Economic Bulletin July 2018
The Green Book: Current Economic Trends
The Korean economy has seen industrial production improve for two months in a row. However, investment and consumption has been weak and uncertainties are increasing amid the trade conflict between the US and China.
The economy added 106,000 jobs year-on-year in June led by the service sector. Job markets remained weak due to the struggling manufacturing sector and decreasing working age population. Young adult unemployment fell (10.4% → 9.0%, down 1.4%p, y-o-y).
Consumer prices rose 1.5 percent year-on-year in June. Consumer prices held steady (up 1.5% → up 1.5%, y-o-y, compared with a month ago) despite high oil product prices as vegetable prices became stable.
All industry production continued to improve in May (up 1.5% → up 0.3%, m-o-m) as mining and manufacturing production rose (up 3.4% → up 1.1%, m-o-m) backed by strong cars and broadcasting & communications equipment.
Service output fell somewhat (0.0% → down 0.1%, m-o-m), despite strong wholesale & retail and healthcare & welfare services, as broadcasting & communications services declined.
Retail sales continued to fall in May (down 0.9% → down 1.0%, m-o-m) as the sales of durable goods and nondurable goods declined. The sales of semi-durable goods improved.
Facility investment continued to be weak in May (down 2.7% → down 3.2%, m-o-m), although investment in machinery improved slightly, due to poor transportation equipment. Construction completed fell (up 4.7% → down 2.2%, m-o-m) due to a fall in building construction. Civil engineering works improved.
In May, the cyclical indicator of the coincident composite index stayed unchanged at 99.7, and the cyclical indicator of the leading composite index fell 0.1 points to 100.
Exports exceeded US $50 billion for the fourth consecutive month in June due to strong petroleum products, computers and semiconductors.
In June KOSPI fell amid increasing concerns over the pace of Fed’s rate hikes. The dollar-won exchange rate increased due to a strong dollar, and government bond yields fell.
Housing prices continued to fall in June (down 0.03% → down 0.02%, m-o-m), led by houses outside the Seoul metropolitan area, and Jeonse (lump-sum deposits with no monthly payments) prices remained stable across the country (down 0.28% → down 0.25%, m-o-m).
The economy is expected to continue to recover given improving global economies and increased fiscal spending through the supplementary budget, but job markets have yet to recover and external risks linger, such as global trade conflicts, Fed’s rate hikes and high oil prices.
The government will strengthen its risk management, and will work to help improve the job market and the real economy, such as by successfully implementing the supplementary budget.
- Economic Policies for H2 2018: Second half policies focus on 'growth through innovation' as well as inclusive growth
Economic News Briefing
- Korea to accelerate regulatory reform, focusing on developing new industries
- Government to strengthen low-income family support
- FX reserves surpass US $400 billion
- Inbound FDI posts record high in H1 2018
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