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The Green Book: Current Economic Trends
Overview 3
1. Global economy 4
2. Private consumption 8
3. Facility investment 12
4. Construction investment 14
5. Exports and imports 16
6. Mining and manufacturing production 18
7. Service sector activity 20
8. Employment 22
9. Financial markets 26
9.1 Stock market9.2 Exchange rate9.3 Bond market9.4 Money supply & money market
10. Balance of payments 30
11. Prices and international commodity prices 32
11.1 Prices11.2 International oil and commodity prices
12. Real estate market 36
12.1 Housing market12.2 Land market
13. Composite indices of business cycle indicators 40
Policy IssuesLee administrations economic achievement for the past two years 42
Economic News Briefing 46
Statistical Appendices 53
Republic of Korea
Economic Bulletin
Vol. 32 | No. 3
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Economic Bulletin 3
The Korean economy overall continued a recovery track, despite some indices becomingstagnant affected by temporary factors such as a heavy snowfall and cold wave, and theexpiration of the tax credit for new car purchases.
Mining and manufacturing production in January remained flat month-on-month, while rising36.9 percent year-on-year. Service output fell 0.8 percent month-on-month due to weakperformance in real estate and rent, education, and leisure businesses, but year-on-year theindex rose 4.6 percent.
Consumer goods sales, while gaining 6.9 percent year-on-year, lost 1.3 percent month-on-month in January due to sluggish sales of durable goods, in particular automobile salesaffected by the expiration of the tax credit for new car purchases.
In January facilities investment dropped 9.8 percent month-on-month as machineryinvestment decreased, but year-on-year the index increased 20.4 percent. Constructioncompleted grew both month-on-month and year-on-year by 12.7 percent and 8.9 percent,respectively, backed by the brisk public sector and civil engineering works.
The total number of workers hired in January gained 5,000 year-on-year. The employmentrate (seasonally adjusted ) posted 58.2 percent, shedding 0.1 percentage point from theprevious month. The unemployment rate jumped to 5.0 percent affected by temporaryfactors, in particular soaring applicants for Hope Employment Program where economically-inactive population such as the aged were counted unemployed persons.
Exports jumped 31.0 percent year-on-year in February, helped by the recovering globaleconomy. Imports soared 36.9 percent year-on-year, as an unusual cold wave increased
crude oil imports.
Consumer prices in February declined back to the 2 percent range, as stabilizing prices ofmanufactured goods such as processed food and petroleum products offset increasingprices of agriculture, livestock and fishery products.
Instability in the financial market grew in February, as stock prices and foreign exchangerates fluctuated affected by rocky international financial markets.
To sum up, amid the global economy steadily recovering, external uncertainties rise asinternational financial markets are vulnerable to fiscal difficulties in some Europeancountries and policies taken by the US and China.
The Korean government, to achieve a secure economic recovery, will keep pursuingexpansionary fiscal policies, while renewing its efforts to create jobs. On the other hand, thegovernment will keep an eye on any changes in internal and external situations includinginternational financial markets, and check risks in the Korean economy to timely respond topossible worsening of economic conditions.
The Green BookCurrent Economic Trends
Overview
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4 March 2010
1. Global economy
The global economy has been slowly rebounding, as major countries such as the US, Japan
and European countries continued to grow in the fourth quarter of 2009. There have been
some moves toward liquidity control such as the US discount rate hike and Chinas further
increase in the bank reserve ratio. Concerns about sovereign credit risk from European
countries have been relieved to some degree after Greek governments announcement of
new fiscal austerity plan.
US real GDP was revised upward to 5.9 percent (annualized q-o-q, preliminary) in the fourth
quarter from 5.7 percent (advanced ). The real economy including consumption and
production continued a slow recovery, as industrial production and retail sales rose in
January from the previous month.
The US housing market recovery decelerated in January, despite the S&P/Case-Shiller Home
Price Index inching up 0.3 percent, as existing and new home sales fell 7.2 percent and 11.2
percent, respectively.
The job market slowed its fall, as the unemployment rate improved from the previous
month, landing at 9.7 percent, and non-farm payrolls decreased at a slower pace.
The Federal Reserve announced in the Federal Open Market Committee (FOMC) on February
18 that it would raise the discount rate by 25 basis points to 0.75 percent from 0.5 and
shorten loan terms to overnight from 28 days. Federal Reserve Chairman Ben Bernanke said,
at the House of Representative hearing on February 24, that the Fed would keep its main
interest rate at an all-time low near zero for an extended period.
US
(Percentage change from previous period)
Annual Q3 Q4 Annual Q1 Q2 Q3 Q4 Jan
Real GDP1
- Personal consumption expenditure
- Corporate fixed investment
- Construction investment for housing
Industrial production
Retail sales
New home sales
New non-farm payroll employment(thousand) 2
Consumer prices (y-o-y, %)
2008 2009 2010
1. Annualized rate (%)
2. Monthly average
Source: US Department of Commerce
0.4
-0.2
1.6
-22.9
-1.8
-0.8
-37.4
-302
3.8
-2.7
-3.5
-6.1
-15.9
-2.3
-1.5
-9.8
-334
5.2
-5.4
-3.1
-19.5
-23.2
-3.4
-6.8
-15.0
-651
1.5
-2.4
-0.6
-17.9
-20.4
-9.8
-6.0
-22.8
-398
-0.3
-6.4
0.6
-39.2
-38.2
-5.2
-1.3
-13.5
-753
-0.2
-0.7
-0.9
-9.6
-23.3
-2.7
-0.1
9.9
-478
-0.9
2.2
2.8
-5.9
18.9
1.6
1.6
9.2
-260
-1.6
5.9
1.7
6.5
5.0
1.6
1.9
-8.9
-103
1.5
-
-
-
-
0.9
0.5
-11.2
-20
2.6
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Economic Bulletin 5
US federal funds rate and consumer prices
Source: US Federal Reserve Board & Department of Labor
US non-farm payroll employment (m-o-m change)
Source: US Department of Labor
US GDP (q-o-q, annualized rate)
Source: US Department of Commerce1-1
1-2
1-3
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6 March 2010
The Chinese government further raised the bank reserve ratio on February 25, aiming tostabilize asset prices, amid increasing domestic demand and expanding exports. TheManufacturing Purchasing Managers Index (PMI) in January stayed above the benchmark 50for the 12th consecutive month, but compared with the previous month, it fell 3.8 points.
Japans economy grew 1.1 percent quarter-on-quarter in the fourth quarter, maintainingrecovery momentum, as exports increased and facility investment rebounded. Exportssurged, thanks to a low base effect from the previous year and growing demand from therecovering global economy.
The eurozone economy showed a slow recovery, posting 0.1 percent quarter-on-quartergrowth in the fourth quarter, as Germanys GDP stayed flat and Italys economy contracted0.2 percent. Greek government's announcement on March 3 of additional deficit cuts worth4.8 billion euros (US$6.6 billion) alleviated the countrys sovereign debt concerns to somedegree.
China
Japan
(Percentage change from same period in previous year)
Real GDP
Fixed asset investment (accumulated)
Retail sales
Industrial production
Exports
Consumer prices
Producer prices
2008 2009 2010
Annual
9.0
26.1
21.6
12.9
17.2
5.9
6.9
Q3
9.0
27.6
23.2
13.0
22.9
5.3
9.7
Q4
6.8
26.1
20.6
6.4
4.1
2.5
2.5
Annual
8.7
30.5
15.5
11.0
-15.9
-0.7
-5.4
Q1
6.2
28.6
14.9
5.1
-19.7
-0.6
-4.6
Q2
7.9
33.6
15.0
9.2
-23.5
-1.5
-7.2
Q3
9.1
33.3
15.4
12.4
-20.7
-1.3
-7.7
Q4
10.7
30.5
16.9
18.0
0.2
0.7
-2.1
Jan
-
-
-
-
21.0
1.5
4.3
Source: China National Bureau of Statistics
Manufacturing PMI (y-o-y, %)
54.0 (Aug 2009) 54.3 (Sep) 55.2 (Oct) 55.2 (Nov) 56.6 (Dec) 55.8 (Jan 2010) 52.0 (Feb)
Eurozone
Source: Eurostat
Real GDP
Industrial production
Retail sales
Exports (y-o-y, %)Consumer prices (y-o-y, %)
2008 2009 2010
(Percentage change from previous period)
Annual
0.8
-1.8
-0.7
3.63.3
Q3
-0.4
-2.0
-0.4
5.33.8
Q4
-1.9
-7.8
-1.1
-4.92.3
Annual
-4.0
-14.9
-2.2
-18.10.3
Q1
-2.5
-8.3
-0.8
-20.91.0
Q2
-0.1
-1.4
-0.2
-23.20.2
Q3
0.4
1.9
-0.1
-19.4-0.4
Q4
0.1
0.2
-0.2
-8.40.4
Jan
-
-
-0.3
-1.0
Source: Japan's Statistics Bureau and Statistics Centre
Real GDP
Industrial and mining production
Retail sales (y-o-y, %)
Exports (y-o-y, %)
Consumer prices (y-o-y, %)
2008 2009 2010
(Percentage change from previous period)
Annual
-0.7
-3.4
0.3
-3.5
1.4
Q3
-1.1
-3.3
0.8
3.2
2.2
Q4
-3.0
-17.7
-1.5
-23.1
1.0
Annual
-5.0
-22.3
-2.2
-33.1
-1.4
Q1
-3.2
-17.2
-3.9
-46.9
-0.1
Q2
1.3
14.6
-0.9
-38.5
-1.0
Q3
0.0
5.9
-3.4
-34.4
-2.2
Q4
1.1
4.7
-0.7
-8.0
-2.0
Jan
-
2.5
2.6
40.8
-1.3
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Economic Bulletin 7
Eurozone GDP growth and industrial production
Source: Eurostat
Japans GDP growth
Source: Cabinet Office & Ministry of Economy, Trade and Industry, Japan
Chinas GDP and fixed asset investment
Source: National Bureau of Statistics of China1-4
1-5
1-6
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8 March 2010
2. Private consumptionPrivate consumption (advanced estimates of GDP) in the fourth quarter of 2009 edged down0.1 percent quarter-on-quarter but increased 5.6 percent year-on-year.
Consumer goods sales in January 2010 dropped 1.3 percent month-on-month, negativelyaffected by weak sales of durable goods including automobiles and non-durable goods, butrose 6.9 percent year-on-year.
Durable goods sales continued an upward trend year-on-year, soaring 39.8 percent, but fell5.7 percent month-on-month due to a drop in automobile sales as the tax break for new carpurchases expired.
Non-durable goods sales decreased 2.0 percent month-on-month or 5.2 percent year-on-year, as gasoline sales dropped due to a cold wave and heavy snow.
Sales at department stores and specialized retailers jumped 6.5 percent and 10.9 percentyear-on-year, respectively, whereas those at large discounters posted a 9.0 percent year-on-year drop.
(Percentage change from same period in previous year)
Consumer goods sales
(Seasonally adjusted)2
- Durable goods3
Automobiles
- Semi-durable goods4
- Non-durable goods5
1. Preliminary
2. Percentage change from previous period
3. Durable goods: Automobiles, electronic appliances, furniture, telecommunications devices, etc.
4. Semi-durable goods: Clothing, footwear, etc.
5. Non-durable goods: Food, medicine, cosmetics, fuel, tobaccos, etc.
Source: Statistics Korea
2008 2009 2010
Annual
1.1
-1.6
-3.5
-3.0
1.4
Q4
-4.2
-3.6-9.6
-21.0
-10.7
0.2
Annual1
2.6
-8.1
21.8
0.3
1.2
Q1
-4.7
1.0-11.9
-20.6
-1.5
-1.4
Q2
1.5
5.15.7
20.1
-0.6
0.5
Q3
2.8
0.37.9
24.1
-0.7
1.9
Q41
10.8
4.133.9
76.9
3.4
4.1
Nov
9.7
0.540.7
113.3
0.3
1.5
Dec 1
12.7
1.245.8
92.0
7.2
1.5
Jan 1
6.9
-1.339.8
73.0
5.2
-5.2
(Percentage change from same period in previous year)
Annual Q4 Annual1 Q1 Q2 Q3 Q41 Nov Dec1 Jan 1
- Department stores
- Large discounters
- Specialized retailers2
2008 2009 2010
1. Preliminary
2. Specialized retailers are defined as stores carrying a few (1 to 3) specialized items.
Source: Statistics Korea
1.2
2.5
-1.8
-4.3
-1.0
-8.2
3.3
-2.0
2.9
-0.8
-4.4
-6.6
0.4
-2.9
2.6
4.2
-3.4
3.5
9.1
3.2
12.6
3.2
-1.3
12.6
14.7
5.4
14.1
6.5
-9.0
10.9
(Percentage change from same period in previous year)
Private consumption2
(Seasonally adjusted)3
2007 20081 20091
1. Preliminary 2. National accounts 3. Percentage change from previous period
Source: The Bank of Korea
Annual
5.1
-
Annual
0.9
-
Q3
1.4
0.0
Q4
-3.7
-4.6
Annual
0.2
-
Q1
-4.4
0.4
Q2
-0.8
3.6
Q3
0.8
1.5
Q4
5.6
-0.1
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Consumer goods sales
Source: Statistics Korea (industrial activity trend)
Private consumption
Source: The Bank of Korea (national accounts)2-1
2-2
2-3 Consumer goods sales by type
Source: Statistics Korea (industrial activity trend)
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10 March 2010
Consumer goods sales in February are projected to rebound from a month earlier, given anincreased demand during the Lunar New Year holidays, improvements in advancedestimates, and recovering consumer spending, with the year-on-year index continuing toimprove due to a low base effect from the previous year.
Domestic credit card spending rose 21.2 percent year-on-year, posting a 20 percent range
increase for three consecutive months since December 2009 when the index first landed at20 percent.
Sales at department stores jumped 14.5 percent year-on-year, adding 9.7 percentage pointsto the January figure. Sales at large discounters sharply rebounded by 31.3 percent year-on-year in February, after the previous months fall of 13.4 percent.
Domestic sales of Korean automobiles in February contracted month-on-month due to theexpiration of the tax break for new car purchases and Lunar New Year holidays, whileincreasing 21.3 percent year-on-year.
Gasoline sales turned positive in four months, thanks to an increasing demand during theLunar New Year holidays.
Gradually improving employment and subdued inflation is expected to help recovery inprivate consumption.
The Consumer Sentiment Index, which slightly decreased in February but stayed above thebenchmark 100, is also projected to positively affect private consumption.
Value of credit card use (y-o-y, %)
14.7 (Sep 2009) 9.4 (Oct) 18.3 (Nov) 20.0 (Dec) 20.2 (Jan 2010) 21.2 (Feb)
Department store sales (y-o-y, %)
8.6 (Sep 2009) 11.4 (Oct) 6.4 (Nov) 12.5 (Dec) 4.8 (Jan 2010) 14.5 (Feb)
Discount store sales (y-o-y, %)
-6.0 (Sep 2009) 4.5 (Oct) -2.8 (Nov) 3.9 (Dec) -13.4 (Jan 2010) 31.3 (Feb)
Domestic sales of Korean automobiles (y-o-y, %)
76.0 (Sep 2009) 23.8 (Oct) 83.6 (Nov) 79.9 (Dec) 61.7 (Jan 2010) 21.3 (Feb)
Domestic sales of gasoline (y-o-y, %)
-0.3 (Sep 2009) 20.7 (Oct) -3.0 (Nov) -4.5 (Dec) -0.6 (Jan 2010) 9.4 (Feb)
Source: Ministry of Knowledge Economy
The Credit Finance Association
Korea Automobile Manufacturers Association
Korea National Oil Corporation
Ministry of Strategy and Finance (for February data)
Number of workers hired (y-o-y, ten thousand)7.1 (Sep 2009) 1.0 (Oct) -1.0 (Nov) -1.6 (Dec) 0.5 (Jan 2010)
Consumer prices (y-o-y, %)
2.0 (Oct 2009) 2.4 (Nov) 2.8 (Dec) 3.1 (Jan 2010) 2.7 (Feb)
Consumer Sentiment Index (CSI)
114 (Sep 2009) 117 (Oct) 113 (Nov) 113 (Dec) 113 (Jan 2010) 111 (Feb)
Domestic sales of Korean automobiles (ten thousand units)
13.1 (Oct 2009) 13.7(Nov) 15.7 (Dec) 11.9 (Jan 2010) 10.7 (Feb)
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Department store and discount store sales (current value)
Source: Ministry of Knowledge Economy (monthly retail sales)2-4
2-5
2-6 Consumer sentiment index
Source: The Bank of Korea
Domestic automobile sales
Source: Korea Automobile Manufacturers Association (monthly automobile industry trend)
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12 March 2010
3. Facility investment
Facility investment (advanced estimates of GDP ) in the fourth quarter of 2009 posted a
quarter-on-quarter increase of 4.7 percent, and a year-on-year gain of 12.9 percent.
Facility investment in January rose 20.4 percent year-on-year but the index fell 9.8 percent
month-on-month, affected by a high base effect from the previous month and seasonalfactors which caused machinery investment such as semi-conductors to fall by 12.7 percent.
Facility investment in February is expected to increase from the previous month, given
improvements in leading indicators such as machinery orders and imports, corporateinvestment confidence and facility investment adjustment pressure.
(Percentage change from same period in previous year)
Facility investment1
(Seasonally adjusted)2
- Machinery
- Transportation equipment
1. National accounts 2. Percentage change from previous period
Source: The Bank of Korea
2007 2008 2009
Annual
9.3
-
9.2
9.6
Annual
-2.0
-
-2.7
0.4
Q1
1.5
-0.4
-1.2
12.2
Q2
1.1
0.4
-0.1
5.1
Q3
4.3
0.2
6.5
-3.6
Q4
-14.0
-14.2
-15.3
-9.9
Q1
-23.5
-11.2
-24.0
-21.8
Q2
-15.9
10.1
-19.6
-3.2
Q3
-7.4
10.4
-15.1
21.8
Q4
12.9
4.7
-
-
(Percentage change from same period in previous year)
Facility investment
(Seasonally adjusted)2
- Machinery
- Transportation equipment
Domestic machinery orders
- Public
- Private
- Machinery imports
Facility investmentadjustment pressure3
1. Preliminary
2. Percentage change from previous period
3. Production growth rate minus production capacity growth rate in the manufacturing sector (%p)
Sources: Statistics Korea & The Korea International Trade Association
2007 2008 2009 2010
Annual
8.2
-
7.5
11.3
20.6
-11.4
24.5
22.1
1.7
Annual
-3.0
-
-4.2
2.1
-13.8
5.0
-15.5
6.4
-1.7
Annual1
-8.0
-
-12.9
12.0
-11.8
61.7
-19.9
-16.6
-4.0
Q1
-17.9
-10.2
-22.1
0.1
-35.5
150.8
-44.8
-27.9
-19.1
Q2
-12.9
5.6
-18.9
11.8
-17.7
29.9
-22.3
-27.4
-8.9
Q3
-10.0
2.4
-17.0
20.0
3.4
280.2
-16.0
-15.9
1.2
Q41
10.2
13.9
8.8
15.5
20.0
-27.2
35.2
-7.2
12.8
Jan
-21.1
-4.5
-22.2
-16.4
-49.1
56.5
-54.4
-33.6
-29.9
Nov
10.2
5.9
7.2
21.5
56.2
110.1
45.5
21.6
14.9
Dec1
21.1
5.9
19.5
27.4
21.2
-44.5
52.4
24.7
31.5
Jan 1
20.4
-9.8
15.1
41.7
11.3
-27.1
18.0
34.8
34.4
Source: The Bank of Korea
Oct Nov Dec Jan Feb Mar
Business survey indices (base=100) for 100 96 98 103 101 103manufacturing facility investment projections
2009 2010
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Economic Bulletin 13
Machinery orders and estimated facility investment (3-month average)
Source: Statistics Korea (industrial activity trend)
Machinery imports
Source: Korea International Trade Association (KITA)
Facility investment by type
Source: The Bank of Korea (national accounts)3-1
3-2
3-3
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14 March 2010
4. Construction investment
Construction investment (advanced estimates of GDP) in the fourth quarter of 2009 rose
3.9 percent year-on-year, while remaining unchanged quarter-on-quarter.
Construction completed (current value) in January rose 8.9 percent year-on-year or 12.7
percent month-on-month thanks to an increase in SOC budget spending which affected
public sector performance. Both building construction and civil engineering works climbed
8.6 percent and 9.2 percent, respectively, from the previous year.
Construction investment in February is expected to be negatively affected by a high base
effect from the previous month, despite improving leading indicators such as construction
orders and business survey indices.
(Percentage change from same period in previous year)
Construction investment2
(Seasonally adjusted)3
- Building construction
- Civil engineering works
1. Preliminary
2. National accounts
3. Percentage change from previous period
Source: The Bank of Korea
2007 2008 2009
Annual
1.4
-
-0.0
3.8
Annual
-2.1
-
-4.3
1.3
Q1
-1.9
-2.5
-1.2
-3.2
Q2
-0.3
-0.3
-0.1
-0.7
Q3
0.2
0.1
-0.1
0.7
Q4
-5.6
-3.0
-14.3
5.7
Q1
1.6
5.2
-11.1
24.9
Q2
3.7
1.7
-3.5
14.3
Q3
2.7
-2.0
-0.4
7.7
Q4
3.9
0.0
-
-
(Percentage change from same period in previous year)
Construction completed
(Seasonally adjusted)2
- Public
- Private
Construction orders
- Public
- Private
Building permit Area
1. Preliminary
2. Percentage change from previous period
Source: Statistics Korea & The Ministry of Land, Transport and Maritime Affairs
2007 2008 2009 2010
Annual
6.6
-
8.4
4.6
23.6
40.3
16.5
13.3
Annual
4.9
-
6.5
2.2
-7.6
10.0
-14.3
-20.1
Annual1
3.3
-
21.2
-5.7
3.0
60.9
-21.9
-12.9
Q1
4.3
8.1
24.5
-5.3
-12.0
33.1
-37.3
-31.6
Q2
6.4
0.7
31.9
-5.9
-1.1
182.9
-60.2
-32.7
Q3
-1.2
-6.3
21.3
-11.8
7.6
78.9
-14.3
-4.6
Q41
3.7
3.4
10.7
0.4
11.6
11.6
17.3
13.1
Jan
-0.5
15.0
25.2
-11.4
0.3
64.4
-31.2
-48.3
Nov
3.2
-0.7
8.1
1.7
78.8
63.3
92.5
14.1
Dec1
12.9
1.4
18.3
9.8
-19.6
-33.9
-9.6
42.7
Jan 1
8.9
12.7
11.6
7.6
17.1
-14.7
49.4
33.3
Source: The Construction and Economy Research Institute of Korea
Oct Nov Dec Jan Feb
Business survey indices (base=100) for 110.8 90.1 83.6 74.8 91.4construction projections
2009 2010
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Economic Bulletin 15
Leading indicators of construction investment
Source: Statistics Korea (construction orders)
Ministry of Land, Transport and Maritime Affairs (building construction permit area)
Construction completed and housing construction
Source: Statistics Korea (construction completed)
Kookmin Bank (housing construction)
Construction investment
Source: The Bank of Korea (national accounts)4-1
4-2
4-3
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5. Exports and imports
Exports in February rose 31.0 percent year-on-year to US$33.27 billion.
Exports, while staying on a positive track backed by the recovering global economy, grew at
a slower pace compared with the previous month, as the number of working days decreased
by 1.5 days with the Lunar New Year holidays falling on February instead of January.
Working-day-adjusted daily average exports rose to US$1.62 billion from the previous
months US$1.38 billion, helped by soaring vessel exports from US$1.9 billion to US$5 billion.
By export category, semiconductors (up 118.4%) and liquid crystal devices (up 60.3%) made
great strides, and by regional category, exports to Central and South America (up 62.2%)
and China (up 43.2%) surged.
Imports in February jumped 36.9 percent year-on-year to US$30.94 billion, accelerating an
increase from the previous month, due to a low base effect, rising imports of crude oil by
56.9 percent and petroleum products by 102.5 percent, backed by a cold wave, and the
recovering economy. Average daily imports in working-day-adjusted-terms increased from
the previous months US$1.4 billion to US$1.51 billion. Imports of capital goods, raw
materials and consumer goods all expanded greatly year-on-year.
The trade balance in February shifted back to the black from the previous months deficit of
US$460 million, posting a surplus of US$2.33 billion.
Raw materials (y-o-y, %)
-42.8 (Q2, 2009) -39.3 (Q3) -2.3 (Q4); 25.4 (Jan 2010) 42.8 (Feb)
Capital goods (y-o-y, %)
-23.6 (Q2, 2009) -13.7 (Q3) 8.2 (Q4); 30.3 (Jan 2010) 29.3 (Feb)
Consumer goods (y-o-y, %)-24.4 (Q2, 2009) -20.9 (Q3) 4.6 (Q4); 21.3 (Jan 2010) 27.1 (Feb)
(US$ billion)
Exports
(y-o-y, %)
Average daily exports
Imports
(y-o-y, %)
Average daily imports
2009 2010
Annual
363.53
-13.9
1.30
323.09
-25.8
1.16
Q1
74.42
-25.2
1.10
71.42
-32.7
1.06
Q2
90.36
-21.1
1.30
74.00
-35.6
1.06
Q3
94.78
-17.6
1.32
84.84
-31.0
1.18
Q4
103.97
11.7
1.49
92.85
1.4
1.33
Jan
21.13
-34.5
0.98
24.90
-31.4
1.16
Feb
25.40
-18.5
0.91
22.60
-30.7
1.03
Jan
31.01
46.7
1.38
31.47
26.4
1.40
Feb
33.27
31.0
1.62
30.94
36.9
1.51
Source: Korea Customs Service
(US$ billion)
Trade Balance
2009 2010
Annual
40.45
Q1
3.00
Q2
16.39
Q3
9.94
Q4
11.12
Jan
-3.77
Feb
2.80
Jan
-0.46
Feb
2.33Source: Korea Customs Service
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Imports (customs clearance basis)
Source: Korea Customs Service & Ministry of Knowledge Economy (export and import trend)
Trade balance
Source: Korea Customs Service & Ministry of Knowledge Economy (export and import trend)
Exports (customs clearance basis)
Source: Korea Customs Service & Ministry of Knowledge Economy (export and import trend)
5-1
5-2
5-3
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6. Mining and manufacturing production
Mining and manufacturing production remained steady month-on-month in January, while
rising 36.9 percent year-on-year due to a low base effect from the same period of the
previous year.
By business category, semiconductors and parts (up 80.1%), automobiles (up 83.1%), and
primary metals (up 50.5% ) posted an increase year-on-year, whereas refined petroleum
products (down 5.8%) and beverages (down 2.2%) decreased.
Shipments, led by semiconductors and parts, continued to improve, posting a 32.4 percent
increase year-on-year and 0.8 percent month-on-month, while the level of inventory fell at a
slightly slower pace year-on-year from 7.5 percent to 4.0 percent.
By business category, the shipments of semiconductors and parts (up 77.8% ), and
automobiles (up 79.0% ) rose year-on-year, while those of cigarettes (down 3.3% ) and
refined petroleum products (down 0.7% ) declined. The inventories of apparels (down
32.5%), non-metal minerals (down 20.2%), and primary metals (down 9.6%) fell.
The average operation ratio of the manufacturing sector was 78.8 percent, down 0.9
percentage points from a month earlier.
Mining and manufacturing production in February is projected to remain steady considering
advanced indices such as exports and industrial electricity sales.
Production (q-o-q, m-o-m)
(y-o-y)
- Manufacturing
Heavy chemical industry
Light industry
Shipment
- Domestic demand
- Exports
Inventory3
Average operation ratio (%)
Production capacity
1. Preliminary 2. Including mining, manufacturing, electricity and gas industry 3. End-period
Source: Statistics Korea
(Percentage change from same period in previous year)
Mining andmanufacturingactivity2
Manufacturingactivity
2009 20102008
Annual
-
3.4
3.0
4.4
-1.6
2.6
-0.4
7.2
7.1
77.5
5.1
Annual1
-
-0.7
-0.9
0.1
-5.7
-1.7
-1.8
-1.7
-8.0
74.6
3.1
Q3
6.8
4.3
4.4
5.7
-2.4
2.1
3.3
0.4
-14.2
78.8
3.2
Q4 1
1.3
16.2
16.8
20.0
1.7
12.8
12.4
13.3
-8.0
78.4
4.0
Jan
2.9
-25.7
-27.3
-28.1
-22.9
-23.6
-24.3
-22.6
-0.1
62.8
2.6
Nov
1.8
18.0
18.8
21.9
3.6
15.4
13.9
17.5
-14.6
78.2
3.9
Dec1
2.4
34.3
36.0
41.5
11.6
26.2
26.2
26.1
-8.0
79.7
4.5
Jan 1
0.0
36.9
38.9
43.5
17.7
32.4
26.1
34.4
-4.0
78.8
4.5
Industrial electricity sales (thousand GWh)
17.7 (Oct 2009) 18.1 (Nov) 19.1 (Dec) 19.4 (Jan 2010) 17.2 (Feb) 1
Exports (US$ billion)
34.1 (Sep 2009) 34.0 (Oct) 34.3 (Nov) 36.2 (Dec) 31.1 (Jan 2010) 32.7 (Feb)
1. Estimate
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Economic Bulletin 19
Average manufacturing operation ratio
Source: Statistics Korea (industrial activity trend)
6-1
6-2
6-3
Industrial production
Source: Statistics Korea (industrial activity trend)
Inventory
Source: Statistics Korea (industrial activity trend)
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7. Service sector activity
Service activity in January 2010 decreased 0.8 percent month-on-month due to sluggish
educational services and real estate & renting services. From a year earlier, service output
expanded 4.6 percent.
By business category, finance & insurance services (up 2.8%), business services (up 2.6%)
led the month-on-month increase in service activity.
On the other hand, educational services (down 7.9%) and real estate & rental (down 6.6%)
declined from a month earlier.
Service activity in February 2010 is expected to slightly increase from a month earlier.
Amid robust expectations on wholesale & retail sales as well as advertisement &
broadcasting services affected by the lunar New Years holidays and Winter Olympics,
improved labor market conditions also served as a positive factor.
(Percentage change from same period in previous year)
Annual Q4 Annual Q1 Q2 Q3 Q4 Nov Dec1 Jan 1
Service activity index
- Wholesale & retail
- Transportation services
- Hotels & restaurants
- Information & communication services
- Financial & insurance services
- Real estate & renting
- Professional, scientific & technical activities
- Business services
- Educational services
- Healthcare & social welfare services
- Entertainment, cultural & sports services
- Membership organizations
- Sewerage & waste management
Weight2008 2009
100
22.0
9.0
7.8
8.4
15.3
6.3
4.8
2.9
10.8
6.0
2.9
3.8
0.4
3.6
1.3
4.3
0.7
3.3
9.7
-2.1
2.0
4.4
1.7
8.7
2.2
0.1
5.8
0.0
-4.7
-3.2
-3.0
-0.8
4.5
-7.5
0.9
0.0
7.4
8.7
3.3
-1.0
4.0
2.0
-0.4
-6.6
-1.5
0.7
8.0
5.3
1.0
-3.0
2.8
10.4
-0.5
-2.4
3.7
-0.3
-4.8
-12.7
-2.6
-1.4
6.9
-4.2
-1.7
-4.9
9.4
8.9
1.4
-3.8
0.1
2.4
-2.2
-10.0
-0.6
1.6
10.3
-2.2
3.8
-6.2
16.5
8.9
0.7
-4.8
9.0
1.9
0.3
-4.8
-2.5
1.4
9.0
6.7
0.0
-0.8
-3.7
10.4
0.0
-1.4
6.0
3.6
5.4
1.4
-0.2
1.4
5.7
21.6
1.6
-0.2
-9.6
13.2
-3.8
0.1
-0.2
4.6
5.8
11.6
3.2
0.7
8.9
8.6
0.4
3.0
-12.1
14.0
2.0
2.2
5.9
4.2
5.4
2.5
-1.9
1.5
5.3
21.3
-2.4
-1.3
2.1
12.5
-6.6
-2.2
2.3
6.9
8.9
4.8
3.6
1.4
7.7
25.9
7.7
0.6
-3.3
14.9
2.6
2.8
0.3
1. Preliminary
Source: Statistics Korea
Initial claims for unemployment benefits (thousand)
67.1 (Oct 2009) 70.2 (Nov) 93.7 (Dec) 139.7 (Jan 2010) 88 (Feb)
2010
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Economic Bulletin 21
December 2009 service industry by business
Source: Statistics Korea (service industry activity trend)
7-1
7-2
7-3
Totali
ndex
Who
lesale
&retail
Tran
sportatio
n
Hotels
&re
staurants
Information
&comm
unica
tions
Real
estate
&renting
Professional,s
cientifi
c&
technic
alservi
ces
Busin
essfacilit
ymanag
ement&
busin
esssupport
service
s
Education
alservi
ces
Healthc
are&
socialw
elfar
e
servi
ces
Ente
rtainm
ent,
cultu
ral&
sports
servi
ces
Membe
rship
organiz
ation
s,repair
&
othe
rpersonals
ervic
es
Sewe
rage
,waste
mana
geme
nt,mate
rials
recovery&
remedia
tiona
ctivities
Finan
cial&
insuran
ceservi
ces
Service industry
Source: Statistics Korea (service industry activity trend)
Wholesale and retail sales
Source: Statistics Korea (service industry activity trend)
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8. Employment
The number of workers on payroll in January 2010 increased by 5,000 from a year earlier,
while the employment rate fell by 0.7 percentage points to 56.6 percent.
Employment in construction (down 81,000), and agriculture, forestry & fishery (down160,000 ) stayed on a downward track, while hiring in the manufacturing (up 29,000 ) and
service sector (up 213,000) increased. Manufacturing employment rose due to an increase in
both production and exports. Employment in construction continued to decline, although
decelerating the pace. Hiring in services soared as a result of the recovery of domestic
consumption and expanded expenditure. Employment in agriculture, forestry & fishery
sector tumbled with lower temperature and heavy snowfalls.
Wage workers rose by 244,000 led by an increase of 609,000 in regular workers, although
the number of daily workers plunged by 244,000. Non-wage workers including self-
employed workers (down 113,000), however, plummeted by 240,000 from a year earlier. In
the mean time, male workers (up 91,000 ) and workers in their fifties (up 233,000)significantly increased.
Number of employed (million)
Employment rate (%)
(seasonally adjusted)
Employment growth (y-o-y, thousand)
(Excluding agriculture, forestry & fishery)
- Manufacturing
- Construction
- Services
- Agriculture, forestry & fishery
- Wage workers
Regular workers
Temporary workers
Daily workers
- Non-wage workers
Self-employed workers
- Male
- Female
- 15 to 29
- 30 to 39
- 40 to 49
- 50 to 59
- 60 or more
2009 20102008
Annual
23.58
59.5
59.5
145
182
-52
-37
263
-37
236
386
-93
-57
-92
-79
96
48
-119
-26
64
207
18
Q3
23.75
59.9
59.5
141
179
-52
-40
262
-38
208
347
-83
-56
-66
-76
92
49
-114
-36
92
169
30
Q4
23.64
59.4
59.2
54
46
-103
-41
187
8
137
316
-94
-85
-83
-95
43
12
-166
-92
56
206
50
Annual
23.51
58.6
58.6
-72
-34
-126
-91
186
-38
247
383
22
-158
-319
-259
31
-103
-127
-173
-24
198
54
Q1
22.90
57.4
58.8
-146
-160
-163
-43
47
14
73
318
-136
-108
-220
-197
-23
-124
-212
-159
8
193
23
Jan
22.86
84.8
59.0
-11.8
-
-127
-41
57
15
21
287
-134
-133
-123
-112
-19
-84
-240
-113
28
197
25
Q2
23.74
59.3
58.6
-134
-109
-151
-113
155
-25
175
313
-5
-133
-309
-286
24
-158
-99
-213
-27
156
49
Q3
23.75
59.1
58.7
-1
24
-143
-103
269
-25
356
386
125
-155
-357
-276
34
-34
-123
-169
-30
211
109
Q4
23.63
58.7
58.5
-6
110
-49
-107
264
-116
413
492
186
-264
-424
-307
89
-94
-77
-149
-46
230
37
Jan
22.87
56.6
58.2
165
-
29
-81
213
-160
244
609
-121
-244
-240
-113
91
-9
14
-81
-56
233
-105
Source: Statistics Korea
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Economic Bulletin 23
Share of employed by industry
Source: Statistics Korea (employment trend)
8-1
8-2
8-3 Share of employed by status of workers
Source: Statistics Korea (employment trend)
Number of employed and employment growth
Source: Statistics Korea (employment trend)
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24 March 2010
The number of the unemployed in January 2010 climbed by 368,000 year-on-year to record
1,216,000, and the unemployment rate rose by 1.1 percentage points to 5.0 percent.
The number of female workers who have lost jobs (up 214,000 ) increased at a faster pace
than that of male workers unemployed (up 154,000) in January.
The unemployment rate was high among employers in their fifties and sixties or over as
applicants for public works allotted to seniors were categorized as economically active
population.
The economically inactive population in January 2010 was up 150,000 from a year earlier to
post 16,310,000. Meanwhile, the labor force participation rate was up 0.1 percentage pointyear-on-year to 59.6 percent. Workers quit jobs due to childcare & housework (up 190,000)
and old ages (up 190,000) surged while those who stayed away from work to take a rest
(down 231,000) significantly decreased.
Number of unemployed (thousand)
Unemployment growth (y-o-y, thousand)
- Male
- FemaleUnemployment rate (%)
(Seasonally adjusted)
- Youth aged 15 to 29
- Middle school graduate or under
- High school graduate
- College, univ. graduate or over
2009 20102008
Annual
769
-14
-12
-1
3.2
3.2
7.2
2.2
3.8
3.0
Q3
752
-5
1
-6
3.1
3.2
6.9
2.1
3.8
2.9
Q4
757
24
25
-1
3.1
3.2
7.0
2.1
3.8
2.9
Annual
889
119
80
40
3.6
3.6
8.1
2.5
4.4
3.5
Jan
848
73
66
8
3.6
3.3
8.2
3.0
4.4
3.0
Q1
908
107
83
24
3.8
3.5
8.6
2.9
4.5
3.6
Q2
943
176
116
60
3.8
3.9
8.0
2.6
4.6
3.7
Q3
886
134
95
39
3.6
3.7
8.1
2.2
4.6
3.3
Q4
817
60
25
36
3.3
3.5
7.6
2.3
4.0
3.2
Jan
1,216
368
154
214
5.0
4.8
9.3
7.1
5.2
3.8
Source: Statistics Korea
Labor force participation rate (%)
Economically inactive population (million)
Growth in economically inactive
population (y-o-y, thousand)
- Engaged in family duties
- Retired
- Rest
2009 20102008
Annual
61.5
15.25
297
123
76
31
Q3
61.8
15.15
289
134
104
-27
Q4
61.3
15.37
372
112
59
99
Annual
60.6
15.70
447
188
88
123
Jan
59.5
16.16
506
147
55
149
Q1
59.7
16.09
514
209
52
162
Q2
61.7
15.35
445
173
102
112
Q3
61.3
15.53
374
119
105
94
Q4
60.7
15.83
456
250
92
123
Jan
59.6
16.31
150
190
190
-231
Source: Statistics Korea
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Unemployment rate and youth unemployment rate
Source: Statistics Korea (employment trend)
8-4
8-5
8-6 Unemployment rate by education
Source: Statistics Korea (employment trend)
Employment rate
Source: Statistics Korea (employment trend)
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9. Financial market
9.1 Stock market
The Korean stock market in February 2010 slightly fell adversely affected by unfavorablefactors in the global economy. Global investor sentiment has been chilled as uncertainty
over global monetary policy rose as the US and China moved to absorb liquidity. On
February 18, the Federal Reserve Board (Fed) raised the discount rate by 25 basis points
while Chinas central bank lifted the reserve requirement ratio by 50 basis points on
February 16.
Worries over the Greek debt crisis persisted as European finance ministers failed to spell out
concrete measures to aid Greece and credit rating agencies, S&P and Moodys, hinted that
they may downgrade Greeces sovereign debt rating.
Due to the flight to safety assets, foreign investors shifted to a net-buying position onKorean shares for the first time since February 2009.
9.2 Exchange rate
The won/dollar exchange rate as of the end of February 2010 fell 1.8 won from 1,161.8 won at
the end of January to wrap up the month at 1,160.0 won.
The exchange rate has shown higher volatility fluctuating in the 1,140 to 1,170 won range due
to external factors such as credit concerns in the eurozone and Dubai and the Feds discount
rate hike, rather than internal factors.
The won/yen exchange rate rose 5.8 won from 1,293.2 won to 1,299.0 won due to growingdemand for safe assets including yen affected by sovereign debt woes in Greece and other
eurozone countries.
Jan 2010 Feb 2010 Change1 Jan 2010 Feb 2010 Change1
Stock price index
Market capitalization
Average daily trade value
Foreign stock ownership
1. Change from the end of the previous month
1. Appreciation from the end of the previous year (%); the exchange rate is based on the closing price at 3:00 p.m., local time.
(End-period)
Dec Dec Dec Dec Jan Feb Change1
Won/Dollar 929.8 936.1 1,259.5 1,164.5 1,161.8 1,160.0 0.4
Won/100Yen 783.4 828.6 1,396.8 1,264.5 1,293.2 1,299.0 -2.7
2006 2007 2008 2009 2010
KOSPI KOSDAQ
(End-period, point, trillion won)
1,602.4
848.1
6.2
32.5
1,594.6
844.1
4.0
32.1
-7.9(-0.5%)
-43.2(-4.4%)
-2.2(-35.5%)
-0.4(-1.2%)
496.6
84.8
3.2
7.6
507.3
84.4
2.3
7.5
10.5(2.1%)
-0.4(-0.5%)
-0.9(-28.1%)
-0.1(-1.3%)
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Economic Bulletin 27
9-1
9-2
9-3 Recent foreign exchange rate
Foreign exchange rate (month-end)
Stock prices
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Total money supply
Source: The Bank of Korea
Interest rates
Source: The Bank of Korea9-4
9-5
9-6 Share of deposits by financial sector (M3 as of year-end)
Source: The Bank of Korea
* Retail finance: Mutual savings banks & National Credit Union Federation of Korea, Others: Investment banks, post office savings, etc.
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10. Balance of payments
Koreas current account recorded a US$450 million deficit in January 2010.
The goods account surplus decreased significantly to post US$1.55 billion from the previous
months US$4.02 billion as the trade account shifted to a deficit.
Although the travel account deficit expanded, the service account deficit was down to
US$2.16 billion from the previous months US$2.80 billion as the business service deficit fell.
The income account surplus declined to record US$470 million from US$700 million a month
earlier due mainly to reduced dividend income.
The current transfer account deficit edged down to US$300 million from the previous
months US$400 million with decreased outward remittance.
The capital and financial account in January 2010 posted a net inflow of US$5.07 billion.
The direct investment account expanded the net outflow to register US$1.68 billion from the
previous months deficit of US$1.37 billion mainly as inbound foreign direct investment (FDI)
was down.
The portfolio investment account decreased the net inflow to record US$100 million from
US$970 million a month earlier as foreign investment in the Korean stock market declined.
The net inflow in the financial derivatives account was down to post US$320 million from
US$990 million in the previous month as payments related to overseas financial derivative
transactions increased.
The other investment account increased the surplus to US$6.40 billion from the previous
months US$1.01 billion as domestic financial institutions temporary borrowings from
overseas were up.
The current account is likely to record a surplus of around US$1 billion in February 2010 as
the trade account registered a US$2.33 billion surplus.
Capital & financial account balance (US$ billion)
-1.40 (Q1 2009) 8.68 (Q2) 14.40 (Q3) 4.77 (Q4); 1.64 (Dec) 5.07 (Jan 2010)
Current account
- Goods balance
- Service balance
- Income balance
- Current transfers
(US$ billion)
2009 20102008
Annual
-5.78
5.67
-16.67
5.90
-0.67
Annual
42.67
56.13
-17.20
4.55
-0.81
Q1
8.62
8.31
-1.93
0.92
1.31
Q2
13.10
17.58
-4.17
0.29
-0.60
Q3
10.40
14.70
-5.33
1.69
-0.66
Q4
10.56
15.54
-5.78
1.65
-0.86
Nov
4.28
5.84
-1.66
0.39
-0.29
Dec
1.52
4.02
-2.80
0.70
-0.40
Jan
-0.45
1.55
-2.16
0.47
-0.30
Source: The Bank of Korea
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Capital & financial account balance
Source: The Bank of Korea (balance of payments trend)
Travel balance
Source: The Bank of Korea (balance of payments trend)
Current account balance
Source: The Bank of Korea (balance of payments trend)10-1
10-2
10-3
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11. Prices and international commodity prices
11.1 Prices
Consumer prices in February 2010 increased 2.7 percent year-on-year, decelerating from theprevious months 3.1 percent with price stabilization of processed foods and oil products,although prices of agricultural, livestock and fishery products stayed on an upward track. Froma month earlier, consumer prices were up 0.4 percent.
Prices of agricultural, livestock and fishery products increased driven by productsvulnerable to cold weather. The price was also boosted by increased demand during theLunar New Year holidays which shifted from January in 2009 to February in 2010.
Prices of agricultural, livestock & fishery products in Feb 2010 (m-o-m, %)Chinese cabbage (46.0), apple (13.3), cucumber (26.5), pumpkin (26.4), bell pepper (22.0), scallion (14.7),
lettuce (-34.5), strawberry (-5.7), pork (-1.8), rice (-1.0)
Prices of oil products decreased 0.2 percent from a month earlier as the wons appreciation wasreflected with time lag while international oil prices went down.
Prices of Dubai crude (US$/barrel)
71.4 (Aug 2009) 67.7 (Sep) 73.2 (Oct) 77.7 (Nov) 75.5 (Dec) 76.8 (Jan 2010) 73.6 (Feb)
Public utility charges remained unchanged month-on-month without noticeable priceadjustments. Personal service charges were up 0.3 percent from the previous month due toseasonal factors such as the school vacation, moving season and winter heating demand.
Core consumer prices, which exclude the prices of oil and agricultural products, rose by 1.9 percentyear-on-year. Consumer prices for basic necessities, a barometer of perceived consumer prices, wereup 3.4 percent compared to the same month of the previous year.
Consumer price inflation in major sectors
Publicutility
Industrialproducts
Oilproducts
TotalAgricultural,
livestock & fisheryproducts
Housingrents
Personalservices
Month-on-Month (%)
Contribution (%p)
Year-on-Year (%)
Contribution (%p)
0.4
0.35
2.7
2.69
2.5
0.22
4.3
0.37
-0.2
-0.05
3.5
1.07
-0.2
-0.01
11.2
0.60
0.2
0.02
1.4
0.13
0.0
0.00
1.9
0.31
0.3
0.12
2.4
0.83
Source: Statistics Korea
Consumer price inflation
Source: Statistics Korea
2009
Month-on-Month (%)
Year-on-Year (%)
Core consumer prices (y-o-y)
(m-o-m)
Consumer prices for basicnecessities (y-o-y)
Feb
0.7
4.1
5.2
0.4
3.3
Mar
0.7
3.9
4.5
0.4
3.1
Apr
0.3
3.6
4.2
0.2
3.0
May
0.0
2.7
3.9
0.2
1.8
Jun
-0.1
2.0
3.5
0.1
0.5
Jul
0.4
1.6
3.2
0.2
0.4
Aug
0.4
2.2
3.1
0.1
1.3
Sep
0.1
2.2
2.7
0.1
1.7
Oct
-0.3
2.0
2.6
0.1
1.5
Nov
0.2
2.4
2.5
0.2
2.3
Dec
0.4
2.8
2.2
0.1
3.3
Jan
0.4
3.1
2.1
0.1
3.8
Feb
0.4
2.7
1.9
0.2
3.4
2010
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Contribution to consumer price inflation
Source: Statistics Korea (consumer price trend)
Prices
Source: Statistics Korea (consumer prices, core inflation) & The Bank of Korea (producer prices)11-1
11-2
11-3
Consumer price inflation
Source: Statistics Korea (consumer price trend)
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34 March 2010
11.2. International oil and commodity prices
Average international oil prices in February 2010 decreased month-on-month as the dollar
strengthened amid fiscal woes in some European countries such as Greece.
The prices, however, turned to an increase after mid-February as energy demand for heating
was pushed up by cold weather and heavy snowfalls in the North Eastern region of the US.
In the domestic market, galsoline prices inched up month-on-month backed by the wons
depreciation although international oil prices decreased. Meanwhile diesel prices declined
from the previous month as the prices fell at a steeper pace than gasoline in the
international market.
Monthly average prices of all non-ferrous metals in February decreased from a month earlier
with the exception of nickel whose prices increased due to long-term strikes in the Canadian
nickel mines. Non-ferrous metal prices, however, generally showed an upward trend after
mid-February as concerns over Chinas monetary tightening eased.
International prices of grain including corn, wheat and soybean decreased from the previous
month as robust grain production in South America boosted the grain harvest outlook for
this year. A strong dollar also contributed to a fall in grain prices.
Prices of non-ferrous metals and grain in Feb 2010 (m-o-m, %)
Corn (-5.5), wheat (-6.0), soybean (-4.3), bronze (-7.3), aluminum (-8.2), nickel (3.0), zinc (-11.6), lead (-10.5), tin (-7.6)
(Won/liter, period average)
Annual Annual Annual Aug Sep Oct Nov Dec Jan Feb
Gasoline prices 1,526 1,692 1,601 1,670 1,681 1,627 1,655 1,646 1,661 1,664
Diesel prices 1,273 1,614 1,397 1,447 1,453 1,409 1,452 1,441 1,450 1,443
2007 2008 2009 2010
Source: Korea National Oil Corporation
Record high oil prices (spot prices, US$/barrel)
Dubai crude: 141 (Jul 4, 2008), Brent crude: 145 (Jul 3, 2008), WTI crude: 146 (Jul 14, 2008)
(US$/barrel, period average)
Dubai crude
Brent crude
WTI crude
2007 2008 2009 2010
Annual
68.4
72.8
72.3
Annual
94.3
97.5
99.9
Annual
61.9
61.7
61.9
Aug
71.4
72.9
71.1
Sep
67.7
67.5
69.4
Oct
73.2
72.8
75.8
Nov
77.7
76.7
78.1
Dec
75.5
74.5
74.5
Jan
76.8
76.4
78.3
Feb
73.6
73.9
76.5
Source: KOREAPDS
(Period average)Reuters index*
Annual Annual Annual Aug Sep Oct Nov Dec Jan Feb
2,400 2,536 2,079 2,159 2,147 2,197 2,243 2,294 2,343 2,290
2009 201020082007
* A weighted average index of 17 major commodities
Source: KOREAPDS
Reuters index*
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International oil prices
Source: Korea National Oil Corporation11-4
11-5
11-6 International commodity prices
Source: Bloomberg (CRB) & The Bank of Korea (Reuters index)* CRB demonstrates futures price index of 21 commodities listed on the US Commodity Transaction Market, including beans and other crops, crude oil and jewelry.
International oil prices (Dubai crude) and import prices
Source: Korea National Oil Corporation & Korea Customs Service
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36 March 2010
12. Real estate market
12.1 Housing market
In February 2010, nationwide apartment sales prices increased at a faster pace of 0.4
percent from 0.1 percent a month earlier.
In the Seoul metropolitan area (up 0.1%), the increase in apartment sales prices acceleratedmonth-on-month in Seoul (up 0.3%) including Gangnam (up 0.4% ). On the other hand,prices relatively stabilized in Gyeonggi province (up 0.0%) and Incheon (down 0.1%).
Meanwhile, apartment sales prices in areas excluding the Seoul metropolitan areacontinued to increase led by some metropolitan cities such as Busan (up 1.3%) and Daejeon(up 1.3%) without enough apartments put up for sale.
The increase in rental prices has been speeded up significantly to 0.9 percent from theprevious months 0.4 percent. In Seoul (up 1.0%), the acceleration was led by Gangnam (up
1.4%), Seocho (up 2.2%), Songpa (up 2.1% ) and Gwangjin (up 3.1%) with rising demand ingood school districts and from newlyweds.
Apartment sales transactions in January 2010 plunged from 81,961 a month earlier to post61,974. The transactions were up 26.3 percent from a year earlier and down 13.8 percentcompared with the monthly average recorded in the same month for the past 3 years.
Source: Korea Land Corporation
(Monthly average, thousand)Apartment sales transactions
Nationwide
2007 2008 2009 2010
Annual
84
Jan
87
Annual
74
Jan
80
Annual
77
Jan
49
Feb
60
Mar
79
Apr
76
May
72
Jun
81
Jul
91
Aug
81
Sep
90
Oct
87
Nov
82
Dec
82
Jan
62
(Percentage change from previous period)Nationwide apartment sales prices
Nationwide
Seoul
Gangnam2
Gangbuk3
Seoul metropolitan area
5 metropolitan cities
1. Weekly trends 2. Upscale area of Southern Seoul 3. Northern Seoul Source: Kookmin Bank
2006 2007 2008 2009 2010
Annual
13.8
24.1
27.6
19.0
24.6
2.1
Annual
2.1
3.6
0.5
8.3
4.0
-0.6
Annual
2.3
3.2
-1.9
9.4
2.9
1.0
Annual
1.6
2.6
3.9
0.9
0.7
2.8
Q1
-1.2
-1.3
-1.1
-1.7
-1.8
-0.7
Q2
0.4
1.0
1.7
0.2
0.5
0.3
Q3
1.5
2.6
3.1
2.0
1.8
1.3
Q4
0.9
0.3
0.2
0.4
0.2
1.9
Dec
0.2
0.0
0.0
0.0
-0.1
0.5
Jan
0.1
0.1
0.2
0.0
0.0
0.4
Feb
0.4
0.3
0.4
0.1
0.1
0.8
Feb11
0.1
0.1
0.1
0.0
0.0
0.2
Feb81
0.1
0.1
0.1
0.0
0.0
0.2
Feb151
0.0
0.0
0.0
0.0
0.0
0.1
Feb221
0.1
0.0
0.0
0.0
0.0
0.2
(Percentage change from previous period)Nationwide apartment rental prices
Nationwide
Seoul
Gangnam2
Gangbuk3
Seoul metropolitan area
5 metropolitan cities
1. Weekly trends 2. Upscale area of Southern Seoul 3. Northern Seoul Source: Kookmin Bank
2006 2007 2008 2009 2010
Annual
7.6
11.5
11.3
11.8
11.7
3.0
Annual
1.9
2.2
0.5
4.6
2.1
1.1
Annual
0.8
-1.8
-3.6
0.5
-0.4
1.6
Annual
4.5
8.1
10.4
5.4
5.6
3.9
Q1
-1.3
-0.8
-0.1
-1.6
-1.8
-0.9
Q2
0.9
1.8
2.4
1.0
1.4
0.4
Q3
2.8
4.7
5.1
4.2
4.1
1.9
Q4
2.0
2.3
2.7
1.9
1.8
2.6
Dec
0.3
0.4
0.5
0.2
0.1
0.7
Jan
0.4
0.6
0.9
0.1
0.3
0.7
Feb
0.9
1.0
1.2
0.7
0.7
1.4
Feb11
0.2
0.2
0.3
0.2
0.2
0.4
Feb81
0.2
0.2
0.2
0.2
0.2
0.4
Feb151
0.1
0.1
0.1
0.1
0.1
0.1
Feb221
0.2
0.2
0.2
0.3
0.2
0.3
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Apartment prices by region
Source: Kookmin Bank (national housing price trend)
Weekly apartment sales prices and monthly transaction volume
Source: Kookmin Bank (weekly APT price trend) & Korea Land Corporation (monthly land trade trend)
Real estate prices
Source: Kookmin Bank (national housing price trend)12-1
12-2
12-3
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38 March 2010
12.2 Land market
Continuing the moderate recovery pace since April 2009, nationwide land prices in January
2010 rose 0.25 percent, slightly decelerating from the previous months 0.34 percent. Land
prices in January were 3.0 percent lower than the pre-crisis peak reached in October 2008.
In the Seoul metropolitan area (up 0.31%), land prices in Incheon (up 0.45%) and Gyeonggi
province (up 0.35%) saw a robust increase.
Meanwhile, land price increases in areas excluding the Seoul metropolitan area slowed to
0.14 percent from 0.26 percent of the previous month.
Nationwide land transactions in January recorded 170,000 land lots, down 29.6 percent from
the previous month and up 26.9 percent from the same month of the previous year.
Nationwide land transactions decreased in terms of land lots led by Incheon (down 49.3%),
South Jeolla province (down 35.8%) and Gyeonggi province (down 33.5%).
Land price increases in Seoul metropolitan area (m-o-m, %)
0.37 (Oct 2009) 0.36 (Nov) 0.38 (Dec) 0.31 (Jan 2010)
Land price increases in areas excluding Seoul metropolitan area (m-o-m, %)
0.16 (Oct 2009) 0.21 (Nov) 0.26 (Dec) 0.14 (Jan 2010)
(Percentage change from previous period)Land prices by region
Nationwide
Seoul
Gyeonggi
Incheon
2007 2008 2009 2010
Annual
3.88
5.88
4.22
4.86
Q3
0.91
1.40
1.05
1.12
Q4
1.15
1.90
1.14
1.13
Annual
-0.31
-1.00
-0.26
1.37
Q1
1.23
1.83
1.28
1.36
Q2
1.46
2.17
1.57
1.67
Q3
1.18
1.59
1.28
2.01
Q4
-4.08
-6.34
-4.28
-3.57
Annual
0.96
1.40
1.22
1.99
Q1
-1.20
-1.38
-1.62
-1.39
Q2
0.35
0.68
0.37
0.53
Q3
0.88
1.30
1.13
1.16
Q4
0.94
0.81
1.36
1.70
Annual
0.25
0.25
0.35
0.45
Jan
0.25
0.25
0.35
0.45Source: Korea Land Corporation
(Monthly average, land lot, thousand)Land sales transactions
Nationwide
Seoul
Gyeonggi
Incheon
2007 2008 2009 2010
Annual
208
33
49
13
Annual
208
26
45
13
Annual
203
22
46
10
Jan
134
13
26
7
Feb
164
15
34
7
Mar
207
20
41
9
Apr
207
24
48
10
May
192
22
45
9
Jun
215
27
49
10
Jul
222
26
50
11
Aug
206
25
48
10
Sep
226
28
56
13
Oct
212
25
52
14
Jan
170
16
39
6
Nov
207
19
48
11
Dec
241
21
58
12
Source: Korea Land Corporation
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Land trade volume
Source: Korea Land Corporation (land trade trend)
12-4
12-5
12-6
Land and consumer prices since 1970s
Source: Korea Land Corporation (land prices) & Statistics Korea (consumer prices)
Land prices by region
Source: Korea Land Corporation (land price trend)
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40 March 2010
13. Composite indices of business cycle indicators
The coincident composite index increased 0.9 percent month-on-month in January 2010,
while the cyclical indicator of coincident composite index was up 0.5 points from the
previous month.
All components of the coincident composite index including the value of construction
completed, the domestic shipment index and the mining and manufacturing production
index increased with the exception of the number of non-farm payroll employment which
has remained flat.
The leading composite index climbed 0.3 percent from the previous month, while the 12-
month smoothed change in leading composite index slipped 0.3 percentage points month-
on-month.
The indicator of inventory cycle, the ratio of job openings to job seekers, the value of
machinery orders received and the value of capital goods imports were up.
Components of coincident composite index in Jan 2010 (m-o-m)
Value of construction completed (3.8%), domestic shipment index (1.4%), mining & manufacturing production
index (1.3%), volume of imports (1.0%), manufacturing operation ratio index (0.7%), service activity index
(0.5%), wholesale & retail sales index (0.2%), number of non-farm payroll employment (0.0%)
Components of the leading composite index in Jan 2010 (m-o-m)
Indicator of inventory cycle (3.8%p), ratio of job openings to job seekers (3.3%p), value of machinery orders
received (1.4%), volume of capital goods imports (0.1%), composite stock price index (0.0%), liquidity in the
financial institutions (-0.1%), spreads between long & short term interest rates (-0.1%p), net terms of trade
index (-0.5%), consumer expectations index (-2.0p), value of construction orders received (-2.2%)
Coincident composite index (m-o-m, %)
Cyclical indicator of coincident composite index
(m-o-m, p)
Leading composite index (m-o-m, %)
12 month smoothed changein leading composite index (%)
(m-o-m, %p)
1. Preliminary
2009 2010
1. Preliminary
Jul
1.1
98.4
0.6
1.5
7.6
2.1
Aug
0.7
98.7
0.3
0.9
8.8
1.2
Sep
0.6
98.9
0.2
0.6
9.6
0.8
Oct
0.5
98.9
0.0
0.6
10.3
0.7
Nov1
0.6
99.1
0.2
1.1
11.3
1.0
Dec1
0.6
99.1
0.0
0.7
11.6
0.3
Jan1
0.9
99.6
0.5
0.3
11.3
-0.3
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Coincident and leading composite indices
Source: Statistics Korea
94.2
92.6
13-1
13-2
13-3
Cyclical indicator of coincident composite index
Source: Statistics Korea
Leading composite index
Source: Statistics Korea
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42 March 2010
As the Lee Myung-bak administration started its third year at the end of February, the
government looked back on the achievement of the Lee administration in terms of efforts 1)
to weather the global economic crisis, 2) support the working class, 3) upgrade Koreasimage in the international community, 4) restructure the economy, and 5) enhance potential
for future economic growth.
Weathering the economic crisis
Korea is one of the three OECD economies seeing positive growth in 2009, achieving annual
growth of 0.2 percent. The financial and foreign exchange markets began to stabilize from
the second quarter of 2009, reflecting expectations of economic rebound, as anxiety over
the international financial market began to be eased: The KOSPI soared from end-2008s
1124.5 points to 1682.8 points at the end of 2009, and during the same period the
won/dollar exchange rate continued to improve from 1259.5 won to 1164.5 won. The current
account balance recorded a surplus of US$42.7 billion in 2009, backed by brisk exports.
The IMF, OECD, and Fitch Ratings positively evaluated the role of the Korean government in
facilitating riding out the economic crisis (IMF at the annual consultation meeting in
December 2009, OECD at the 2010 annual meeting in February 2010, and Fitch Ratings in
September 2009).
The Korean government pursued expansionary fiscal policies along with tax cuts in 2008 and
2009, to supplement and stimulate demand. Some of the examples of the policies are 4.9
trillion won of supplementary budget to control rising oil prices, 11.4 trillion won of
additional budget at the end of 2008 to cope with the economic crisis, and the record high
level of supplementary budget for job creation of 28.4 trillion won. The increased budget
was complemented with early budget expenditure, with 62.9 percent of the 2009 budget,
171.5 trillion won spent in the first half of 2009. Both income tax cuts to boost domestic
demand and corporate tax cuts to promote investment were implemented in line with
consumption tax reduction and investment tax deduction.
Lee Administrations Economic Achievementfor the Past Two Years
Policy Issues
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The Korean government responded swiftly in the financial market: The Bank of Korea
slashed the base rate from 5.25 to 2.0 percent, while supplying liquidity of 27.9 trillion won
through RP purchases, open market operation, bank recapitalization fund, total loan
increase, bond market stabilization fund, and increased interest-on-reserves. The
government also carried out measures exclusive for SMEs to provide them liquidity and
credit, which resulted in reduced default rates of corporate bonds and corporations.
Thanks to governments foreign liquidity provision measures such as currency swap
arrangements with the US, Japan and China, foreign currency liquidity provision by the Bank
of Korea, bond issuance to secure foreign liquidity, and relaxed regulations to facilitate
inflows of foreign investment, most indices related to foreign exchange markets have
recovered to the pre-crisis level: The CDS premium, which was 104 basis points in August
2008, fell back to 103 basis points in February 2010, after it hit 699 basis points in October 2008.
The current account balance greatly improved from a US$5.78 billion deficit in 2008 to a
surplus of US$42.67 billion in 2009, backed by relatively strong exports compared to other
nations amid the global economic downturn. Korea was ranked the 9 th largest exporter in
2009, climbing from the 12th in 2008. The government increased support for export insurance
from 130 trillion won to 170 trillion won and credit guarantee for exporters from 1.5 trillion
won to 6 trillion won between 2008 and 2009 in addition to expanded budgets for R&D and
overseas marketing. The governments efforts to help enhance Korean companies
competitiveness will continue through its firm support for parts and service industries, and
green growth engines.
Supporting the working class
To help boost falling employment levels in face of the crisis, the government launched the
job sharing program. Governments job creation programs include Hope Employment
Program which provided 250,000 jobs to the vulnerable group, youth internship program
through which 99,000 college graduates were employed, and social welfare service program
for which the government financed 1.1 trillion won in 2008 and 16.4 trillion won in 2009 to
support employment of social welfare workers. In 2010 the National Strategic Meeting on
Employment, a monthly meeting presided by the president, was launched, in which mid-and
long term as well as short term measures to raise employment are discussed, laid out, andimplemented.
The government took various measures to stabilize prices directly affecting the lives of low
income class. The price stabilizing measures include oil tax reduction of 10 percent,
redemption of 3.5 trillion won for oil purchased in 2008, lowering tariff quotas and
stabilizing public utility charges, and monitoring prices of 52 necessities: lower tariff quotas
applied to 123 import items in 2009 and public utility charges up 2.4 percent in 2008 and 1.9
percent in 2009. The government will monitor and balance supply of and demand for
agriculture, livestock and fishery products to stabilize their prices, while it strictly bans price-
fixing of manufactured goods.
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The ratio of welfare budget to total budget was steadily increased from 2007s 25.8 percent
to 26.2 percent in 2008 to 26.6 in 2010. To help the low income class with burden of
education and housing costs, the government adopted income contingent loans and low
interest rate student tuition loans, and planned to provide 1.5 million housing units
affordable to the low income group between 2009 and 2018. The government begansupporting those who have will to be self-reliant but with poor credit through micro-loan
programs which do not require any security for loans. The micro-loan programs will be
expanded to 2 trillion won for the next 10 years. Low income working families of 590,000
received earned income tax credit of 453.7 billion won in 2009 for the first time, which was
designed to encourage them to work.
Upgrading Koreas image in the international community
In 2009 as one of the G20 Troika, Korea played an active role in working together in the
international community to ride out the crisis through the Washington, London and Pittsburg
summits, where Korea proposed a standstill on protectionism, sharing Koreas experience of
dealing with toxic assets, and international cooperation in laying out exit strategies. Korea,
as the first emerging country to host a G20 summit, will try hard to effectively play a bridging
role between developed and developing countries, enhance cooperation among
international organizations, and actively collaborate with domestic and overseas think tanks
to reflect their expertise to the G20 Seoul summit in 2010.
Korea made one step forward to become a more reliable donor country by doubling the size
of Official Development Aid (ODA) from US$450 million in 2006 to US$900 million in 2009,
and expanding Knowledge Sharing Program (KSP), through which Korea shares its economic
development experience with other developing countries, from eight countries in 2008 to 11
countries in 2009 with increasing financial support from 2.5 billion won to 5 billion won.
Korea joined the OECDs Development Assistance Committee (DAC) in November 2009, and
the legal basis for ODA has been established in January 2010.
On the trade front, five FTAs (FTAs with Chile, the EFTA, Singapore, the ASEAN, and India) are
in force, two (FTAs with the US and the EU) signed, seven (FTAs with Canada, the GCC,Mexico, Peru, Australia, New Zealand, Columbia) under negotiation, and eight under study.
To raise Koreas birth rate, the government announced measures covering five key areas of
easing bringing-up burden, supporting households with more than two children, creating
family-friendly working environment, supporting single parent and adopting parents, and
pursuing more open immigration policies. Action plans for 2011 through 2015 will follow, and
be reflected in budgeting.
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Restructuring the economy
The government founded a financial basis for corporate restructuring by launching the Bank
Recapitalization Fund of 20 trillion won and Corporate Restructuring Fund of 40 trillion won.
To promote corporate restructuring, the government introduced corporate tax reduction inApril 2009, which applies to a company or its major shareholders selling assets to repay
corporate debt. The revised capital market law was passed in the plenary session of the
National Assembly in February 2010, which allows Private Equity Fund to invest in
corporation under restructuring.
Household debt, in particular mortgage loans, has been on the rise. However, the debt is
relatively sound thanks to the governments early response to increasing mortgage loans by
tightening the loan to value (LTV) ratio and debt to income (DTI) ratio.
In dealing with cacophonous labor-management relations, the government stuck to the
principle that it does not tolerate any illegal walkouts. Revised regulations banning
companies from paying full-time union workers and allowing multiple unions in one
workplace were passed, which will be enforced from July 2010 and July 2011, respectively.
Instead of paying by a company as full time union workers, union members will be exempt
from their company duties for some time to carry out union activities. Multiple unions in one
workplace are obliged to form a single bargaining body to negotiate with a company. The
number of labor-management disputes hit the lowest in 2008 at 130 cases and increased to
175 in 2009, which, although increased, is still a low level compared with the previous years.
Governments efforts to scrap unnecessary business regulations were paid off as the World
Banks report Doing Business 2010 ranked Korea 19th out of 183 countries in the business
friendliness scale, up 4 notches from the previous year. Korea lifted limitations on giant
corporations investment in other companies, by allowed non-financial companies to hold
bank shares up to nine percent, eased regulations on metropolitan area development and
military facilities protection zone development, and took market friendly measures in the
service sector.
Nurturing future growth potential
The government designated 17 future growth engines in three areas: 1) green technologies
to generate and effectively use energy, 2) high-tech convergence industries such as IT and
communications, new materials and nano-technology, and medical devices and bio-
technology, and 3) value added services such as health care, education, content & software,
and tourism. The government increased support for those industries not only through R&D
budgets, tax incentives and deregulation but also by certifying new technologies to
encourage private investment in the promising technologies.
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Korea hosts the G-20 Deputy Finance Ministers and Deputy Governorsmeeting
The G-20 Deputy Finance Ministers and Deputy Central Bank Governors Meeting was held
at the Songdo, Incheon from February 27 to 28, marking the first G-20 meeting that Korea
chaired.
Some 150 participants included delegations from G-20 member nations and international
organizations such as the IMF, the World Bank and the OECD. The co-chairs were Shin Jae-
Yoon, the Deputy Minister for International Affairs of the Ministry of Strategy and Finance,
and Rhee Gwang-Ju, Deputy Governor of the Bank of Korea.
The focus of the meeting was to analyze the current situation of the global economy and
continue the follow-up of past G-20 agendas. On February 27, participants focused
discussions on framework for strong, sustainable and balanced growth, global financial
safety nets, and international financial institutions reform. On February 28, discussions
were centered on improving financial regulations, addressing problems of energy subsidies
and financial inclusion, and financing for the fight against climate change.
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About 100 of the global business leaders will gather in Seoul to attend the Seoul G-20
Business Summit from November 10 to 11, 2010. The summit will cover four topics on the
agenda: trade and investment, finance, green growth, and corporate social responsibility. It
will be the first time for the worlds top business leaders to get together on the sidelines of a
G-20 Summit, seeking economic cooperation between public and private sectors.
Amendments to the Financial Investment Services and Capital MarketsAct (FSCMA) passed at the National Assembly
Amendments to the Financial Investment Services and Capital Markets Act (FSCMA) were
passed at a general meeting of the National Assembly on February 18, 2010. The revisions
were made based on six proposals submitted by legislators to address various issues raised
since FSCMA came into effect in February 2009.
The amendments are expected to take effect in June 2010, three months after a public
announcement. In regard with commercial papers (CPs), however, the new rule will be
enforced immediately after public hearings.
With the intent to utilize the capital markets and gather private funds to revitalize corporate
restructuring, a special exemption law will be enacted and enforced for three years on asset
management of funds specially purposed for enhancing corporate financial structure. Under
the revised law, private equity funds (PEFs) for corporate financial restructuring are able to
invest in a company without management participation, but are to invest more than 50
percent of their assets into corporate restructuring related assets. In regard to Mutual Funds
for corporate financial restructuring, the 10 percent rule, which limits investments in a single
company to a maximum of 10 percent of the funds assets, is alleviated to supply sufficient
liquidity to the SMEs. The funds are enabled to invest a maximum of 50 percent of its assets
in newly issued stocks of SMEs and mid-size corporations.
A. Introducing PEFs and Mutual Fund for corporate financial restructuring
(temporarily enforced for 3 years)Facilitating corporate funding and corporate
restructuring through capital markets
Improving the quality of financial services
through the extended scope of financial
investment businesses, as well as enhancing
public trust in financial investment companies
Providing better protections for financial
investors and consumers
B. Allowing companies to issue CPs without issuing electronic notes
C. Strengthening requirements for financial investment companies to add
new business a
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