158

-120

-37

-35

-40

-20

1

4

87

15 -100

136

-93 -169 -270

121

-97

-15

-3

路 Daily workers - Nonwage workers 路 Self-employed workers

-54 -151

-88 -114 -211 -189

-82 -140 -133 4

-98

124

-67

1

19

7

-89

-49

-37 -136 -135

-96 -105

-70

- Male

234

186

266

268

196

132

141

145

111

132

183

107

74

105

- Female

203

200

267

249

226

205

213

163

199

244

195

180

178

155

- 15 to 29

-36

-50

77

102

56

68

32

90

50

100

114

40

43

72

- 30 to 39

-31

-21

-21

-7

-29

-38

-1

-56

-60

-36

-44

-21

-22

-20 -37

- 40 to 49

11

22

38

15

4

-14

-47

-15

1

7

-7

6

-52

- 50 to 59

270

254

239

215

190

149

177

138

145

135

147

84

76

83

- 60 or more

222

181

200

192

201

172

192

150

174

169

167

179

208

162

Source: Statistics Korea

July 2016

23

The number of unemployed persons in May was down 17,000 year-on-year to 1,005,000, and the unemployment rate fell 0.1 percentage points year-on-year to 3.7 percent. The unemployment rate fell or stayed unchanged in all age groups except in the groups of those aged 15 to 29 and those in their 60s or more.

Unemployment rate

Source: Statistics Korea (employment trends)

6 (%)

5

4

3

2 2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

2014.1

2015.1

Original data

2016.1

Seasonally adjusted rate

2012 2013

2014

Annual Annual Annual

Q3

Q4 Annual Q1

2015 Q2 Q3

Q4

May

Q1

2016 Apr May

Number of unemployed (thousands)

820

807

937

884

854

976

Unemployment growth (y-o-y, thousands)

-35

-13

137

107

121

40

58

65

45

-9

71

64

22

-17

- Male

-26

-6

49

37

59

24

25

42

31

-3

49

51

30

16

- Female

1,089 1,042 929

845 1,022 1,153 1,075 1,005

-9

-7

80

70

63

16

32

23

14

-6

21

13

-8

-33

Unemployment rate (%)

3.2

3.1

3.5

3.3

3.2

3.6

4.1

3.8

3.4

3.1

3.8

4.3

3.9

3.7

(Seasonally adjusted)

3.2

3.1

3.5

3.5

3.5

3.6

3.7

3.8

3.6

3.4

3.9

3.8

3.7

3.7

- 15 to 29

7.5

8.0

9.0

8.6

8.3

9.2

10.3

9.9

8.4

8.0

9.3

11.3

10.9

9.7

- 30 to 39

3.0

3.0

3.1

3.0

2.8

3.1

3.1

3.3

3.0

2.9

3.1

3.2

3.3

3.1

- 40 to 49

2.0

2.0

2.2

2.1

2.1

2.3

2.4

2.5

2.3

2.0

2.7

2.4

2.3

2.2

- 50 to 59

2.1

1.9

2.2

2.1

2.2

2.4

2.6

2.6

2.4

1.9

2.6

2.6

2.4

2.4

- 60 or more

2.4

1.8

2.3

1.5

1.6

2.5

4.1

2.2

2.0

2.1

2.2

4.2

2.3

2.4

Source: Statistics Korea

The economically inactive population in May increased 169,000 from a year earlier to 15,930,000, while the labor force participation rate remained unchanged year-on-year at 63.3 percent.

The number of those economically inactive due to education (down 67,000) and childcare (down 108,000) decreased year-on-year, while those due to rest (up 140,000) increased.

24

The Green Book : Current Economic Trends

Labor force participation rate

Source: Statistics Korea (employment trends)

65 (%) 64 63 62 61 60 59 58 57 2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

2014.1

2015.1

Original data

Seasonally adjusted rate

2012 2013

2014

Annual Annual Annual

Economically inactive population (millions)

2016.1

Q3

Q4 Annual Q1

2015 Q2 Q3

Q4

May

Q1

2016 Apr May

16.08 16.22 15.98 15.76 16.07 16.11 16.47 15.84 15.92 16.19 15.76 16.57 16.12 15.93

Labor force participation rate (%)

61.3

61.5

62.4

63.0 62.4 62.6 61.5 63.2 63.0 62.5 63.3 61.7 62.8 63.3

(Seasonally adjusted)

61.3

61.5

62.4

62.5 62.4 62.6 62.8 62.3 62.5 62.6 62.3 62.8 62.4 62.3

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

128

141 -246 -222 -101

- Childcare - Housework

-2 123

1 -39 -3 -131

- Education

-12

77

-81 -109

-72 -146 -141 -213 -112 -118 -230 -108 -112

-67

- Old age - Rest

148 -53

54 -7

93 -92

89 -15

111 140

-41 -99 91 -65

-31 -67

128

72

150

162

128

73

8 -45

41 -91

50 -41

3 -19

-63 -29

43 -115 -123 -108 -49 32 46 84

109 141

68 154

95 151

103 123

171 136

82 138

99

161 97

149

110 150

169

Source: Statistics Korea

9. Financial markets 9.1 Stock market

The KOSPI fell 0.7 percent in June from 1,983.4 points to 1,970.4 points and the KOSDAQ was down 3.3 percent from 698.5 points to 675.1 points.

The KOSPI and KOSDAQ plunged 3.1 percent and 4.8 percent to 1,925 points and 647 points, respectively, on June 24, as investors’ risk aversion heightened after the UK’s decision to leave the

July 2016

25

EU on June 23. The indexes, however, rebounded afterward as shocks from the Brexit vote eased and bargain hunting increased.

Stock prices 2,200 (monthly average) 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

2014.1

2015.1

2016.1

KOSPI

KOSDAQ

(Closing rate)

May 2016

KOSPI Jun 2016

Change1

May 2016

KOSDAQ Jun 2016

Change1

Stock price index (points)

1,983.4

1,970.4

-13.0 (-0.7%)

698.5

675.1

-23.4 (-3.3%)

Market capitalization (trillion won)

1,255.4

1,250.2

-5.2 (-0.4%)

212.7

208.1

-4.6 (-2.1%)

5.0

5.2

0.2 (3.2%)

3.5

3.9

0.4 (12.0%)

32.86

33.35

0.49 (1.5%)

9.82

9.82

Average daily trade value (trillion won) Foreign stock ownership (%, %p)

-

-

1. Change from the end of the previous month in June 2016 Source: Korea Exchange

9.2 Exchange rate

The dollar-won exchange rate fell to around 1,147 won in mid-June due to weak employment data in the US and expectations that the UK would decide on June 23 to remain in the EU. The dollar-won exchange rate, however, surged to around 1,180 won on June 24 as the UK voted to leave the EU. The exchange rate fell again toward the end of the month to close the month at 1,151.8 won as investors’ anxiety eased.

The 100 yen-won exchange rate rose 4.6 percent in June to close the month at 1,122.8 won. The yen appreciated as the UK’s decision to leave the EU heightened investors̓ risk aversion and increased demand for safe assets.

26

The Green Book : Current Economic Trends

(Closing rate)

2010 Dec

2011 Dec

2012 Dec

2013 Dec

2014 Dec

2015 Dec

May

2016 Jun

Change1

Dollar-Won

1,134.8

1,151.8

1,070.6

1,055.4

1,099.3

1,172.5

1,191.7

1,151.8

+3.5

100 Yen-Won

1,393.6

1,481.2

1,238.3

1,002.3

913.0

974.1

1,071.4

1,122.8

-4.6

1. Appreciation from the end of the previous year in June 2016 (%); the exchange rate is based on the closing price at 3:00 p.m., local time.

Source: Bank of Korea

Foreign exchange rates

Source: Bank of Korea

1,800 (month-end, \) 1,600 1,400 1,200 1,000 800 600 2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

2014.1

2015.1

Dollar-Won

2016.1

100 Yen-Won

9.3 Bond market

Treasury bond yields fell in June as the Bank of Korea (BOK) cut its policy rate on June 9 from 1.50 percent to 1.25 percent and demand for safe haven assets increased after the UK decision to leave the EU. In June, 3-year, 10-year and 30-year bond yields fell to record lows of 1.236 percent, 1.459 percent and 1.565 percent, respectively.

Interest rates 9

Source: Bank of Korea

(monthly average, yearly, %)

8 7 6 5 4 3 2 1 2006.1

2007.1

Overnight call rate (daily)

2008.1

2009.1

2010.1

2011.1

2012.1

3-yr Treasury bond yield

2013.1

2014.1

2015.1

2016.1

3-yr corporate bond yield

July 2016

27

(Closing rate, %)

2010 Dec

2011 Dec

2012 Dec

2013 Dec

2014 Dec

2015 Dec

2016 Apr

May

Jun

Call rate (1 day)

2.51

3.29

2.77

2.52

2.03

1.52

1.50

1.48

1.23

-25

CD (91 days)

2.80

3.55

2.89

2.66

2.13

1.67

1.61

1.56

1.37

-19

Treasury bonds (3 yrs)

3.38

3.34

2.82

2.86

2.10

1.66

1.45

1.50

1.25

-25

Corporate bonds (3 yrs)

4.27

4.21

3.29

3.29

2.43

2.11

1.92

1.95

1.69

-26

Treasury bonds (5 yrs)

4.08

3.46

2.97

3.23

2.28

1.81

1.55

1.58

1.30

-28

Change1

1. Basis points, changes from the previous month in June 2016 Source: Bank of Korea

9.4 Money supply and money market

Year-on-year M2 (monthly average) growth decelerated in April to 7.0 percent from 7.8 percent in the previous month. Private sector credit expanded at a slower pace as security investments by depository institutions decreased, and the current account surplus fell due to a declining trade surplus.

(Percentage change from same period in previous year, average)

2010

2011

2012

2013

2014

2015

Annual

Annual

Annual

Annual

Annual

Annual

Feb

Mar

2016 Apr

M1²

11.8

6.6

3.8

9.5

10.9

18.6

19.4

18.8

18.0

721.0

M2

8.7

4.2

5.2

4.8

6.6

8.6

8.3

7.8

7.0

2,303.3

LfÂł

8.2

5.3

7.8

6.9

7.0

9.7

8.9

8.6

8.0

3,172.5

Apr1

1. Balance at end April 2016, trillion won 2. M1 excluding corporate MMFs and individual MMFs while including CMAs 3. Liquidity aggregates of financial institutions (mostly identical with M3) Source: Bank of Korea

Total money supply Source: Bank of Korea 40 (y-o-y, monthly average balance, %) 30

20

10

0

-10

-20 2006.1

2007.1

2008.1

2009.1

2010.1

Reserve money

28

The Green Book : Current Economic Trends

2011.1

M1

2012.1

2013.1

2014.1

2015.1

2016.1

Lf

Bank deposits increased 11.4 trillion won in May. Instant access deposits rose 6.5 trillion won as corporations deposited funds to settle their accounts, while time deposits were up 4.0 trillion won due to inflows of local government funds.

Asset management company (AMC) deposits increased 13.9 trillion won after rising 7.4 trillion won in the previous month. Money market funds (MMFs) expanded at a faster pace (up 4.3 trillion won → up 8.1 trillion won) as the government and corporations deposited surplus funds.

Deposits in financial institutions

Source: Bank of Korea

60 (y-o-y, end of month balance, trillion won) 50 40 30 20 10 0 -10 -20 -30 2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

2014.1

2015.1

2016.1

(Change from the end of the previous period, trillion won)

2010

2011

2012

2013

2014

2015

Annual

Annual

Annual

Annual

Annual

Annual

Feb

Mar

2016 Apr

May

May1

Bank deposits

36.9

58.9

37.0

41.0

115.4

100.3

13.4

3.3

-11.0

11.4

1,405.3

AMC deposits

-16.7

-16.6

18.8

17.7

42.4

44.4

11.6

-11.1

7.4

13.9

467.1

1. Balance at end May 2016 Source: Bank of Korea

10. Balance of payments

Korea’s current account (preliminary) in May posted a surplus of US $10.36 billion, staying in the black for 51 consecutive months.

The goods account surplus increased month-on-month from US $9.56 billion to US $10.74 billion as exports declined at a slower rate.

July 2016

29

Growth in goods exports (y-o-y, %) -19.2 (Apr 2016) → -2.4 (May) Growth in goods imports (y-o-y, %) -18.7 (Apr 2016) → -8.6 (May) Export growth by item in May (y-o-y, %, customs clearance basis) -6.0 (total), -4.2 (steel), -4.4 (semiconductors), -8.9 (automobiles), -14.3 (mobile phones), -16.7 (vessels), -25.6 (oil products) Import growth by category in May (y-o-y, %, customs clearance basis) -9.0 (total), -19.6 (commodities), 1.4 (capital goods), 6.9 (consumer goods)

Current account balance 15

Source: Bank of Korea (balance of payments trends)

(US$ billion)

10

5

0

-5

2006.1

2007.1

Goods account

2008.1

2009.1

2010.1

2011.1

Services account

2012.1

2013.1

2014.1

2015.1

2016.1

Current account

The services account deficit decreased month-on-month from US $1.62 billion to US $1.14 billion, despite a wider deficit in the intellectual property rights account, as the construction account surplus rose while the other businesses account deficit fell.

Services account (US $ billion, Apr → May) -0.40 → -0.45 (manufacturing), -0.05 → -0.16 (transportation), -0.53 → -0.25 (travel), 0.55 → 0.84 (construction), -0.06 → -0.45 (intellectual property rights), -1.11 → -0.73 (other businesses)

The primary income account shifted from a deficit of US $4.07 to a surplus of US $0.91 due to an increase in dividend income. The secondary income account deficit decreased from US $0.50 billion to US $0.15 billion.

30

The Green Book : Current Economic Trends

(US $ billion)

2015 29.11

Q41 26.41

May1 8.32

Q11 24.08

2016 Apr1 3.37

May1 10.36

33.68 -3.09

30.64 -3.56

31.76 -4.67

8.79 -0.08

27.88 -4.17

9.56 -1.62

10.74 -1.14

-1.56 -1.11

2.73 -0.70

0.90 -1.58

0.04 -0.43

1.25 -0.88

-4.07 -0.50

0.91 -0.15

2014 105.87

Q11 22.44

Q21 27.92

88.89 -3.68

120.29 -15.71

24.22 -4.39

4.15 -4.98

5.90 -4.61

3.83 -1.22

Annual

Annual1

Current account

84.37

- Goods balance - Services balance - Primary income balance - Secondary income balance

Q31

1. Preliminary Source: Bank of Korea

The capital and financial account (preliminary) in May saw an outflow of US $8.93 billion.

Capital & financial account balance* (US $ billion) 8.56 (May 2015) → 8.72 (Nov) → 7.86 (Dec) → 6.48 (Jan 2016) → 9.50 (Feb) → 12.24 (Mar) → 0.17 (Apr) → 8.93 (May) * Positive figures represent net outflows, and negative figures represent net inflows.

FDI ended May with a net outflow of US $0.72 billion, reversing from a net inflow of US $0.14 billion a month earlier as Korean FDI increased at a faster pace (up US $1.78 billion → up US $1.91 billion) while inbound FDI expanded at a slower pace (up US $1.93 billion → up US $1.19 billion).

Net outflows of portfolio investment increased from US $3.36 billion to US $4.36 billion, despite Korean investment in foreign shares increasing at a slower pace (up US $7.20 billion → up US $5.07 billion), as foreign investment in Korean shares increased at an even slower pace (up US $3.84 billion → up US $0.71 billion).

Net inflows of financial derivatives investment decreased from US $1.03 billion to US $0.46 billion.

Other investment reversed from a net inflow of US $3.33 billion to a net outflow of US $3.92 billion.

The current account surplus is expected to increase in June as net exports expanded to US $11.64 billion.

Capital & financial account balance

Source: Bank of Korea (balance of payments trends)

15 (US$ billion) 10

5

0

-5

-10

-15 2006.1

2007.1

Direct investment

2008.1

2009.1

2010.1

Portfolio investment

2011.1

2012.1

2013.1

Financial derivatives

2014.1

2015.1

2016.1

Capital & financial account

July 2016

31

11. Prices

11.1 Consumer prices

Consumer prices rose 0.8 percent year-on-year in June.

Consumer price inflation

Source: Statistics Korea (consumer price trends)

7 (%) 6 5 4 3 2 1 0 -1 2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

2014.1

2015.1

Consumer price inflation (m-o-m)

2016.1

Consumer price inflation (y-o-y)

Consumer price inflation

(%)

2015

2016

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Month-on-Month

0.7

0.6

0.9

1.0

1.3

0.8

1.3

1.0

1.0

0.8

0.8

Year-on-Year

0.2

-0.2

0.0

-0.1

0.3

0.0

0.8

-0.3

0.1

0.0

0.0

Source: Statistics Korea

Prices of agricultural, livestock & fishery products fell 0.7 percent after rising 1.3 percent in the previous month due to increased supplies of newly harvested produce. Oil product prices were down 9.6 percent, falling at a slower pace than the previous month. Prices of public utilities, housing rents, public services and personal services followed similar tracks to those of the previous month.

Consumer price inflation in major sectors Total

Agricultural, livestock & fishery products

May (y-o-y, %)

0.8

1.3

-0.9

Jun (y-o-y, %)

0.8

-0.7

-

-0.05

- Contribution (%p)

Manufactured Oil products products

Public utilities

Housing rents

Public services

Personal services

-11.6

-6.4

2.6

2.2

2.2

-0.4

-9.6

-6.5

2.6

2.1

2.2

-0.12

-0.41

-0.30

0.25

0.30

0.69

Source: Statistics Korea

32

The Green Book : Current Economic Trends

Core inflation stood at just under 2.0 percent.

(Percentage change from same period in previous year)

2015

2016

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Consumer prices excluding oil and agricultural products

2.1

2.3

2.4

2.4

1.7

1.8

1.7

1.8

1.6

1.7

Consumer prices excluding food and energy

2.5

2.6

2.7

2.8

1.9

2.0

1.9

1.9

1.8

1.9

Source: Statistics Korea

Consumer prices for basic necessities rose 0.1 percent year-on-year, while fresh food prices fell 1.7 percent from a year earlier.

(Percentage change from same period in previous year)

2015 0.9

May 0.1

Jun 0.1

9.7

9.7

3.5

-1.7

Jan

Feb

0.1

Dec 0.6

0.2

3.7

3.0

6.2

4.2

Sep

Oct

Consumer prices for basic necessities -0.1

-0.2

Fresh food prices

0.7

4.0

2016 Mar Apr 0.4 0.5

Nov 0.1

Aug

9.6

Source: Statistics Korea

11.2 International oil and commodity prices

International oil prices rose in June as political unrest continued to disrupt production in Nigeria while oil production decreased in the US. However, growth in oil prices was limited due to intensifying concerns over global economic slowdown as the UK voted to leave the EU in a referendum on June 23.

Dubai crude (US $/barrel) 45.9 (1st week Jun) → 47.6 (2nd week) → 45.8 (3rd week) → 46.4 (4th week) → 45.4 (5th week)

International oil prices 160

Source: Korea National Oil Corporation

(US $/B)

140 120 100 80 60 40 20 0 2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

2014.1

2015.1

2016.1

Dubai crude

WTI

July 2016

33

(US $/barrel, period average)

2014

2016

2015

Annual Annual

Q1

Q2

Q3

Q4

Q1

Q2

Jan

Feb

Mar

Apr

May

Jun

Dubai crude

96.6

50.7

51.9

60.5

49.9

40.8

30.5

43.2

26.9

28.9

35.2

39.0

44.3

46.3

Brent crude

99.4

53.6

55.1

63.5

51.3

44.7

35.2

47.0

31.9

33.5

39.8

43.3

47.7

49.9

WTI crude

92.9

48.8

48.6

58.0

46.5

42.2

33.7

45.6

31.8

30.6

38.0

41.1

46.8

48.9

Source: Korea National Oil Corporation

Domestic gasoline prices continued to rise in June in line with increasing international oil prices.

Domestic gasoline prices (won/liter) 1,421.1 (1st week Jun) → 1,432.1 (2nd week) → 1,439.5 (3rd week) → 1,441.9 (4th week) → 1,442.6 (5th week) International gasoline prices (US $/barrel) 57.5 (3rd week May) → 57.9 (4th week) → 58.0 (1st week Jun) → 57.7 (2nd week) → 55.1 (3rd week) Dollar-won exchange rate (won) 1,178.1 (3rd week May) → 1,184.9 (4th week) → 1,188.0 (1st week Jun) → 1,169.6 (2nd week) → 1,170.3 (3rd week)

(Won/liter, period average)

2014

2016

2015

Annual Annual

Q1

Q2

Q3

Q4

Q1

Q2

Jan

Feb

Mar

Apr

May

Jun

Gasoline prices 1,827 1,510 1,485 1,543 1,544 1,468 1,363 1,396 1,385 1,352 1,350 1,362 1,389 1,438 Diesel prices

1,638 1,300 1,313 1,344 1,309 1,233 1,121 1,168 1,157 1,101 1,103 1,121 1,158 1,225

Source: Korea National Oil Corporation

Dubai crude prices and import prices Source: Korea National Oil Corporation 160

160 (thousand won/B)

(US $/B)

140

140

120

120

100

100

80

80

60

60

40

40

20

20 2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

Dubai crude (import prices, won, left)

34

The Green Book : Current Economic Trends

2012.1

2013.1

2014.1

2015.1

2016.1

Dubai international prices (dollar, right)

International prices of wheat and corn rose due to concerns about bad weather conditions, including dry weather in Brazil and in the US. International grain price increases in June (monthly average, m-o-m, %) 1.0 (wheat), 4.7 (corn), 7.8 (soybean)

International prices of nonferrous metals fell due to expectations of production cuts.

At a meeting hosted by the China Nonferrous Metals Industry Association (CNIA) on June 13, major smelters agreed to cut production if aluminum prices fell below US $1,727 per ton.

Nonferrous metal price increases in June (monthly average, m-o-m, %) 1.3 (tin), 2.3 (nickel), 1.2 (lead), 1.6 (aluminum), -2.1 (copper)

International commodity prices

Sources: Bloomberg (CRB), Bank of Korea (Reuters Index) * C RB demonstrates a futures price index of 21 commodities listed on the US Commodity Transaction Market, including beans and other crops, crude oil and jewelry.

4000

470

430

390

3000

350

2000

310

270

1000

230

190

150

2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

2014.1

2015.1

CRB (left)

2016.1

0

Reuters Index (right)

(Period average)

2014 Annual Annual Q1

2016

2015 Q2

Q3

Q4

Q1

Q2

Jan

Feb

Mar

Apr

May May

Reuters Index1 (Sep 18,1931=100) 2,523 2,328 2,368 2,394 2,287 2,269 2,115 2,250 2,147 2,067 2,132 2,161 2,222 2,361 1. A weighted average index of 17 major commodities Source: KOREA PDS

July 2016

35

12. Real estate market 12.1 Housing market

Apartment prices nationwide rose 0.04 percent month-on-month in June.

Apartment prices rose 0.15 percent in the Seoul metropolitan area, which includes Seoul (up 0.2%), Gyeonggi Province (up 0.1%) and Incheon (up 0.1%).

Apartment sales prices by region

Source: Korea Appraisal Board

3 (m-o-m, %)

2

1

0

-1

2009.1

7

2010.1

7

2011.1

7

Nationwide

2012.1

7

2013.1

7

2014.1

Seoul metropolitan area

7

2015.1

7

2016.1

Areas excluding Seoul metropolitan area

Apartment prices

(Percentage change from previous period)

2015

2010 2011 2012 2013 2014

Annual Annual Annual Annual Annual Annual May

2016 Jun Annual Mar

Apr

May

Jun

Nationwide

1.9

6.9

0.0

0.3

1.7

3.5

0.3

0.4

0.1

0.00

0.02

0.03

0.04

Seoul metropolitan area

-1.7

0.5

-3.0

-1.1

1.5

4.4

0.4

0.5

0.3

0.00

0.04

0.09

0.15

Seoul

-1.2

0.3

-2.9

-1.4

1.1

4.6

0.4

0.5

0.5

0.01

0.08

0.15

0.22

Gangnamš

-1.0

0.3

-3.5

-1.1

1.2

5.2

0.6

0.6

0.6

-0.02

0.09

0.20

0.31

Gangbuk²

-1.4

0.3

-2.3

-1.7

1.1

3.9

0.3

0.4

0.4

0.04

0.07

0.09

0.13

Areas excluding the Seoul metropolitan area

6.4

15.1

3.1

1.7

1.9

2.7

0.2

0.3

0.0

-0.01

0.00 -0.02 -0.05

1. Upscale area of Southern Seoul Source: Korea Appraisal Board

2. Northern Seoul

Apartment prices fell 0.05 percent in areas excluding the Seoul metropolitan area, which include the five metropolitan cities (down 0.0%) and the eight provinces (down 0.1%).

36

The Green Book : Current Economic Trends

Apartment price increases in five metropolitan cities (m-o-m, %) Busan (0.2), Daegu (-0.3), Gwangju (0.0), Daejeon (0.0), Ulsan (0.0)

Apartment rental prices nationwide rose 0.1 percent month-on-month in June. Rental prices increased 0.2 percent in the Seoul metropolitan area and stayed unchanged in areas excluding the Seoul metropolitan area.

Apartment rental price increases in major districts in Seoul (m-o-m, %) Gangnam (0.0), Seocho (0.0), Songpa (0.0), Mapo (0.4), Gwanak (0.4), Yangcheon (0.3)

Apartment rental prices by region Source: Korea Appraisal Board 3 (m-o-m, %)

2

1

0

-1

-2 2009.1

7

2010.1

7

2001.1

7

Nationwide

2012.1

7

2013.1

7

2014.1

7

Seoul metropolitan area

2015.1

7

2016.1

Areas excluding Seoul metropolitan area

Apartment rental prices

(Percentage change from previous period)

2015

2010 2011 2012 2013 2014

Annual Annual Annual Annual Annual Annual May

2016 Jun Annual Mar

Apr

May

Jun

Nationwide

7.1

12.3

3.5

4.7

3.4

4.8

0.4

0.5

0.7

0.1

0.1

0.1

0.1

Seoul metropolitan area

6.3

11.0

2.1

6.2

4.7

7.1

0.7

0.7

1.1

0.2

0.2

0.2

0.2

Seoul

6.4

10.8

2.1

6.6

3.6

7.2

0.6

0.7

1.0

0.1

0.1

0.2

0.2

Gangnamš

7.6

11.1

2.4

6.7

3.3

7.9

0.7

0.8

0.9

0.1

0.1

0.1

0.2

Gangbuk²

5.1

10.6

1.8

6.4

3.8

6.5

0.5

0.5

1.0

0.1

0.1

0.2

0.2

Areas excluding the Seoul metropolitan area

9.2

14.5

4.6

3.3

2.2

2.8

0.2

0.3

0.3

0.1

0.1

0.0

0.0

1. Upscale area of Southern Seoul Source: Korea Appraisal Board

2. Northern Seoul

Apartment sales transactions in May increased 3.4 percent to 89,267 transactions from 86,298 transactions a month earlier and decreased 18.8 percent year-on-year from 109,872 transactions.

July 2016

37

Monthly apartment transaction volume

Source: Ministry of Land, Infrastructure and Transport

160 (thousands) 140 120 100 80 60 40 20 0

2009.1

7

2010.1

7

2011.1

7

2012.1

Nationwide

7

2013.1

7

2014.1

7

Seoul metropolitan area

2015.1

7

2016.1

Areas excluding Seoul metropolitan area

Apartment sales transactions 2011

2012

2013

(Thousands)

2014

Nationwide

82

61

71

84

2016

2015

Annual1 Annual1 Annual1 Annual1 Annual1 May

99

110

Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May 110 111

94

86

106

98

88

62

59

78

86

89

1. Monthly average Source: Ministry of Land, Infrastructure and Transport

12.2 Land market

Land prices nationwide rose 0.22 percent month-on-month in May.

Land prices 2010

(Percentage change from previous period)

2011

2012

2013

2015

2014

Annual Annual Annual Annual Annual Annual

2016

Q1

Q2

Q3

Q4

Annual

Q1

Mar

Apr

May

Nationwide

1.05

1.17

0.96

1.14

1.96

2.40

0.48

0.59

0.60

0.72

1.00

0.56

0.22

0.21

0.22

Seoul

0.53

0.97

0.38

1.21

2.66

2.69

0.57

0.69

0.69

0.72

1.06

0.57

0.21

0.23

0.26

Gyeonggi

1.49

1.47

1.04

0.91

1.24

1.73

0.35

0.41

0.43

0.52

0.72

0.37

0.17

0.17

0.18

Incheon

1.43

0.66

0.46

0.87

1.35

1.95

0.37

0.53

0.54

0.50

0.66

0.34

0.13

0.19

0.12

Source: Korea Appraisal Board

Land prices increased 0.21 percent in the Seoul metropolitan area, led by Seoul (up 0.26%) and Gyeonggi Province (up 0.18%).

38

The Green Book : Current Economic Trends

Land price increases in Seoul metropolitan area (m-o-m, %) 0.21 (Oct 2015) → 0.20 (Nov) → 0.20 (Dec) → 0.13 (Jan 2016) → 0.14 (Feb) → 0.18 (Mar) → 0.20 (Apr) → 0.21 (May)

Land prices rose 0.24 percent in areas excluding the Seoul metropolitan area, led by Busan (up 0.35%), Daegu (up 0.32%) and South Chungcheong Province (up 0.15%).

Land price increases in areas excluding Seoul metropolitan area (m-o-m, %) 0.25 (Oct 2015) → 0.32 (Nov) → 0.34 (Dec) → 0.24 (Jan 2016) → 0.22 (Feb) → 0.27 (Mar) → 0.24 (Apr) → 0.24 (May)

There were 253,000 land transactions in May, up 3.2 percent from the previous month and down 3.5 percent from a year ago (262,000).

Land transactions increased month-on-month in the Seoul metropolitan area including Seoul (up 10.3%), Incheon (up 12.7%) and Daegu (up 1.3%). Land transactions decreased in some areas including Ulsan (down 9.1%), Sejong (down 6.3%) and South Jeolla Province (down 6.6%).

Vacant land transactions, which accounted for 38.3 percent of total land transactions, recorded 97,000 in May, up 0.4 percent month-on-month and 5.7 percent compared with a year ago (92,000).

Land transaction volume

Source: Korea Appraisal Board

500,000

(thousand m²)

450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0

2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

Seoul metropolitan area

2014.1

2015.1

Areas excluding Seoul metropolitan area

Land transactions 2010

2011

2016.1

(Land lots, thousands)

2012

2013

2014

2015

2016

Annual1 Annual1 Annual1 Annual1 Annual1 Annual1 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

Nationwide 187

208

170

187

220

257

262 279 290 241 229 263 259 274 207 191 248 245 253

Seoul

16

18

13

17

22

30

34

33

36

29

27

31

29

28

21

20

26

28

31

Gyeonggi

41

43

33

37

46

58

60

65

62

56

58

63

61

62

48

44

56

57

59

Incheon

8

10

8

8

10

12

12

13

15

13

12

14

13

12

8

8

10

12

13

1. Monthly average Source: Korea Land & Housing Corporation

July 2016

39

13. Composite indices of business cycle indicators

Industrial output in May increased 1.7 percent month-on-month and 4.8 percent year-on-year. Output rose month-on-month in mining & manufacturing (up 2.5%), construction (up 2.9%), services (up 0.1%) and public administration (up 10.6%).

Index of all industry production

Source: Statistics Korea (industrial activity trends)

20 (%) 15 10

5 0 -5 -10 -15 2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

2014.1

Index of all industry production (m-o-m)

2015.1

2016.1

Index of all industry production (y-o-y)

Oct

2015 Nov

Dec

Jan

Feb

2016 Mar1

Apr1

May1

-0.8 2.5

-0.5 2.0

1.5 2.8

-1.4 1.7

0.7 2.5

0.7 2.4

-0.8 0.8

1.7 4.8

Coincident composite index (2010=100) (m-o-m, %)

119.0 0.5

119.1 0.1

119.4 0.3

119.3 -0.1

119.4 0.1

119.5 0.1

119.8 0.3

120.3 0.4

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

100.9 0.3

100.7 -0.2

100.6 -0.1

100.3 -0.3

100.2 -0.1

100.0 -0.2

100.0 0.0

100.2 0.2

Leading composite index (2010=100) (m-o-m, %)

122.7 0.4

123.0 0.2

123.2 0.2

123.4 0.2

123.5 0.1

123.9 0.3

124.5 0.5

124.9 0.3

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

101.0 0.1

100.9 -0.1

100.8 -0.1

100.5 -0.3

100.3 -0.2

100.3 0.0

100.4 0.1

100.4 0.0

Index of all industry production (m-o-m, %) (y-o-y, %)

1. Preliminary

The cyclical indicator of the coincident composite index rose 0.2 points to 100.2. Six components of the coincident composite index, such as retail sales, the value of construction completed, imports, domestic shipments, service output and nonfarm payroll employment increased, while mining & manufacturing production stayed unchanged.

40

The Green Book : Current Economic Trends

Components of the coincident composite index in May (m-o-m) retail sales (1.4%), value of construction completed (1.2%), imports (0.6%), domestic shipments (0.4%), service output (0.2%), nonfarm payroll employment (0.1%), mining & manufacturing production (0.0%)

Cyclical indicator of coincident composite index

Source: Statistics Korea (industrial activity trends)

110 (points)

100

90 2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

2014.1

2015.1

2016.1

The cyclical indicator of the leading composite index remained unchanged month-on-month at 100.4.

Four components of the leading composite index, including the inventory circulation indicator, domestic shipments of machinery and KOSPI, increased, while four others, including the value of construction orders received, the ratio of export to import prices and the ratio of job openings to job seekers, decreased.

Components of the leading composite index in May (m-o-m) inventory circulation indicator (3.1%p), domestic shipments of machinery (1.9%), KOSPI (1.1%), consumer expectations index (0.6p), value of construction orders received (-11.1%), ratio of export to import prices (-1.2%), ratio of job openings to job seekers (-1.3%p), spreads between long & short term interest rates (-0.01%p)

Cyclical indicator of leading composite index 110

Source: Statistics Korea (industrial activity trends)

(points)

100

90 2006.1

2007.1

2008.1

2009.1

2010.1

2011.1

2012.1

2013.1

2014.1

2015.1

July 2016

2016.1

41

Policy Issue

Economic policies for the second half of 2016 Service sector development plan 2016 supplementary budget 42

Policy The Green Issue Book : Current Economic Trends

Economic Policies for the Second Half of 2016 Government to Actively Stimulate Economy through Expansionary Fiscal Policies I. Evaluation for the first half of 2016 In the first half of 2016, the government aggressively pursued structural reforms while working to revitalize the economy. The government frontloaded this year’s budget and extended the individual tax cut at the beginning of the year amid concerns over a consumption cliff. These efforts led to a modest recovery in production and domestic demand from March after falling in January and February.

However, job growth has slowed as the private sector has yet to gain momentum while restructuring is underway. The number of newly employed persons remained at less than 300,000 for two consecutive months recently.

Against this backdrop, it is crucial to create jobs and produce tangible results from structural reforms in the second half of the year. The government will focus on enhancing competitiveness through the reforms in order to promote growth and job creation amid sluggish global growth. The government will work to accelerate structural reforms in the four areas of the labor, financial, public and education sectors as well as reforming industries, including corporate restructuring and nurturing new industries.

In the process of these reforms, the corporate restructuring of marginal and vulnerable businesses is expected to negatively affect the economy and employment in the short run. In this regard, the government will actively make policy efforts to support the reforms.

II. 2016 economic outlook 1) Growth The economy is expected to grow 2.8 percent in 2016, higher than the previous year, as policy efforts including fiscal stimulus offset the negative impacts of restructuring on the economy and employment.

Private consumption this year is projected to increase 2.2 percent and facility investment is expected to rise 0.3 percent. Investment in construction and intellectual property products will rise 5.6 percent and 1.8 percent, respectively.

July 2016

43

2) Employment The Korean economy is expected to add 300,000 jobs this year, partly thanks to expansionary macroeconomic policies, despite deteriorating labor market conditions. The employment rate (ages 15-64) is projected to increase 0.4 percentage points to 66.1 percent this year.

3) Inflation Prices are expected to increase 1.1 percent in 2016 as downward pressure from supply-side factors eases due to increasing oil prices.

4) Current account balance The current account surplus is expected to narrow to US $98 billion this year owing to an increase in imports, partly due to rising oil prices, whereas exports have yet to pick up. Exports and imports are forecast to fall 4.7 percent and 6.0 percent, respectively, in 2016.

III. Economic policy framework for the second half 1) Adopt expansionary macroeconomic policies to stimulate job creation and support corporate restructuring - Increase fiscal spending by more than 20 trillion won including a 10 trillion won supplementary budget, in order to support employment and low income families affected by the corporate restructuring, and respond to external risks including Brexit - Absorb shocks from corporate restructuring by providing support for employment and local economies - Maintain expansionary monetary policies and continue to work on stabilizing FX markets

2) Accelerate the four-area reform and industrial restructuring - Place job creation at the heart of the industrial restructuring - Work on both corporate restructuring and the development of new growth engines

3) Strengthen risk management - Be prepared for risks from Brexit and global financial market volatility - Effectively manage household debt

44

Policy Issue

IV. Detailed plans by area The government will increase support for stimulating the economy and creating jobs, while continuing to pursue structural reform.

Economic policies for the second half of 2016 Stimulate the economy

1) Promote consumption - Promote the purchase of eco-friendly products: Give a 70 percent sales tax cut on new car purchases when you put the old car out of service forever, expand the rebate programs for scrapping old diesel cars in terms of both rebate amount and the number of cars to promote early scrapping, and provide rebates worth 10 percent of the prices of the product you purchase if the products are rated Grade 1 Energy Efficiency - Promote tourism and leisure industries, while working on revising the holiday system - Revise the corporate tax deduction system to strengthen the link between corporate earnings and household income, in a way to further encourage corporations to increase wages and investment - Expand reverse mortgages for the elderly to houses worth more than 900 million won and condominiums 2) Promote investment in eco-friendly technologies - Give emissions trading point incentives to companies working on new energy technology and companies replacing the existing facilities with energy efficient facilities or facilities that reduce greenhouse gas emissions - Promote investment in eco-friendly vehicles: Install electric vehicle charging stations nationwide, while working on making the station mandatory for an apartment building - Launch safety and environment funds worth 5 trillion won, which will invest in improving air quality - Work on issuing Green Bonds to encourage the private sector to invest in environment 3) Encourage the reshoring of Korean companies - Expand the government support for reshoring to medium-sized companies, which has been given to small companies returning to Korea: corporate or income tax exemption for three years and 50 percent reduction for the following two years, financial support for employing new workforce, E-7 visas to be issued for up to 30 employees moving to Korea, exporters to be allowed to locate in the Free Trade Zone 4) Strengthen export support - Restructure overlapping or similar programs, and expand choices exporters can choose services from by promoting competition between public and private service providers, while extending the tariff reduction for factory automation equipment imports until the end of 2018 - Develop support for promising items, such as luxury consumer goods, while increasing export financing for promising new items and applying tariff rate quotas to equipment and materials needed for the manufacturing of these items

July 2016

45

- Streamline the process of online export - Provide emergency trade subsidies - Help develop new markets: Continue to support Korea-Iran projects from exploring new projects to establishing a settlement system, raise the ceiling of credits extended by the Export-Import Bank of Korea (KEXIM) and Korea Trade Insurance Corporation (K-sure) for projects between Korean companies and developing countries, support Korean companies’ investing in overseas infrastructure development through Korea Investment Corporation (KIC) Support the working class

1) Provide support for local economies affected by corporate restructuring, including layoffs - Designate the shipbuilding industry as the industry in need of the special unemployment support to help the workforce find jobs through job training programs and develop projects that will absorb the workforce in the shipbuilding industry - Provide SMEs dealing with shipbuilding equipment and materials with emergency financing, while promoting their venturing into other areas by offering R&D support, increasing subsidies and giving opportunities to participate in SOC and other public projects - Early start the construction of nuclear reactors in Ulsan, in which a total of 8.6 trillion won is expected to be invested between 2016 and 2022, contributing to job creation in the region - Increase financial support for small merchants through public microfinance institutions and local branches of Korea Federation of Credit Guarantee Foundations - Open the Center for Supporting the Shipbuilding Industry in areas affected by the restructuring, which provides all round support 2) Improve government employment support programs - Place job creation at the heart of government policies when developing and assessing all government policies - Increase support delivered by the government itself, designed to stimulate employment of the target group: Internship support or other employment support targeting those without jobs for six months or more, support for working mothers, such as part-time employment support and substitute employee support - Restructure government training programs, reflecting the market demand, and integrate information systems to help job seekers easily access the information they need - Continue to work on creating young adult and female jobs: Provide financial support worth more than 12 million won to those working at SMEs for two years as permanent employees, provide companies with incentives for employing young adults, strengthen female employment support 3) Correct unequal treatment and promote fair competition in the job market - Continue to work on correcting unfair practices which discriminate temporary workers: Encourage companies to increase permanent workers and develop guidelines on the treatment of temporary workers - Eliminate unfair practices between contractor and subcontractor companies by strictly treating any corrupt practices including technology theft

46

Policy Issue

- Promote large corporation-SME joint investment in technology: Increase the Public-Private Joint Technology Investment Fund from 710 billion won to 750 billion won, which is designed to invest in technologies being developed by SMEs 4) Increase competitiveness of the self-employed - Provide business lifecycle-specific support: Financial support and consultation services for the startup stage, strengthened protection for small business owners and guidelines on closing a business for the final stage - Work on expanding the unemployment benefit support to the self-employed without employees 5) Strengthen support for low income families - Work on reducing basic living costs by promoting competition and improving the social security system - Impose a freeze on the National Healthcare Insurance Rates Four-area reform

1) Public sector - Continue to pursue mid- to long-term fiscal soundness: Work on establishing strict fiscal discipline, such as drawing up the Special Act on Fiscal Soundness - Keep a special account for local government education subsidies to require local governments to be more responsible for their spending on education - Work on reforming public institutions: Continue to pursue increasing management efficiency, adopt a performance-based reward system, restructure the energy, environment and education sectors in a way to increase core competencies, start working on the restructuring of the healthcare, public finance and industry support sectors, open the energy market to the private sector 2) Labor sector - Establish mid- to long-term immigration policies to attract qualified human resources: Lift requirements to receive E-7 visas for those having expertise in IT and other professional areas 3) Education sector - Continue to work on university restructuring, reflecting demographic changes and industrial demand - Promote the development of joint industry-university education programs, which include job opportunities, while drawing up plans to expand the vocational high school 4) Financial Sector - Continue to work on the final approval of internet-only banks and the revision of the bank law in order to allow IT enterprises to participate in internet-only banks - Encourage private equity funds to participate in M&As by easing regulations on asset management and extending the tax exemption for stock trading - Further develop the capital market to be a healthy source of corporate finance: Extend stock and FX trading hours, boost short-term debt markets, such as Repos, by improving regulations

July 2016

47

- Continue to pursue the revision of the Capital Markets Act, which includes transforming the Korea Exchange (KRX) into a holding company - Work on revising the Foreign Exchange Transactions Act in order to ease regulations on capital transactions, which will also aim at allowing fintech companies to provide FX transaction services Industrial restructuring

1) Corporate and industrial restructuring - Regularly hold ministerial meetings to check corporate and industrial restructuring from a macroeconomic point of view: Whether they are being carried out in a way to enhance industrial competitiveness - Establish a comprehensive road map to successful industrial restructuring and provide support for voluntary restructuring based on the Corporate Revitalization Act: The government will unveil plans in September to increase competitiveness of the shipbuilding, shipping, steel and oil refining industries, all of which are suffering from oversupply, and will develop programs to support voluntary restructuring by July, which will include financial, tax and R&D support - Thoroughly prepare for financial market volatility that may arise due to the restructuring: 1 trillion won worth of direct investment in the Export-Import Bank of Korea (KEXIM), 11 trillion won worth of the Bank Recapitalization Fund with which KEXIM and Korea Development Bank (KDB) will buy coco-bonds, additional measures in hand in case of systemic risks, including the funding from KEXIM - Work on increasing management efficiency in KEXIM, KDB and other state-run banks: The banks will cut wages and carry out downsizing, and the government will draw up plans to increase management efficiency in state-run banks by September - Work on avoiding anxiety in the corporate bond market by continuing to provide guarantees on SME bonds (P-CBOs) and drawing up measures to improve the corporate bond market by July, which will include easing regulations to expand the market 2) Develop new growth engines - Designate 11 new growth engines1 which government support will focus on: Corporations investing in the new growth engines will receive up to 30 percent tax deduction for R&D investment and up to 10 percent tax deduction for facility investment, and the government will revise tax support given to companies with a large foreign shareholder (more than 10 percent) for the new growth engines to benefit from it - Conduct a zero base review of the current R&D projects (12.8 trillion won) and reallocate 15 percent of the budget to the new growth engines, while aggressively sharing investment risks with the private sector through a New Growth Engine Fund, in which the government is the first to take losses if losses arise - Use the Creative Economy Centers as a startup hub, in particular high-tech ventures, and improve tax support for venture investment: Introduce corporate tax deduction for venture investment and expand tax support for technology M&As - Include new services, in particular the sharing economy, in the venture business list

48

Policy Issue

- Continue to foster the seven promising service industries of healthcare, tourism, contents, education, finance, SW and logistics - Continue to work on improving regulations: Enact the Special Act on Regulatory Reform and adopt a negative list approach, introduce the regulatory system which puts a limit on the total amount of regulations, enact the Special Act on Regulation Free Zones Strengthen risk management

1) Actively respond to external risks - Brexit: Operate a 24-hour Government-wide Monitoring and Response System to monitor the local and global financial markets and economic developments, implement existing contingency plans to help stabilize the foreign exchange and financial markets, and closely cooperate with the G20, international financial institutions and neighboring nations such as China and Japan - Monitor the developments in exports and commodity supply in order to ensure that the volatility in the financial sector does not spread to the real economy, while providing support for exporters and SMEs that are negatively affected - Analyze and respond preemptively to potential impacts of the UK leaving the EU on global trade, currency and financial markets in the medium- to long-term - Enhance foreign exchange soundness: Adopt a foreign currency liquidity coverage ratio (LCR) requirement for banks 2) Enhance the structure of household debt and strengthen microfinance programs - Banks: Raise the target ratio of fixed-rate amortized loans and encourage amortized loans for Jeonse (lump-sum deposits with no monthly payments), while implementing the use of Debt Service Ratio (DSR) in the loan screening process - Non-bank financial institutions: Apply the guidelines on loan screening to the insurance sector from July - Microfinance programs: Boost support for low income and more vulnerable borrowers, increase loans with mid-level interest rates by launching loan products backed by credit guarantee insurance in July and establishing Internet-only banks

1. Future cars, AI technology, next generation SW and security, contents, next generation electronic devices and information security, next generation broadcasting and communications, bio- and health industries, energy and environment industries, material science and engineering, robots, aerospace engineering

July 2016

49

Service Sector Development Plan Service Sector Development Plan Focuses on Creating High Value-added Industries through Convergence

The government unveiled its plan to promote the service sector on July 5, which focuses on developing a high value-added industry by promoting industrial convergence between the manufacturing and service sectors.

I. Strategies 1) Strengthen both services and manufacturing through convergence - Expand the current tax and financial support to services, which has been given exclusively to manufacturing businesses - Develop services which add high value to manufactured products, such as design and advertising - Integrate manufacturing and services to improve productivity and develop new business models1

2) Create a business environment that promotes the service sector - Increase investment in private sector R&D projects - Revise regulations on business activities2 - Grow professional workforce

3) Develop the seven promising areas to become new growth engines - Develop area-specific support: healthcare, tourism, contents, education, financial services, software and logistics - Provide special support for new growth engines, including tax, financial and human resources development support

1. Examples are using IT to improve production and developing a packaged product of high tech devices and maintenance services 2. Examples are regulations forbidding remote healthcare services and putting a cap on the shareholding of internet-only banks

50

Policy Issue

II. Expected outcomes Macroeconomy

Growth - Add 0.1-0.2 percentage points to annual growth until 2020 - Added value created in the service sector to be increased from 60 percent in 2015 to 65 percent in 2020 Service sector jobs - Take up 70 percent of the total jobs in 2015 to 73 percent in 2020 - Create 250,000 jobs in promising services Service exports - Increase from US $97.8 billion in 2015 to US $150 billion in 2020 - Services account to erase a deficit of US $15.7 billion by 2020

Korean people: quality of life to be improved

Enterprises: new business opportunities to be created

Enhanced convenience - Enjoy high tech services: remote healthcare, precision medicine, drone deliveries - Enjoy personalized medical, tourism, education and financial services New job opportunities - Jobs to be created in promising services: cloud computing experts, VR experts, fintech technical professionals, electronic learning content developers Productivity - Increased share of R&D investment in services will lead to improved productivity: Government to increase its service R&D investment from 3 percent of the total public sector R&D investment in 2016 to 6 percent in 2021, private sector to increase theirs from 8.5 percent of the total service R&D investment in 2013 to 12.5 percent in 2020 Investment - Eased regulations on market entry will lead to increased investment - Financial support for services will be increased from 39 trillion won in 2015 to 54 trillion won in 2020 New markets - Help companies reach new export markets by providing export financing and trade insurance support - Help companies find new business opportunities in areas such as convergence services and public procurement

July 2016

51

III. The plan 1) Strengthen both services and manufacturing through convergence - Adopt a negative list approach to services: tax deduction for R&D and human resources development investment, job creation, SME social security contributions - Allow nonscience or engineering majors to be eligible for the R&D investment tax deduction - Increase tax support for new growth engines in the service sector, such as the bio-health industry, cloud computing, electronic learning and fintech, in order to promote job creation and investment in those fields: up to 100 percent corporate or income tax deduction for investment with the number of jobs created by the investment taken into account, 75 percent of tax deduction for social security contributions - Increase financial support for services from 39 trillion won in 2015 to 54 trillion won in 2020 - Develop business services which increase competitiveness of the manufacturing industry, such as design and engineering: Promote M&As between business service companies and industry-university cooperation, support business service startups - Integrate services and manufacturing to improve productivity, such as integrating production with IoT or cloud computing, or to develop a new business model, such as selling healthcare products and maintenance services as a package - Promote industrial convergence: Ease regulations on preliminary approval to support the launch of new products, draw up guidelines for using personal information, promote the use of data fusion to support fintech and precision medicine

2) Create a business environment that promotes the service sector - Invest a total of 4.7 trillion won in service R&D 3 between 2017 and 2021, and encourage the commercialization of private sector R&D outcomes by providing financial and consulting support - Ease regulations: Currently working on the 46 most important regulations across the seven promising areas. Details of the revision will be announced in June 2017.

3) Seven promising areas Healthcare

- Promote IT-medical service convergence: Allow remote medical care, expand precision medicine, work on developing new medical services - Ease regulations to improve consumer convenience: Increase the number of over the counter medications, develop a mobile app-based healthcare system - Promote new businesses, including medical tourism and medical equipment manufacturing

3. 1.5 trillion won in new growth engines, 1.3 trillion won in packages products of manufactured products and services, 0.3 trillion won in core technologies

52

Policy Issue

Tourism

- Develop target market specific tourism programs, ease environment regulations to grow cruise and mountain sports industries - Increase tourist accommodations and tourist information centers, develop tourism workforce

Contents

- Provide a content industry-friendly environment: Strengthen intellectual property rights, give up to 10 percent tax deduction for audio-visual content creation, extend content propertybased loans - Increase investment in content development, including games and stories

Education

- Promote the use of high technology in education: Expand cloud computing-based electronic learning, launch a pilot school which uses state of the art ICT as teaching tools, such as AI, AR and VR - Ease regulations regarding the management of foreign school branches in Korea

Financial services

- Innovate financial services through ICT-financial service convergence: Promote fintech, ease regulations on internet-only banks, which includes raising the shareholding ceiling applied to nonfinancial corporations from 4 percent to 50 percent, allow ventures that have successfully raised funds through crowd-funding to be listed on the Korea New Exchange (KONEX) market or to be traded in the over the counter market - Develop a variety of financial services: Use big data in designing insurance products, strengthen asset management services for the elderly - Transform the Korea Exchange (KRX) into a holding company

Software

- Promote the use of cloud computing: The public sector itself will use cloud computing, and the government will revise regulations on information security, such as requirements to use separate servers and networks

Logistics

- Work on developing markets for high tech logistics services, such as drone delivery, IoT-based real time tracking of deliveries, marine electronic navigation, robotic shuttles - Develop the freight delivery market: Revise regulations regarding the use of self-driving trucks in order to allow them to be used if they meet international safety standards

July 2016

53

2016 Supplementary Budget Supplementary Budget Drawn up to Support Industrial Restructuring and Job Creation

The government drew up a supplementary budget proposal worth 11 trillion won in order to support the restructuring of the shipbuilding industry and prepare for shocks in the job market following the restructuring. To finance the supplementary budget, the government will use this year’s extra tax revenues worth 9.8 trillion won and utilize 1.2 trillion won worth of budget surpluses from last year. The supplementary budget includes 1.2 trillion won of budget expenditures which will be used to redeem government debt. The redemption will reduce the government debt by 0.8 percentage points from 40.1 percent to GDP to 39.3 percent.

Expenditure plan Budget allocation

(trillion won)

Budgets

Major projects - Provide financial support through state-owned banks (1.4)

Support industrial restructuring

1.9

- Finance public vessel construction (0.1) - Finance guarantee and insurance programs (0.4) - Provide startup support (0.3)

Job creation and working class support

1.9

- Provide layoffs in the shipbuilding industry with job training and other employment support (0.04) - Social security benefits and other basic welfare support (0.2) - Strengthen the government employment program (0.04) - Refurbish basic infrastructure facilities, such as old sewages and reservoirs (0.4)

Stimulate local economies

2.3

- Alleviate shortages of business operation funds in SMEs and small businesses (1.0) - Finance local projects suspended due to budget shortages (0.9)

Support local governments

3.7

Redeem government debt

1.2

Total budget

11.0

54

Policy Issue

- Grants (1.8) - Education subsidies (1.9)

Economic News Briefing

Government announces 10th Round of Measures to Boost Investment Korea joins Paris Club Government to make fundraising easier for SMEs FDI reaches record high in first half of 2016

Government announces 10th Round of Measures to Boost Investment The government unveiled on July 7 the 10th Round of Measures to Boost Investment at the 9th Presidential Meeting on Trade and Investment, which focuses on promoting new industries, including the halal and kosher markets, companion animal industry, rental housing industry, sports industry and virtual reality, as well as supporting ventures and helping restart projects suspended on the site due to regulations. The 10th round of measures is expected to attract 3.6 trillion won in investment from the private sector.

Korea joins Paris Club Korea became the 21st member of the Paris Club, an informal group of creditor nations, at an official ceremony held during a conference commemorating the club’s 60th anniversary in Paris on July 1.

Government to make fundraising easier for SMEs The Financial Services Commission (FSC) announced on July 4 new measures to make fundraising easier for small- and medium-sized enterprises (SMEs). Companies with low credit ratings will be able to use their intellectual property (IP) as collateral to issue corporate bonds, while the Korea Development Bank (KDB) and Industrial Bank of Korea (IBK) will create a 100 billion won fund to support companies applying for IP-backed bond issuance. Korea’s corporate bond market has not functioned properly as a source of financing for SMEs, despite the market’s considerable growth over the last seven years, because it has been dominated by low-risk bonds issued by large companies. The FSC will also allow sales of private debt funds that pool capital from institutional investors to lend to companies.

FDI reaches record high in first half of 2016 FDI in the first half of 2016 reached a record high of US $10.52 billion, up 18.6 percent from last year.

Previously, the record was US $10.33 billion set in 2014. Investments from China and the EU surged 79.5 percent and 221.0 percent, respectively. By sector, investments in manufacturing increased 159.6 percent backed by electronics, transportation, machinery and petrochemicals, while investments in services rose 13.7 percent with money flowing into financial & insurance services and business services.

56

Economic News Briefing

Statistical Appendices

01. National accounts 02. Production, shipment and inventory 03. Production capacity and operation ratio 04. Consumer goods sales index 05. Consumer goods shipment index and consumer sentiment index 06. Machinery orders received and facility investment index 07. Value of construction completed and domestic construction orders received 08. Composite indices of business cycle indicators and BSI 09. Balance of payments (I) 10. Balance of payments (II) 11. Prices 12. Employment 13. Financial indicators 14. Monetary indicators 15. Exchange rates

1. National accounts Period

Agri., fores. & fisheries

Manufacturing

Final consumption expenditure

Gross fixed capital formation Construction

Facilities

2008 2009 2010 2011 2012 2013 2014 2015p

2.8 0.7 6.5 3.7 2.3 2.9 3.3 2.6

5.6 3.2 -4.3 -2.0 -0.9 3.1 3.6 -1.5

3.7 -0.5 13.7 6.5 2.4 3.6 3.5 1.3

2.2 1.3 4.3 2.7 2.2 2.2 2.0 2.4

-0.9 0.3 5.5 0.8 -0.5 3.3 3.4 3.8

-2.7 3.5 -3.7 -3.4 -3.9 5.5 1.1 3.9

-0.2 -7.7 22.0 4.7 0.1 -0.8 6.0 5.3

2008 Ⅰ Ⅱ Ⅲ Ⅳ

5.5 4.1 3.9 -1.6

7.7 4.6 4.3 6.4

8.2 7.1 6.1 -5.3

4.7 3.1 2.4 -1.4

1.8 0.9 2.3 -7.0

-2.0 -0.7 0.2 -7.3

7.0 1.4 5.6 -13.0

2009 Ⅰ Ⅱ Ⅲ Ⅳ

-1.9 -1.1 0.9 4.8

2.5 0.0 5.0 5.0

-8.4 -5.7 1.6 10.4

-1.9 0.9 1.7 4.5

-5.4 -1.1 0.8 5.8

1.9 4.4 3.1 4.1

-19.4 -13.6 -5.9 9.5

2010 Ⅰ Ⅱ Ⅲ Ⅳ

7.3 7.4 5.4 6.0

0.0 -2.2 -7.8 -5.7

16.1 17.2 10.1 11.9

6.2 3.6 3.9 3.4

12.0 6.8 3.8 1.3

1.6 -4.8 -4.8 -5.1

27.6 28.8 20.6 12.9

2011 Ⅰ Ⅱ Ⅲ Ⅳ

4.9 3.6 3.3 3.0

-9.3 -2.5 -5.8 7.1

11.4 6.5 5.6 3.4

3.3 3.3 2.8 1.7

-0.7 2.5 1.7 -0.3

-8.2 -2.5 -2.2 -2.0

8.3 8.3 3.4 -0.9

2012 Ⅰ Ⅱ Ⅲ Ⅳ

2.5 2.4 2.1 2.2

0.1 -1.8 0.0 -1.3

2.7 2.8 2.0 2.0

2.2 1.3 2.7 2.7

6.2 -2.3 -0.9 -3.6

-0.2 -5.3 -2.6 -6.4

11.0 -1.9 -4.2 -3.8

2013 Ⅰ Ⅱ Ⅲ Ⅳ

2.1 2.7 3.2 3.5

-1.2 0.1 4.3 7.0

2.7 3.6 3.8 4.2

1.5 2.2 2.4 2.6

-3.2 4.2 4.9 6.5

1.2 8.9 7.5 3.5

-12.3 -3.2 2.3 11.7

2014 Ⅰ Ⅱ Ⅲ Ⅳ

3.9 3.5 3.4 2.7

5.9 4.5 2.7 2.4

4.7 4.7 3.1 1.8

2.9 1.8 2.0 1.6

6.1 3.6 3.6 0.8

4.5 0.3 2.3 -1.7

7.4 7.9 4.4 4.4

2015pⅠ Ⅱ Ⅱ Ⅳ

2.4 2.2 2.8 3.1

7.5 -4.0 -0.8 -5.0

0.6 0.5 1.5 2.4

1.9 2.1 2.4 3.4

2.6 2.2 5.1 5.4

0.9 1.0 5.6 7.5

5.8 5.1 6.7 3.9

2016pⅠ

2.8

-2.4

1.9

2.7

3.0

9.6

-4.5

p: Preliminary Source: Bank of Korea

58

(year-on-year change, %, chained 2010 year prices)

Real GDP

Statistical Appendices

2. Production, shipment and inventory Period

Production index*

Shipment index*

y-o-y change (%)

Inventory index*

y-o-y change (%)

(constant prices, 2010=100)

Service production index

y-o-y change (%)

y-o-y change (%)

2013 2014 2015

108.2 108.4 107.7

0.7 0.2 -0.6

108.1 108.0 107.8

0.8 -0.1 -0.2

130.7 127.4 131.2

4.4 -2.5 3.0

106.4 108.9 112.0

1.5 2.3 2.8

2014 Ⅰ Ⅱ Ⅲ Ⅳ

106.9 109.8 105.6 111.3

0.8 0.5 1.2 -1.5

106.6 109.3 104.9 111.3

0.5 -0.1 0.4 -0.8

129.6 128.2 129.0 127.4

5.3 7.6 3.6 -2.5

105.4 108.6 108.5 113.1

2.1 1.7 2.7 2.8

2015 Ⅰ Ⅱ Ⅲ Ⅳ

105.7 108.4 105.5 111.2

-1.1 -1.3 -0.1 -0.1

106.0 108.1 105.8 111.2

-0.6 -1.1 0.9 -0.1

132.2 134.0 137.7 131.2

2.0 4.5 6.7 3.0

108.2 111.5 111.6 116.8

2.7 2.7 2.9 3.3

2016 Ⅰ

105.5

-0.2

105.2

-0.8

136.1

3.0

111.2

2.8

2014 1 2 3 4 5 6 7 8 9 10 11 12

106.5 101.2 113.0 112.3 108.5 108.6 112.5 101.2 103.2 110.1 108.7 115.0

-4.2 4.0 3.1 2.6 -1.9 0.7 4.2 -2.6 2.1 -2.8 -3.1 1.4

105.4 101.4 113.1 111.1 108.7 108.1 109.6 101.7 103.4 109.4 109.5 115.1

-4.2 3.3 2.6 1.6 -1.5 -0.5 2.3 -3.1 2.0 -2.8 -1.7 2.2

131.6 128.8 129.6 130.7 129.6 128.2 132.6 129.9 129.0 130.0 129.2 127.4

2.3 3.4 5.3 8.3 6.5 7.6 6.9 5.2 3.6 2.9 0.1 -2.5

104.8 101.9 109.6 107.1 109.0 109.8 108.9 108.1 108.5 110.8 109.9 118.7

2.3 1.4 2.7 1.4 1.2 2.6 3.1 2.3 2.9 2.8 2.3 3.5

2015 1 2 3 4 5 6 7 8 9 10 11 12

108.1 96.0 113.1 109.8 105.2 110.3 108.7 101.4 106.3 112.4 108.5 112.6

1.5 -5.1 0.1 -2.2 -3.0 1.6 -3.4 0.2 3.0 2.1 -0.2 -2.1

108.1 96.6 113.2 109.6 105.4 109.2 107.5 102.1 107.7 112.6 108.4 112.7

2.6 -4.7 0.1 -1.4 -3.0 1.0 -1.9 0.4 4.2 2.9 -1.0 -2.1

131.3 131.9 132.2 133.7 133.0 134.0 137.1 136.8 137.7 136.1 136.2 131.2

-0.2 2.4 2.0 2.3 2.6 4.5 3.4 5.3 6.7 4.7 5.4 3.0

106.9 104.7 113.0 111.7 111.5 111.4 111.7 110.6 112.6 114.1 113.2 123.1

2.0 2.7 3.1 4.3 2.3 1.5 2.6 2.3 3.8 3.0 3.0 3.7

2016 1 2 3 4p 5p

105.7 98.2 112.5 106.9 109.7

-2.2 2.3 -0.5 -2.6 4.3

103.9 97.5 114.2 107.9 109.0

-3.9 0.9 0.9 -1.6 3.4

136.9 136.6 136.1 132.4 133.7

4.3 3.6 3.0 -1.0 0.5

110.1 107.6 115.8 113.8 115.3

3.0 2.8 2.5 1.9 3.4

* Including mining, manufacturing, electricity & gas and water industry p: Preliminary Source: Statistics Korea

July 2016

59

3. Production capacity and operation ratio Period

Production capacity index* (2010=100) y-o-y change (%)

y-o-y change (%)

Average operation ratio* (%)

2013 2014 2015

108.6 110.4 111.7

1.6 1.7 1.2

95.1 94.3 92.1

-2.5 -0.8 -2.3

76.5 76.2 74.3

2014 Ⅰ Ⅱ Ⅲ Ⅳ

109.7 109.9 110.7 111.2

1.5 1.5 1.7 1.7

92.9 96.8 91.5 95.8

-0.9 -1.1 0.8 -2.5

77.2 76.3 75.9 75.2

2015 Ⅰ Ⅱ Ⅲ Ⅳ

111.5 111.6 111.7 112.0

1.6 1.5 0.9 0.7

90.0 94.9 89.8 93.8

-3.1 -2.0 -1.9 -2.1

74.3 74.3 74.9 73.6

2016 Ⅰ

112.0

0.4

88.6

-1.6

73.2

2014 1 2 3 4 5 6 7 8 9 10 11 12

109.8 109.6 109.7 109.6 109.9 110.1 110.4 110.7 111.0 111.1 111.1 111.3

1.7 1.4 1.5 1.4 1.5 1.5 1.7 1.7 1.9 1.8 1.7 1.6

91.9 87.6 99.1 99.7 95.6 95.1 98.7 86.8 89.0 95.9 94.0 97.6

-7.1 3.2 2.0 1.8 -3.8 -1.2 4.3 -4.3 2.3 -3.8 -4.3 0.7

77.9 76.1 77.7 77.5 75.1 76.3 77.7 74.8 75.1 74.2 74.8 76.7

2015 1 2 3 4 5 6 7 8 9 10 11 12

111.5 111.3 111.8 111.5 111.6 111.7 111.5 111.5 112.1 112.1 112.0 111.9

1.5 1.6 1.9 1.7 1.5 1.5 1.0 0.7 1.0 0.9 0.8 0.5

92.8 81.0 96.3 95.8 91.8 97.1 94.7 86.0 88.8 95.4 91.8 94.2

1.0 -7.5 -2.8 -3.9 -4.0 2.1 -4.1 -0.9 -0.2 -0.5 -2.3 -3.5

73.9 74.7 74.2 74.4 73.5 75.0 74.4 75.4 74.9 74.0 73.1 73.8

2016 1 2 3 4p 5p

111.8 111.9 112.2 112.2 112.2

0.3 0.5 0.4 0.6 0.5

89.0 81.2 95.6 90.0 92.4

-4.1 0.2 -0.7 -6.1 0.7

72.3 73.5 73.8 71.3 72.8

* Manufacturing industry p: Preliminary Source: Statistics Korea

60

Operation ratio index* (2010=100)

Statistical Appendices

4. Consumer goods sales index

(constant prices, 2010=100)

Consumer goods sales index Durable goods Semi-durable goods

Period

y-o-y change (%)

y-o-y change (%)

Nondurable goods

y-o-y change (%)

y-o-y change (%)

2013 2014 2015

107.9 110.1 114.4

0.7 2.0 3.9

116.7 122.7 135.2

0.3 5.1 10.2

106.1 105.3 104.0

2.1 -0.8 -1.2

104.7 106.4 109.1

0.4 1.6 2.5

2014 Ⅰ Ⅱ Ⅲ Ⅳ

106.5 109.0 109.3 115.7

2.6 1.2 2.0 2.4

117.4 121.2 123.4 128.6

5.7 2.3 5.5 6.9

100.1 104.6 96.0 120.5

-2.0 -2.5 1.2 0.5

104.3 105.2 108.6 107.5

3.1 2.2 0.6 0.8

2015 Ⅰ Ⅱ Ⅲ Ⅳ

108.8 112.7 113.2 122.8

2.2 3.4 3.6 6.1

126.7 132.0 132.9 149.3

7.9 8.9 7.7 16.1

97.9 103.2 92.7 122.3

-2.2 -1.3 -3.4 1.5

105.1 107.7 112.9 110.7

0.8 2.4 4.0 3.0

2016 Ⅰ

113.8

4.6

133.8

5.6

100.5

2.7

110.2

4.9

2014 1 2 3 4 5 6 7 8 9 10 11 12

110.5 99.4 109.7 106.1 112.5 108.4 110.6 107.7 109.7 111.7 114.7 120.6

5.6 -0.1 2.2 0.7 1.4 1.4 1.3 3.1 1.8 0.4 1.3 5.2

116.4 117.1 118.7 114.5 121.7 127.4 131.3 118.5 120.5 118.9 128.8 138.1

3.6 10.5 3.3 -0.7 1.6 5.9 2.9 1.9 12.6 -1.4 7.2 15.0

100.5 91.8 107.9 105.6 111.5 96.8 95.5 91.3 101.3 115.7 120.5 125.2

-2.2 -1.6 -2.1 -1.0 -2.0 -4.4 -2.6 5.4 1.2 1.6 -2.7 2.5

112.1 94.5 106.2 102.4 108.7 104.5 107.5 109.9 108.4 106.5 105.6 110.3

10.2 -4.8 3.6 2.1 3.0 1.5 1.8 2.9 -2.9 0.7 0.3 1.4

2015 1 2 3 4 5 6 7 8 9 10 11 12

107.9 105.2 113.2 111.8 116.6 109.6 113.1 110.3 116.1 121.3 121.8 125.4

-2.4 5.8 3.2 5.4 3.6 1.1 2.3 2.4 5.8 8.6 6.2 4.0

128.2 117.3 134.6 129.2 130.3 136.4 140.2 129.2 129.4 143.2 146.8 158.0

10.1 0.2 13.4 12.8 7.1 7.1 6.8 9.0 7.4 20.4 14.0 14.4

97.6 91.5 104.6 107.1 114.3 88.3 92.0 88.1 98.0 122.2 124.5 120.3

-2.9 -0.3 -3.1 1.4 2.5 -8.8 -3.7 -3.5 -3.3 5.6 3.3 -3.9

102.9 105.5 106.9 105.7 111.1 106.3 109.7 111.2 117.8 110.6 109.0 112.4

-8.2 11.6 0.7 3.2 2.2 1.7 2.0 1.2 8.7 3.8 3.2 1.9

2016 1 2 3 4p 5p

112.9 108.6 119.8 116.5 112.5

4.6 3.2 5.8 4.2 5.1

125.3 125.0 151.1 139.4 146.1

-2.3 6.6 12.3 7.9 12.1

101.6 93.1 106.7 109.4 115.2

4.1 1.7 2.0 2.1 0.8

112.0 107.8 110.9 109.0 114.7

8.8 2.2 3.7 3.1 3.2

p: Preliminary Source: Statistics Korea

July 2016

61

5. Consumer goods shipment index and consumer sentiment index

Domestic consumer goods shipment index (2010=100) Durable goods Nondurable goods y-o-y y-o-y y-o-y change (%) change (%) change (%)

Period 2013 2014 2015

102.2 102.0 104.4

-0.3 -0.2 2.4

103.4 102.7 106.0

0.6 -0.7 3.2

101.7 101.8 103.7

-0.7 0.1 1.9

-

2014 Ⅰ Ⅱ Ⅲ Ⅳ

100.8 100.8 102.5 104.0

-2.1 2.1 0.1 -0.7

103.5 103.0 100.8 103.3

-4.4 2.1 -1.8 1.5

99.7 99.9 103.2 104.4

-1.1 2.3 0.9 -1.4

-

2015 Ⅰ Ⅱ Ⅲ Ⅳ

101.4 100.5 105.4 110.1

0.6 -0.3 2.8 5.9

100.0 102.6 105.5 115.8

-3.4 -0.4 4.7 12.1

102.0 99.6 105.4 107.7

2.3 -0.3 2.1 3.2

-

2016 Ⅰ

104.5

3.1

101.8

1.8

105.7

3.6

-

2014 1 2 3 4 5 6 7 8 9 10 11 12

102.5 96.5 103.4 101.8 99.9 100.7 105.0 100.2 102.3 105.2 101.0 105.9

-5.8 -0.4 0.1 2.3 0.2 3.9 1.5 -3.7 2.6 -3.3 -1.8 3.5

99.8 106.7 103.9 98.2 103.7 107.2 107.2 94.9 100.3 99.9 103.1 106.9

-9.5 0.3 -3.9 0.1 2.0 4.3 -1.7 -8.6 5.7 -4.3 0.0 9.3

103.6 92.2 103.2 103.4 98.3 98.0 104.0 102.4 103.1 107.5 100.1 105.5

-4.2 -0.8 1.9 3.4 -0.5 3.8 2.9 -1.7 1.4 -2.9 -2.6 1.2

109 108 108 108 104 107 105 106 107 105 103 101

2015 1 2 3 4 5 6 7 8 9 10 11 12

104.5 94.1 105.5 105.1 98.0 98.5 103.2 103.1 109.9 112.9 106.8 110.6

2.0 -2.5 2.0 3.2 -1.9 -2.2 -1.7 2.9 7.4 7.3 5.7 4.4

101.4 92.8 105.7 107.1 98.2 102.5 107.0 103.6 105.8 115.6 114.6 117.1

1.6 -13.0 1.7 9.1 -5.3 -4.4 -0.2 9.2 5.5 15.7 11.2 9.5

105.8 94.7 105.4 104.2 98.0 96.7 101.6 102.9 111.6 111.8 103.4 107.8

2.1 2.7 2.1 0.8 -0.3 -1.3 -2.3 0.5 8.2 4.0 3.3 2.2

102 103 101 104 105 98 100 101 103 105 105 102

2016 1 2 3 4p 5p 6

106.2 95.0 112.4 106.0 103.2 -

1.6 1.0 6.5 0.9 5.3 -

96.8 92.8 115.8 106.2 101.3 -

-4.5 0.0 9.6 -0.8 3.2 -

110.3 95.9 110.9 105.9 104.1 -

4.3 1.3 5.2 1.6 6.2 -

100 98 100 101 101 99

p: Preliminary Source: Statistics Korea

62

Consumer sentiment index

Statistical Appendices

6. Machinery orders received and facility investment index Period 2013 2014 2015

Domestic machinery orders received excluding ship (billion won, constant value) Total Public Private y-o-y y-o-y y-o-y change (%) change (%) change (%)

Facility investment index (2010=100) y-o-y change (%)

23,078 26,487 25,545

6.6 14.8 -3.6

2,580 5,012 1,921

20.5 94.2 -61.7

20,497 21,475 23,624

5.1 4.8 10.0

99.8 105.0 111.6

-0.8 5.2 6.3

2014Ⅰ Ⅱ Ⅲ Ⅳ

6,627 6,106 7,673 6,081

18.6 4.1 49.2 -6.2

1,221 305 2,708 778

184.6 -45.0 418.5 -27.6

5,406 5,801 4,965 5,303

4.8 9.2 7.4 -1.9

98.6 107.9 100.7 112.9

7.5 6.7 1.4 5.5

2015Ⅰ Ⅱ Ⅲ Ⅳ

6,430 7,017 5,596 6,502

-3.0 14.9 -27.1 6.9

405 493 399 624

-66.9 61.7 -85.3 -19.8

6,025 6,524 5,197 5,878

11.4 12.5 4.7 10.8

107.7 112.8 111.0 114.7

9.2 4.5 10.2 1.6

2016Ⅰ

6,486

0.9

635

56.9

5,851

-2.9

100.1

-7.1

2014 1 2 3 4 5 6 7 8 9 10 11 12

1,753 1,844 3,030 2,274 1,831 2,001 1,772 4,083 1,818 1,936 2,308 1,837

-4.9 10.7 45.8 23.2 -13.9 5.7 -8.4 151.8 14.5 -25.7 10.2 3.0

88 120 1,013 97 116 92 89 2,541 79 211 428 139

-36.9 -28.8 735.6 5.1 -53.4 -56.7 -75.3 2,653.2 10.6 -73.2 162.6 12.5

1,665 1,724 2,017 2,177 1,714 1,909 1,683 1,543 1,739 1,725 1,881 1,698

-2.3 15.2 3.1 24.2 -8.7 13.6 6.8 0.9 14.7 -5.0 -2.6 2.3

90.4 95.6 109.8 110.6 108.2 104.8 111.3 90.6 100.2 100.1 112.6 126.1

0.3 13.9 8.7 12.1 6.0 2.2 2.7 -9.9 12.8 -8.7 10.5 15.3

2015 1 2 3 4 5 6 7 8 9 10 11 12

2,313 1,853 2,264 2,766 2,096 2,155 2,004 1,684 1,908 2,048 1,965 2,489

31.9 0.5 -25.3 21.6 14.5 7.7 13.1 -58.8 5.0 5.8 -14.9 35.5

116 141 148 127 197 169 133 160 106 98 228 298

32.0 17.6 -85.4 30.7 69.4 84.7 50.2 -93.7 34.8 -53.6 -46.7 113.6

2,197 1,712 2,116 2,640 1,899 1,986 1,870 1,524 1,802 1,950 1,737 2,191

31.9 -0.7 4.9 21.2 10.8 4.0 11.2 -1.2 3.6 13.1 -7.6 29.1

103.1 98.5 121.4 113.5 107.2 117.7 119.4 105.9 107.8 112.6 107.2 124.4

14.0 3.0 10.6 2.6 -0.9 12.3 7.3 16.9 7.6 12.5 -4.8 -1.3

2016 1 2 3 4p 5p

1,758 2,275 2,453 1,968 2,109

-24.0 22.7 8.4 -28.8 0.6

69 255 312 189 169

-40.7 80.7 110.8 49.3 -14.1

1,689 2,020 2,142 1,779 1,939

-23.1 18.0 1.2 -32.6 2.1

96.9 90.7 112.7 110.3 110.3

-6.0 -7.9 -7.2 -2.8 2.9

p: Preliminary Source: Statistics Korea

July 2016

63

7. Value of construction completed and domestic construction orders received

(current value, billion won)

Period

Value of construction y-o-y completed change (%) (total)

y-o-y change (%)

y-o-y change (%)

Domestic construction orders y-o-y received change (%) (total)

Type of order Public Private y-o-y change (%)

y-o-y change (%)

2013 2014 2015

98,089 98,491 99,967

10.6 0.4 1.5

34,459 32,015 30,694

1.9 -7.1 -4.1

59,714 62,413 65,114

18.0 4.5 4.3

77,885 90,606 134,338

-12.9 16.3 48.3

24,736 26,427 28,778

-5.1 6.8 8.9

50,947 62,115 102,449

-14.8 21.9 65.0

2014 Ⅰ Ⅱ Ⅲ Ⅳ

21,678 26,178 23,604 27,031

7.4 1.6 -0.5 -4.9

7,148 8,708 7,245 8,913

2.1 -6.5 -10.1 -11.6

13,677 16,513 15,359 16,864

10.2 6.8 4.2 -1.4

16,144 23,621 24,236 26,604

16.8 26.4 44.0 -6.8

5,924 6,563 5,181 8,758

38.0 22.2 3.9 -13.2

9,759 16,714 18,384 17,258

6.3 32.3 60.7 -2.4

2015 Ⅰ Ⅱ Ⅲ Ⅳ

21,315 25,034 24,816 28,803

-1.7 -4.4 5.1 6.6

6,593 8,189 7,175 8,738

-7.8 -6.0 -1.0 -2.0

13,973 15,862 16,651 18,628

2.2 -3.9 8.4 10.5

25,417 35,210 36,440 37,270

57.4 49.1 50.4 40.1

4,594 9,069 4,900 10,215

-22.5 38.2 -5.4 16.6

20,537 25,623 30,814 25,525

110.4 53.3 67.6 47.9

2016 Ⅰ

24,191

13.5

6,711

1.8

16,209

16.0

28,927

13.8

7,812

70.1

20,406

-0.6

2014 1 2 3 4 5 6 7 8 9 10 11 12

7,057 6,666 7,954 8,477 8,192 9,509 7,916 7,722 7,966 8,241 8,350 10,439

12.5 6.9 3.7 4.6 0.4 0.2 0.8 0.7 -2.8 -4.6 -8.1 -2.5

2,315 2,207 2,626 2,740 2,584 3,384 2,430 2,324 2,492 2,533 2,675 3,705

11.7 -5.9 1.8 -3.2 -7.6 -8.3 -7.8 -9.0 -13.2 -14.2 -14.2 -7.7

4,452 4,237 4,987 5,459 5,317 5,737 5,149 5,113 5,098 5,370 5,300 6,194

12.4 15.7 4.1 9.6 4.5 6.5 4.9 5.9 1.9 0.5 -5.9 1.1

5,546 5,632 4,966 7,501 6,820 9,301 7,033 8,789 8,414 8,000 6,399 12,205

55.9 19.3 -10.5 45.6 9.6 27.0 21.8 87.4 32.1 3.2 -20.8 -3.9

2,048 2,244 1,633 1,894 1,983 2,686 1,531 1,617 2,033 1,413 1,850 5,495

57.5 57.2 -4.6 21.0 26.8 19.9 2.5 9.7 0.6 -7.0 -30.5 -6.9

3,309 3,238 3,213 5,596 4,769 6,348 5,364 6,961 6,060 6,406 4,432 6,420

56.9 -1.6 -15.0 77.1 5.1 28.5 29.3 119.4 47.0 4.3 -14.8 1.3

2015 1 2 3 4 5 6 7 8 9 10 11 12

6,824 6,690 7,801 7,709 7,767 9,558 7,895 7,939 8,982 8,503 8,709 11,590

-3.3 0.4 -1.9 -9.1 -5.2 0.5 -0.3 2.8 12.8 3.2 4.3 11.0

2,037 2,092 2,463 2,466 2,324 3,399 2,284 2,206 2,685 2,268 2,441 4,029

-12.0 -5.2 -6.2 -10.0 -10.1 0.5 -6.0 -5.1 7.8 -10.4 -8.7 8.7

4,570 4,379 5,024 4,939 5,131 5,792 5,350 5,437 5,864 5,865 5,877 6,886

2.6 3.4 0.7 -9.5 -3.5 1.0 3.9 6.3 15.0 9.2 10.9 11.2

7,515 5,435 12,467 9,055 12,639 13,516 8,685 8,659 19,097 10,378 13,226 13,666

35.5 -3.5 151.0 20.7 85.3 45.3 23.5 -1.5 127.0 29.7 106.7 12.0

1,318 1,135 2,140 2,585 2,458 4,026 1,791 1,921 1,188 1,803 3,296 5,115

-35.6 -49.4 31.3 36.5 24.0 49.9 17.0 18.8 -41.6 27.7 78.2 -6.9

6,084 4,218 10,235 6,414 10,078 9,131 6,817 6,433 17,564 8,574 9,369 7,582

83.9 30.3 218.6 14.6 111.3 43.8 27.1 -7.6 189.8 33.8 111.4 18.1

2016 1 2 3p 4p 5p

7,359 7,273 9,559 9,077 9,405

7.8 8.7 22.5 17.8 21.1

2,042 1,970 2,699 2,376 2,361

0.2 -5.9 9.6 -3.6 1.6

5,003 4,948 6,257 6,274 6,636

9.5 13.0 24.6 27.0 29.3

7,225 10,014 11,687 10,804 9,413

-3.9 84.3 -6.3 19.3 -25.5

2,691 2,347 2,774 1,217 2,121

104.1 106.8 29.6 -52.9 -13.7

4,260 7,586 8,559 9,219 7,242

-30.0 79.8 -16.4 43.7 -28.1

p: Preliminary Source: Statistics Korea

64

Type of order Public Private

Statistical Appendices

8. Composite indices of business cycle indicators and BSI Period

Leading index (2010=100)

Cyclical indicator of leading index (2010=100)

Coincident index (2010=100)

Cyclical indicator of coincident index (2010=100)

BSI (results)

BSI (prospects)

2013 1 2 3 4 5 6 7 8 9 10 11 12

107.9 108.2 108.6 108.9 109.4 110.2 110.7 111.2 111.3 111.8 112.3 112.9

99.2 99.2 99.2 99.2 99.3 99.7 99.9 100.1 99.9 100.0 100.1 100.3

108.3 108.6 108.5 108.9 109.2 109.8 110.1 110.4 110.5 110.9 111.2 111.7

99.6 99.6 99.3 99.4 99.4 99.7 99.7 99.7 99.5 99.7 99.7 99.9

85.0 83.0 101.3 94.1 97.6 95.0 91.1 89.8 93.0 94.7 91.9 90.5

85.7 86.7 104.4 101.5 99.8 97.2 90.7 92.7 94.4 101.1 94.7 92.6

2014 1 2 3 4 5 6 7 8 9 10 11 12

113.3 113.6 113.9 114.3 114.6 114.9 115.1 115.7 116.3 116.8 117.1 117.6

100.4 100.3 100.1 100.2 100.0 100.0 99.8 100.0 100.2 100.2 100.1 100.2

112.2 112.5 112.9 113.0 113.1 113.3 113.8 114.2 114.3 114.3 114.4 115.1

100.1 100.1 100.2 100.1 99.9 99.9 100.0 100.2 100.0 99.7 99.7 100.1

89.4 87.0 100.7 95.8 93.0 91.3 90.8 89.0 92.3 93.1 90.0 95.4

93.4 88.7 104.4 99.5 101.7 94.5 94.0 91.6 93.1 100.7 93.6 94.0

2015 1 2 3 4 5 6 7 8 9 10 11 12

118.2 118.7 119.2 119.7 120.4 120.7 121.1 121.6 122.2 122.7 123.0 123.2

100.4 100.4 100.6 100.6 100.8 100.7 100.7 100.8 100.9 101.0 100.9 100.8

115.5 116.0 116.1 116.4 116.3 116.4 116.8 117.6 118.4 119.0 119.1 119.4

100.1 100.3 100.1 100.1 99.8 99.6 99.7 100.1 100.6 100.9 100.7 100.6

94.0 89.4 101.5 101.3 95.6 79.9 88.4 86.6 96.1 97.2 95.5 95.5

90.3 92.1 103.7 97.5 99.4 96.4 84.3 89.6 95.1 101.2 95.9 97.5

2016 1 2p 3p 4p 5p 6 7

123.4 123.5 123.9 124.5 124.9 -

100.5 100.3 100.3 100.4 100.4 -

119.3 119.4 119.5 119.8 120.3 -

100.3 100.2 100.0 100.0 100.2 -

92.1 87.0 94.2 97.3 97.1 91.3 -

93.2 86.3 98.3 95.7 102.3 94.8 90.5

Sources: Statistics Korea, Federation of Korean Industries

July 2016

65

9. Balance of payments ( I) Period

Current account

Goods

2013 2014 2015p

81,148.2 84,373.0 105,870.7

2014 Ⅰ Ⅱ Ⅲ Ⅳ

Services

Primary income

Secondary income

535,375.9 524,135.2 428,547.8

-6,499.2 -3,678.5 -15,708.1

9,055.7 4,150.8 5,901.7

-4,189.3 -4,984.7 -4,612.9

151,471.8 158,004.3 150,820.7 152,723.8

133,876.5 132,828.6 129,843.3 127,586.8

-2,889.0 50.8 -459.6 -380.7

-736.9 556.0 1,398.7 2,933.0

-820.0 -1,674.6 -1,251.6 -1,238.5

24,216.7 33,679.8 30,637.7 31,755.8

134,439.1 142,258.7 135,363.0 136,777.0

110,222.4 108,578.9 104,725.3 105,021.2

-4,387.1 -3,092.6 -3,561.5 -4,666.9

3,830.8 -1,556.9 2,727.7 900.1

-1,221.2 -1,112.7 -695.8 -1,583.2

24,076.1

27,884.2

118,001.5

90,117.3

-4,172.6

1,249.3

-884.8

2014 1 2 3 4 5 6 7 8 9 10 11 12

1,870.1 4,965.6 6,313.7 7,030.6 9,187.0 7,890.3 6,096.7 6,966.9 7,601.3 8,741.5 10,755.2 6,954.1

3,847.8 6,103.7 7,643.8 10,068.2 8,786.8 6,320.7 5,677.3 7,041.2 8,258.9 7,983.9 9,593.0 7,560.1

50,116.2 47,605.8 53,749.8 56,091.9 51,957.8 49,954.6 52,416.1 48,151.0 50,253.6 51,029.1 49,241.6 52,453.1

46,268.4 41,502.1 46,106.0 46,023.7 43,171.0 43,633.9 46,738.8 41,109.8 41,994.7 43,045.2 39,648.6 44,893.0

-1,727.0 -529.9 -632.1 -226.5 159.6 117.7 343.2 -391.6 -411.2 163.7 94.0 -638.4

84.9 -444.1 -377.7 -1,912.8 629.4 1,839.4 466.0 835.6 97.1 856.3 1,183.5 893.2

-335.6 -164.1 -320.3 -898.3 -388.8 -387.5 -389.8 -518.3 -343.5 -262.4 -115.3 -860.8

2015p 1 2 3 4 5 6 7 8 9 10 11 12

6,257.1 6,081.1 10,101.0 7,729.8 8,315.5 11,872.3 9,714.8 8,546.9 10,846.4 9,120.4 9,910.3 7,375.1

6,310.3 7,020.8 10,885.6 12,090.2 8,792.6 12,797.0 9,924.9 8,805.4 11,907.4 10,605.2 10,466.1 10,684.5

45,022.1 40,294.9 49,122.1 49,908.3 43,471.9 48,878.5 47,259.6 42,991.3 45,112.1 47,298.7 43,360.4 46,117.9

38,711.8 33,274.1 38,236.5 37,818.1 34,679.3 36,081.5 37,334.7 34,185.9 33,204.7 36,693.5 32,894.3 35,433.4

-1,991.3 -1,758.8 -637.0 -804.0 -83.8 -2,204.8 -1,254.3 -1,013.0 -1,294.2 -1,701.7 -1,263.9 -1,701.3

2,558.1 1,037.8 234.9 -3,096.6 40.8 1,498.9 1,139.5 850.9 737.3 594.4 893.6 -587.9

-620.0 -218.7 -382.5 -459.8 -434.1 -218.8 -95.3 -96.4 -504.1 -377.5 -185.5 -1,020.2

2016p 1 2 3 4 5

6,820.9 7,169.7 10,085.5 3,371.7 10,361.3

7,899.7 7,539.0 12,445.5 9,559.3 10,737.6

37,227.8 36,231.7 44,542.0 40,313.0 42,426.0

29,328.1 28,692.7 32,096.5 30,753.7 31,688.4

-1,934.2 -1,242.1 -996.3 -1,617.9 -1,135.2

1,253.4 852.1 -856.2 -4,066.2 908.7

-398.0 20.7 -507.5 -503.5 -149.8

Exports

Imports

82,781.0 88,885.4 120,290.0

618,156.9 613,020.6 548,837.8

13,149.4 24,107.9 20,664.9 26,450.8

17,595.3 25,175.7 20,977.4 25,137.0

2015p Ⅰ Ⅱ Ⅲ Ⅳ

22,439.2 27,917.6 29,108.1 26,405.8

2016p Ⅰ

p: Preliminary Source: Bank of Korea

66

(US $ million)

Statistical Appendices

10. Balance of payments ( II)

(US $ million)

Period

Financial account*

Direct investment

Portfolio investment

Financial derivatives

Other investment

Reserve assets

Capital account

2013 2014 2015p

80,104.6 89,334.0 109,730.0

15,593.2 18,765.6 22,597.8

9,344.5 30,608.9 48,592.8

-4,410.3 -3,826.9 2,532.5

43,281.1 25,900.6 23,954.3

16,296.1 17,885.8 12,052.6

-27.0 -8.9 -64.7

2014 Ⅰ Ⅱ Ⅲ Ⅳ

15,120.7 24,650.2 21,230.4 28,332.7

2,367.1 7,990.4 2,952.8 5,455.3

12,614.4 4,291.2 4,292.1 9,411.2

-1,004.6 -1,983.9 -1,649.7 811.3

-5,879.9 3,182.9 9,803.2 18,794.4

7,023.7 11,169.6 5,832.0 -6,139.5

-2.1 -4.3 3.6 -6.1

2015p Ⅰ Ⅱ Ⅲ Ⅳ

23,800.1 28,671.4 29,615.2 27,643.3

4,386.2 7,467.6 4,920.9 5,823.1

7,838.4 6,994.1 15,096.2 18,664.1

-41.0 -461.4 4,040.7 -1,005.8

4,506.4 7,369.2 9,844.1 2,234.6

7,110.1 7,301.9 -4,286.7 1,927.3

-23.1 -25.5 -27.9 11.8

2016p Ⅰ

28,218.0

5,070.3

16,719.1

2,756.8

4,958.1

-1,286.3

-11.6

2014 1 2 3 4 5 6 7 8 9 10 11 12

3,459.5 6,830.1 4,831.1 6,109.1 8,223.5 10,317.6 4,787.1 7,866.8 8,576.5 7,243.3 10,457.9 10,631.5

-1,420.3 1,601.5 2,185.9 2,369.9 3,512.1 2,108.4 492.8 524.3 1,935.7 2,769.7 1,998.3 687.3

4,393.6 6,429.0 1,791.8 -1,793.6 2,027.7 4,057.1 1,696.5 -705.2 3,300.8 339.4 2,686.3 6,385.5

-177.3 -264.6 -562.7 -890.2 -546.6 -547.1 -597.0 -621.0 -431.7 426.1 91.7 293.5

-2,243.2 -3,260.8 -375.9 5,757.2 -2,737.4 163.1 -132.9 7,841.8 2,094.3 3,955.6 8,579.1 6,259.7

2,906.7 2,325.0 1,792.0 665.8 5,967.7 4,536.1 3,327.7 826.9 1,677.4 -247.5 -2,897.5 -2,994.5

-3.0 3.5 -2.6 2.6 -4.3 -2.6 -6.3 11.2 -1.3 -1.1 -0.8 -4.2

2015p 1 2 3 4 5 6 7 8 9 10 11 12

7,898.1 5,175.2 10,726.8 9,802.8 8,558.1 10,310.5 10,018.0 9,052.5 10,544.7 11,086.1 8,697.0 7,860.2

659.2 1,631.0 2,096.0 1,712.2 949.9 4,805.5 -15.1 328.1 4,607.9 3,501.4 903.0 1,418.7

3,623.7 3,001.5 1,213.2 138.0 358.3 6,497.8 8,277.2 2,537.4 4,281.6 7,098.9 5,128.8 6,436.4

76.2 -27.5 -89.7 -301.9 -403.7 244.2 936.4 1,618.6 1,485.7 -812.0 -609.9 416.1

-489.1 371.2 4,624.3 4,851.0 4,755.5 -2,237.3 1,792.3 8,450.1 -398.3 -931.9 1,662.4 1,504.1

4,028.1 199.0 2,883.0 3,403.5 2,898.1 1,000.3 -972.8 -3,881.7 567.8 2,229.7 1,612.7 -1,915.1

-13.0 -1.7 -8.4 -8.5 -1.5 -15.5 -29.9 1.1 0.9 -5.4 17.0 0.2

2016p 1 2 3 4 5

6,478.9 9,503.0 12,236.1 167.1 8,928.1

-71.5 1,554.4 3,587.4 -143.4 715.8

4,650.7 6,199.9 5,868.5 3,360.8 4,358.8

1,214.5 756.6 785.7 -1,033.1 -463.7

302.9 2,557.8 2,097.4 -3,333.8 3,915.7

382.3 -1,565.7 -102.9 1,316.6 401.5

-6.1 -2.3 -3.2 -5.0 1.0

* Positive figures represent net outflows, and negative figures represent net inflows. p: Preliminary Source: Bank of Korea

July 2016

67

11. Prices Period

(2010=100)

All items y-o-y change (%)

y-o-y change (%)

Producer prices All items Commodities

Core

y-o-y change (%)

y-o-y change (%)

y-o-y change (%)

y-o-y change (%)

2013 2014 2015

107.7 109.0 109.8

1.3 1.3 0.7

110.1 111.1 110.3

1.0 0.9 -0.7

105.8 107.4 109.4

1.5 1.6 1.8

106.6 108.8 111.1

1.6 2.0 2.2

105.7 105.2 101.0

-1.6 -0.5 -4.0

106.2 104.8 98.0

-2.5 -1.4 -6.4

2013 1 2 3 4 5 6 7 8 9 10 11 12

107.3 107.7 107.6 107.5 107.5 107.3 107.6 107.9 108.1 107.8 107.8 107.9

1.6 1.6 1.5 1.3 1.1 1.2 1.6 1.5 1.0 0.9 1.2 1.1

109.9 110.4 110.4 109.9 109.6 109.4 109.7 110.3 110.9 110.1 110.1 110.2

1.7 1.6 1.1 0.9 0.4 0.7 1.7 1.5 0.4 0.3 1.0 0.9

105.3 105.6 105.4 105.6 105.7 105.7 105.9 106.1 106.0 106.0 106.0 106.2

1.5 1.5 1.7 1.7 1.8 1.6 1.5 1.5 1.5 1.4 1.3 1.3

105.9 106.2 106.0 106.0 106.4 106.6 106.7 106.7 107.0 107.1 107.4 107.5

1.3 1.4 1.6 1.6 1.7 1.6 1.7 1.5 1.7 1.8 2.0 1.9

106.0 106.7 106.3 105.9 105.6 105.5 105.5 105.8 105.7 105.3 105.1 105.4

-1.6 -1.6 -2.4 -2.8 -2.6 -1.4 -1.0 -1.3 -1.8 -1.4 -0.9 -0.4

106.8 107.8 107.1 106.6 106.1 106.0 105.9 106.3 106.1 105.5 105.2 105.5

-2.5 -2.5 -3.7 -4.1 -3.8 -2.2 -1.6 -2.1 -2.8 -2.2 -1.5 -0.9

2014 1 2 3 4 5 6 7 8 9 10 11 12

108.5 108.8 109.0 109.1 109.2 109.1 109.3 109.5 109.4 109.1 108.8 108.8

1.1 1.0 1.3 1.5 1.7 1.7 1.6 1.4 1.1 1.2 1.0 0.8

110.9 111.4 111.6 111.3 111.5 111.2 111.2 111.4 111.5 110.6 110.2 110.1

0.9 0.9 1.1 1.3 1.7 1.7 1.4 1.0 0.5 0.5 0.2 0.0

106.6 106.7 107.0 107.3 107.5 107.4 107.7 107.9 107.8 107.8 107.7 107.8

1.3 1.1 1.5 1.6 1.6 1.6 1.7 1.7 1.7 1.7 1.6 1.6

107.7 108.0 108.3 108.5 108.8 108.9 109.1 109.2 109.1 109.1 109.1 109.3

1.7 1.7 2.1 2.3 2.2 2.1 2.2 2.4 1.9 1.8 1.6 1.6

105.6 105.8 105.7 105.6 105.5 105.6 105.7 105.6 105.2 104.5 104.1 103.1

-0.3 -0.9 -0.5 -0.3 0.0 0.1 0.2 -0.2 -0.5 -0.8 -0.9 -2.1

105.7 105.9 105.7 105.4 105.3 105.4 105.4 105.1 104.7 103.6 103.1 101.7

-1.0 -1.7 -1.3 -1.1 -0.7 -0.6 -0.5 -1.1 -1.4 -1.8 -2.0 -3.6

2015 1 2 3 4 5 6 7 8 9 10 11 12

109.4 109.4 109.4 109.5 109.8 109.8 110.0 110.2 110.0 110.1 109.9 110.2

0.8 0.5 0.4 0.4 0.5 0.7 0.7 0.7 0.6 0.9 1.0 1.3

110.9 110.6 110.3 110.1 110.6 110.7 110.3 110.5 110.2 109.9 109.7 110.1

-0.1 -0.7 -1.2 -1.1 -0.8 -0.5 -0.8 -0.8 -1.1 -0.6 -0.5 0.0

108.2 108.4 108.7 109.0 109.2 109.2 109.8 110.0 109.9 110.1 110.1 110.3

1.5 1.5 1.6 1.6 1.6 1.6 2.0 2.0 2.0 2.1 2.2 2.3

110.3 110.4 110.6 110.7 111.1 111.1 111.3 111.5 111.4 111.6 111.7 111.9

2.4 2.3 2.1 2.0 2.1 2.0 2.0 2.1 2.1 2.3 2.4 2.4

101.9 101.9 101.8 101.8 101.8 101.8 101.4 100.8 100.3 99.7 99.3 99.0

-3.6 -3.6 -3.7 -3.6 -3.5 -3.6 -4.0 -4.5 -4.6 -4.6 -4.7 -4.0

99.7 99.7 99.5 99.3 99.3 99.3 98.6 97.7 97.0 96.0 95.3 95.0

-5.8 -5.8 -5.9 -5.8 -5.7 -5.8 -6.4 -7.1 -7.3 -7.4 -7.6 -6.6

2016 1 2 3 4 5 6

110.3 110.8 110.5 110.6 110.7 110.7

0.8 1.3 1.0 1.0 0.8 0.8

109.7 110.5 109.6 109.6 109.5 109.5

-1.1 -0.1 -0.6 -0.4 -1.1 -1.1

110.8 111.0 111.2 111.4 111.6 111.6

2.4 2.4 2.3 2.2 2.2 2.2

112.2 112.5 112.5 112.7 112.9 113.0

1.7 1.8 1.7 1.8 1.6 1.7

98.5 98.5 98.4 98.7 98.8 99.0

-3.3 -3.4 -3.3 -3.0 -3.0 -2.7

94.0 93.9 93.8 94.1 94.3 94.6

-5.7 -5.9 -5.7 -5.2 -5.1 -4.7

Source: Bank of Korea

68

Consumer prices Commodities Services

Statistical Appendices

12. Employment Period

Economically active persons (thousands)

y-o-y change (%)

Employed persons (thousands) All industry Manufacturing y-o-y y-o-y change (%) change (%)

SOC & services Unemployment rate (%) y-o-y change (%)

2013 2014 2015

25,873 26,536 26,913

1.5 2.6 1.4

25,066 25,599 25,936

1.6 2.1 1.3

4,184 4,330 4,486

1.9 3.5 3.6

19,347 19,805 20,029

1.6 2.4 1.5

3.1 3.5 3.6

2013 1 2 3 4 5 6 7 8 9 10 11 12

24,901 24,973 25,397 25,928 26,195 26,291 26,301 26,074 26,186 26,268 26,230 25,736

1.3 0.6 0.7 1.1 1.0 1.4 1.5 1.8 1.7 1.9 2.3 2.4

24,054 23,984 24,514 25,103 25,398 25,478 25,473 25,291 25,466 25,545 25,530 24,962

1.4 0.8 1.0 1.4 1.1 1.4 1.5 1.7 1.9 1.9 2.4 2.3

4,189 4,139 4,141 4,192 4,175 4,180 4,167 4,116 4,174 4,218 4,253 4,264

3.9 1.9 3.1 4.1 2.6 2.3 1.3 0.1 0.5 0.7 0.8 2.0

18,810 18,736 18,989 19,303 19,492 19,531 19,577 19,438 19,540 19,558 19,670 19,514

1.0 0.7 0.6 1.0 1.0 1.5 1.6 2.1 2.2 2.2 3.0 2.7

3.4 4.0 3.5 3.2 3.0 3.1 3.1 3.0 2.7 2.8 2.7 3.0

2014 1 2 3 4 5 6 7 8 9 10 11 12

25,650 25,997 26,187 26,714 26,762 26,825 26,891 26,775 26,766 26,809 26,786 26,270

3.0 4.1 3.1 3.0 2.2 2.0 2.2 2.7 2.2 2.1 2.1 2.1

24,759 24,819 25,163 25,684 25,811 25,875 25,979 25,885 25,917 25,951 25,968 25,384

2.9 3.5 2.6 2.3 1.6 1.6 2.0 2.3 1.8 1.6 1.7 1.7

4,280 4,274 4,284 4,288 4,324 4,345 4,358 4,335 4,347 4,361 4,355 4,406

2.2 3.3 3.5 2.3 3.6 3.9 4.6 5.3 4.1 3.4 2.4 3.3

19,376 19,407 19,538 19,819 19,815 19,841 20,003 19,940 19,949 19,973 20,098 19,896

3.0 3.6 2.9 2.7 1.7 1.6 2.2 2.6 2.1 2.1 2.2 2.0

3.5 4.5 3.9 3.9 3.6 3.5 3.4 3.3 3.2 3.2 3.1 3.4

2015 1 2 3 4 5 6 7 8 9 10 11 12

26,094 26,398 26,577 26,954 27,211 27,255 27,303 27,064 27,129 27,137 27,082 26,747

1.7 1.5 1.5 0.9 1.7 1.6 1.5 1.1 1.4 1.2 1.1 1.8

25,106 25,195 25,501 25,900 26,189 26,205 26,305 26,141 26,264 26,298 26,253 25,879

1.4 1.5 1.3 0.8 1.5 1.3 1.3 1.0 1.3 1.3 1.1 2.0

4,421 4,433 4,400 4,455 4,464 4,478 4,528 4,491 4,512 4,552 4,545 4,552

3.3 3.7 2.7 3.9 3.2 3.1 3.9 3.6 3.8 4.4 4.4 3.3

19,693 19,716 19,832 20,004 20,179 20,161 20,250 20,153 20,249 20,248 20,353 20,266

1.6 1.6 1.5 0.9 1.8 1.6 1.2 1.1 1.5 1.4 1.3 1.9

3.8 4.6 4.0 3.9 3.8 3.9 3.7 3.4 3.2 3.1 3.1 3.2

2016 1 2 3 4 5 6

26,433 26,734 26,955 27,228 27,455 27,563

1.3 1.3 1.4 1.0 0.9 1.1

25,445 25,418 25,800 26,153 26,450 26,559

1.4 0.9 1.2 1.0 1.0 1.4

4,566 4,541 4,525 4,503 4,514 4,493

3.3 2.4 2.8 1.1 1.1 0.3

19,955 19,885 20,028 20,263 20,483 20,593

1.3 0.9 1.0 1.3 1.5 2.1

3.7 4.9 4.3 3.9 3.7 3.6

Source: Statistics Korea

July 2016

69

13. Financial indicators Call rate (1 day)

CDs (91 days)

2012 7 8 9 10 11 12

3.1 3.0 3.0 2.8 2.8 2.8

3.3 3.2 3.1 2.9 2.9 2.9

3.6 3.4 3.3 3.3 3.3 3.3

3.0 2.8 2.8 2.8 2.8 2.9

3.1 2.9 2.9 2.9 2.9 3.0

1,881.99 1,905.12 1,996.21 1,912.06 1,932.90 1,997.05

2013 1 2 3 4 5 6 7 8 9 10 11 12

2.8 2.8 2.7 2.8 2.6 2.5 2.5 2.5 2.5 2.5 2.5 2.5

2.9 2.8 2.8 2.8 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.7

3.2 3.1 3.0 2.9 3.0 3.2 3.4 3.3 3.3 3.3 3.4 3.4

2.8 2.7 2.6 2.6 2.6 2.9 2.9 2.9 2.9 2.8 2.9 2.9

2.9 2.8 2.7 2.6 2.7 3.1 3.2 3.3 3.2 3.1 3.2 3.3

1,961.94 2,026.49 2,004.89 1,963.95 2,001.05 1,863.32 1,914.03 1,926.36 1,996.96 2,030.09 2,044.87 2,011.34

2014 1 2 3 4 5 6 7 8 9 10 11 12

2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.3 2.2 2.1 2.0 2.0

2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.5 2.4 2.2 2.1 2.1

3.3 3.3 3.3 3.3 3.3 3.2 3.0 3.0 2.8 2.6 2.5 2.5

2.9 2.9 2.9 2.9 2.8 2.7 2.6 2.5 2.4 2.2 2.1 2.1

3.3 3.2 3.2 3.2 3.1 3.0 2.8 2.8 2.7 2.4 2.3 2.3

1,941.15 1,979.99 1,985.61 1,961.79 1,994.96 2,002.21 2,076.12 2,068.54 2,020.09 1,964.43 1,980.78 1,915.59

2015 1 2 3 4 5 6 7 8 9 10 11 12

2.0 2.0 1.8 1.7 1.7 1.6 1.5 1.5 1.5 1.5 1.5 1.5

2.1 2.1 2.0 1.8 1.8 1.7 1.7 1.6 1.6 1.6 1.6 1.7

2.4 2.3 2.1 2.0 2.1 2.0 2.0 2.0 2.0 2.0 2.1 2.1

2.0 2.0 1.9 1.7 1.9 1.8 1.8 1.7 1.7 1.6 1.8 1.7

2.2 2.1 2.0 1.9 2.1 2.0 2.1 2.0 1.9 1.8 2.0 1.9

1,949.26 1,985.80 2,041.03 2,127.17 2,114.80 2,074.20 2,030.16 1,941.49 1,962.81 2,029.47 1,991.97 1,961.31

2016 1 2 3 4 5 6

1.5 1.5 1.5 1.5 1.5 1.3

1.7 1.6 1.6 1.6 1.6 1.4

2.1 2.0 2.0 1.9 1.9 1.8

1.6 1.5 1.5 1.5 1.5 1.3

1.8 1.6 1.6 1.6 1.6 1.4

1,912.06 1,916.66 1,995.85 1,994.15 1,983.40 1,970.35

Period

Source: Bank of Korea

70

(period average)

Yields (%) Corporate bonds (3 years, AA-)

Statistical Appendices

Treasury bonds (3 years)

Treasury bonds (5 years)

Stock KOSPI (end-period)

14. Monetary indicators Reserve money

Period 2013 2014 2015

(period average, billion won)

M1

y-o-y change (%)

M2

y-o-y change (%)

Lf y-o-y change (%)

y-o-y change (%)

91,379.4 103,331.5 120,691.4

11.3 13.1 16.8

484,062.9 536,733.4 636,639.0

9.5 10.9 18.6

1,885,781.3 2,009,576.3 2,182,911.9

4.8 6.6 8.6

2,543,232.5 2,721,502.2 2,986,699.4

6.9 7.0 9.7

2013 1 2 3 4 5 6 7 8 9 10 11 12

85,839.3 88,855.7 89,523.5 87,729.0 89,654.8 91,207.6 90,643.7 93,729.6 95,130.6 93,640.4 93,609.9 96,988.5

5.1 8.8 13.2 8.8 11.3 11.5 11.1 13.8 14.7 10.1 12.8 13.7

464,914.5 472,239.6 472,430.1 475,330.0 475,526.7 486,587.5 488,982.7 481,416.9 490,518.7 491,947.9 499,242.7 509,617.9

5.8 8.0 7.4 8.7 8.4 10.2 10.7 9.5 11.5 10.7 12.1 11.3

1,841,128.1 1,857,135.0 1,862,405.5 1,867,726.3 1,870,289.7 1,884,193.2 1,890,728.6 1,888,658.4 1,903,187.1 1,908,557.6 1,923,339.2 1,932,026.4

4.8 5.3 5.0 5.1 4.8 4.9 4.6 3.9 4.6 4.7 5.1 5.3

2,469,789.3 2,488,539.0 2,499,718.1 2,512,459.7 2,518,239.1 2,533,750.8 2,549,443.5 2,557,336.3 2,577,546.7 2,587,071.4 2,605,866.7 2,619,029.5

7.7 8.1 6.8 6.9 6.8 6.6 6.5 6.3 6.7 6.7 6.8 6.6

2014 1 2 3 4 5 6 7 8 9 10 11 12

98,541.6 100,547.9 100,624.0 98,898.5 101,791.4 101,412.3 101,164.2 107,682.4 105,354.1 107,117.5 106,667.9 110,175.6

14.8 13.2 12.4 12.7 13.5 11.2 11.6 14.9 10.7 14.4 13.9 13.6

515,742.5 518,475.5 520,299.0 518,809.3 523,069.9 532,041.2 534,028.8 538,640.3 548,550.8 551,416.0 562,006.2 577,721.1

10.9 9.8 10.1 9.1 10.0 9.3 9.2 11.9 11.8 12.1 12.6 13.4

1,937,045.6 1,954,340.7 1,964,954.0 1,970,361.6 1,982,390.9 1,999,376.3 2,013,935.1 2,031,777.2 2,037,600.8 2,051,149.8 2,083,253.5 2,088,729.8

5.2 5.2 5.5 5.5 6.0 6.1 6.5 7.6 7.1 7.5 8.3 8.1

2,635,100.1 2,647,674.0 2,659,443.2 2,669,341.4 2,684,643.9 2,703,088.1 2,725,737.6 2,743,972.5 2,759,390.8 2,776,968.0 2,817,698.0 2,834,968.4

6.7 6.4 6.4 6.2 6.6 6.7 6.9 7.3 7.1 7.3 8.1 8.2

2015 1 2 3 4 5 6 7 8 9 10 11 12

113,304.2 116,502.4 115,974.9 115,132.7 117,726.3 118,688.2 122,041.0 121,854.4 126,572.2 125,616.2 126,767.1 128,117.5

15.0 15.9 15.3 16.4 15.7 17.0 20.6 13.2 20.1 17.3 18.8 16.3

579,964.2 592,737.4 600,719.9 610,803.3 621,985.5 630,546.3 645,975.4 653,105.9 665,691.1 669,737.7 677,629.2 690,772.4

12.5 14.3 15.5 17.7 18.9 18.5 21.0 21.3 21.4 21.5 20.6 19.6

2,092,223.5 2,109,892.3 2,127,887.8 2,148,114.7 2,166,741.1 2,179,561.1 2,200,510.9 2,218,660.3 2,230,000.7 2,232,432.0 2,242,848.2 2,246,070.1

8.0 8.0 8.3 9.0 9.3 9.0 9.3 9.2 9.4 8.8 7.7 7.5

2,857,610.1 2,876,467.8 2,907,976.4 2,936,746.7 2,960,998.1 2,986,316.5 3,013,503.9 3,028,981.1 3,049,823.2 3,059,051.9 3,076,029.2 3,086,887.8

8.4 8.6 9.3 10.0 10.3 10.5 10.6 10.4 10.5 10.2 9.2 8.9

2016 1 2 3 4 5

131,279.3 134,913.0 132,957.9 135,038.9 135,971.3

15.9 15.8 14.6 17.3 15.5

699,767.3 708,014.0 713,861.2 720,818.5 722,544.4

20.7 19.4 18.8 18.0 16.2

2,261,356.4 2,285,313.5 2,294,544.7 2,299,081.3 2,312,801.2

8.1 8.3 7.8 7.0 6.7

3,110,535.8 3,133,492.2 3,158,687.8 3,170,277.9 3,189,899.3

8.9 8.9 8.6 8.0 7.7

Source: Bank of Korea

July 2016

71

15. Exchange rates Period

100/ \

Euro/ \

Won

y-o-y change (%)

Won

y-o-y change (%)

Won

y-o-y change (%)

2013 2014 2015

1,055.3 1,099.2 1,172.0

-1.5 4.2 6.6

1,004.7 920.1 972.0

-19.5 -8.4 5.6

1,456.3 1,336.5 1,280.5

2.8 -8.2 -4.2

2013 1 2 3 4 5 6 7 8 9 10 11 12

1,082.7 1,085.4 1,112.1 1,108.1 1,128.3 1,149.7 1,113.6 1,110.9 1,075.6 1,061.4 1,062.1 1,055.3

-3.8 -3.6 -2.3 -2.3 -4.2 -0.4 -2.0 -2.1 -3.8 -3.0 -2.1 -1.5

1,188.5 1,176.2 1,180.1 1,132.0 1,116.6 1,167.2 1,135.4 1,129.2 1,098.7 1,077.5 1,038.2 1,004.7

-19.3 -15.9 -14.5 -19.8 -25.0 -19.7 -21.9 -21.8 -23.8 -21.6 -21.4 -19.5

1,469.3 1,425.8 1,425.2 1,451.3 1,471.4 1,498.2 1,476.7 1,470.6 1,451.3 1,456.6 1,444.8 1,456.3

-0.6 -6.0 -5.8 -3.4 1.0 4.4 6.0 3.6 0.5 2.7 2.7 2.8

2014 1 2 3 4 5 6 7 8 9 10 11 12

1,079.2 1,067.7 1,068.8 1,031.7 1,021.6 1,014.4 1,024.3 1,013.6 1,050.6 1,054.0 1,101.1 1,099.2

-0.3 -1.6 -3.9 -6.9 -9.5 -11.8 -8.0 -8.8 -2.3 -0.7 3.7 4.2

1,043.7 1,044.8 1,038.7 1,005.3 1,004.2 1,000.0 995.7 977.6 960.2 964.1 933.9 920.1

-12.2 -11.2 -12.0 -11.2 -10.1 -14.3 -12.3 -13.4 -12.6 -10.5 -10.0 -8.4

1,473.6 1,463.6 1,469.4 1,425.0 1,389.6 1,384.2 1,371.8 1,336.2 1,333.3 1,328.8 1,372.2 1,336.5

0.3 2.7 3.1 -1.8 -5.6 -7.6 -7.1 -9.1 -8.1 -8.8 -5.0 -8.2

2015 1 2 3 4 5 6 7 8 9 10 11 12

1,090.8 1,099.2 1,105.0 1,068.1 1,108.0 1,124.1 1,166.3 1,176.3 1,194.5 1,142.3 1,150.4 1,172.0

1.1 3.0 3.4 3.5 8.5 10.8 13.9 16.1 13.7 8.4 4.5 6.6

921.3 920.7 920.3 897.2 894.6 917.2 939.3 970.1 996.8 944.1 936.7 972.0

-11.7 -11.9 -11.4 -10.8 -10.9 -8.3 -5.7 -0.8 3.8 -2.1 0.3 5.6

1,235.7 1,230.7 1,196.8 1,187.0 1,215.2 1,260.5 1,275.4 1,317.3 1,343.9 1,254.8 1,218.3 1,280.5

-16.1 -15.9 -18.6 -16.7 -12.6 -8.9 -7.0 -1.4 0.8 -5.6 -11.2 -4.2

2016 1 2 3 4 5 6

1,208.4 1,235.4 1,153.5 1,143.9 1,190.6 1,164.7

10.8 12.4 4.4 7.1 7.5 3.6

1,017.1 1,085.8 1,026.0 1,058.2 1,072.8 1,132.2

10.4 17.9 11.5 17.9 19.9 23.4

1,322.2 1,348.3 1,307.4 1,298.4 1,326.8 1,295.5

7.0 9.6 9.2 9.4 9.2 2.8

Source: Bank of Korea

72

(end-period)

US $/ \

Statistical Appendices

Embroidered Korean thimbles

Useful websites Ministry of Strategy and Finance_http://english.mosf.go.kr Ministry of Trade, Industry and Energy_http://english.motie.go.kr 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 Employment and Labor_http://www.moel.go.kr/english Bank of Korea_http://www.bok.or.kr/eng Statistics Korea_http://kostat.go.kr/portal/eng

ECONOMIC BULLETIN

(Republic of Korea)

For free subscriptions and enquiries, please contact: International Media Relations Division Ministry of Strategy and Finance Government Complex, 477 Galmae-ro

July 2016

Sejong, 30109 Republic of Korea Tel. +82 2 731 1530 Fax. +82 2 731 1540 E-mail. fppr@mosf.go.kr Website. http://english.mosf.go.kr Economic Information and Education Center Korea Development Institute 263 Namsejong-ro Sejong, 30149 Republic of Korea Tel. +82 44 550 4645 Fax. +82 44 550 4941 E-mail. jiyounlee@kdi.re.kr Website. http://eb.kdi.re.kr