Ministry of Economy and Finance

On November 19, First Vice Minister Kim Beomseok held a meeting with the International Monetary Fund (IMF) team, led by Mr. Rahul Anand, Mission Chief for Korea. The mission team is in Korea from November 7 to November 20 as part of the 2024 Article IV Consultation*.   * Under Article IV of the IMF Articles of Agreement, this annual consultation reviews the overall economic conditions of member countries, including macroeconomic, fiscal, and financial aspects, and culminates in the release of country-specific reports following approval by the Executive Board.   Mission Chief Rahul Anand shared the results of the two-week annual consultation with VM Kim and exchanged views on key issues. He spoke highly of Korea’s strong economic fundamentals, noting that the country has effectively navigated multiple global shocks with appropriate macroeconomic policies. He projected that Korea would see a gradual recovery in domestic demand next year alongside moderation in export growth, reaching to its potential growth rate.   Mr. Anand also commended the government’s swift and appropriate response mechanisms amid the transition to the new U.S. administration. He recommended bolstering innovation  and diversifying export markets to maintain export competitiveness in a changing trade environment. In addition, he highlighted the government’s recent efforts to improve Korea’s  foreign exchange market structure and the expected benefits of Korea’s inclusion in the World Government Bond Index (WGBI), which would expand transaction volumes and market participants, ultimately contributing to reduced volatility.   Mr. Anand welcomed the fiscal soundness policy stance reflected in the 2025 budget proposal and the focus on expenditure restructuring. He emphasized the importance of securing  fiscal space through more proactive fiscal soundness measures, considering future fiscal demands from aging demographics. In this context, the Mission Chief positively assessed  Korea’s recent pension reform initiatives and efforts to institutionalize fiscal rules.   In response, VM Kim agreed with Mr. Anand’s overall assessment of the Korean economy and stated that the government would dedicate its full efforts to maintaining a stable recovery  trajectory despite elevating external uncertainties.   A press conference on the results of the 2024 Article IV Consultation will be held on November 20 at the Government Complex-Seoul. Please refer to the attached files. 

At the G20 Summit (November 18-19, Rio de Janeiro, Brazil), President Yoon Suk Yeol announced during Session 1 (Global Call to End Hunger & Poverty) that Korea would increase its contribution to the International Development Association (IDA)*’s 21st Replenishment by 45%.   * IDA: A World Bank entity, which provides concessional loans (long-term, low-interest) and grants to low-income countries, supporting their development and poverty allocation efforts.   This amounts to approximately 846 billion won, marking a significant increase of 261 billion (45%) compared to Korea’s contribution of 585 billion won during the 20th Replenishment in 2021.   IDA replenishes its funds every three years, with countries announcing their respective contribution amounts at the 21st Replenishment Final Meeting in Seoul this December. Korea’s proactive announcement ahead of the meeting underscores its leadership as a global pivotal state and aims to encourage greater participation from other nations. This move is also expected to enhance Korea’s shareholding in both IDA and the International Bank for Reconstruction and Development (IBRD).   IDA’s 21st Replenishment Final Meeting, scheduled for December 5-6 in Seoul, will serve as a platform to highlight Korea’s remarkable journey from being an IDA aid recipient during 1960-1970 to becoming a major donor (ranked 15th under IDA20) and showcase its growing influence.   The WB has also spoke highly of Korea’s decision in its press release*, emphasizing the importance of Korea’s enhanced contribution during a period of global challenges for low-income countries. The Bank also anticipates that Korea’s status as a “key player” in development finance will be further solidified following the December meeting.   * A press release highlighting Korea’s increased contribution to IDA has been posted on the WB website: https://ida.worldbank.org/en/home Please refer to the attached files. 

In September, facility investment showed an increase, while construction production declined, and mining and manufacturing output adjusted after a sharp rebound in the previous month.   The entire industry production fell (-0.3% m-o-m, -1.1% y-o-y) as production climbed up in public administration (+2.6%, +1.3%), but decreased in mining and manufacturing (-0.2%, -1.3%), services (-0.7%, -0.2%), and construction (-0.1%, -12.1%).   Expenditure surged in facility investment (+8.4% m-o-m, +6.1% y-o-y), while retail sales (-0.4%, -2.2%) and construction investment (-0.1%, -12.1%) dropped. Average daily exports in October went up by 4.6% year-on-year, driven by growth in semiconductor and automobile exports.   The consumer sentiment index (CSI) in October improved by 1.7 points month-on-month to 101.7. The composite business sentiment index (CBSI) moved up by 0.9 points but the CBSI outlook for November fell by 2.8 points to 89.8.   The cyclical indicator of the coincident composite index for September went down by -0.1 points month-on-month, while the cyclical indicator of the leading composite index remained unchanged.   In October, job growth saw an increase and consumer price growth continued to decline.   The economy added 83 thousand jobs year-on-year and the unemployment rate rose by 0.2%p from a year ago to 2.3%.   The year-on-year consumer price index (CPI) growth slowed to 1.3% while the CPI excluding the food and energy sectors grew by 1.8%, with the index excluding the agricultural and petroleum sectors up by 1.7%. The CPI for basic necessities moved up by 1.2%.   In October, stock prices dropped while Korean Treasury Bond yields rose and the Korean won weakened.   In September, housing prices continued to rise (+0.17% m-o-m) and Jeonse[1] prices climbed (+0.19%), but the pace of growth declined.   With the Korean economy has recently been experiencing an expanding trend of price stability, the recovery momentum has been sustained. However, uncertainties still persist due to both domestic and global conditions.   While the global economic is broadly on a recovery path, uncertainties are increasing owing to persistent geopolitical risks in the Middle East and potential changes in the trade environment.   A comprehensive government response system will be mobilized across the financial, trade, and industrial sectors, and tailored support for vulnerable spots will be strengthened such as construction investment and small business owners, alongside implementing the Dynamic Economy Roadmap to enhance the sustainability of the Korean economy. [1] lump-sum deposits with no monthly payments Key Statistics Employment   2022 2023 2024 Annual Annual Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Number of employed  (million) 28.09 28.42 28.76 28.70 28.09 27.74 28.04 28.40 28.69 28.91 28.91 28.86 28.80   28.84 28.85 Employment  rate  (%) 62.1 62.6 63.3  63.1  61.7 61.0 61.6 62.4 63.0 63.5 63.5 63.3 63.2    63.3 63.3 (Seasonally adjusted)  62.1   62.6 62.7  62.5  62.4  62.8  63.0 62.8 62.9 62.6 62.6 62.6 62.7    62.8 62.7 Consumer Price Index                                                                                          (%)   2023 2024 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct y-o-y 2.7 2.4  3.4  3.7 3.8  3.3   3.2  2.8 3.1 3.1 2.9 2.7 2.4 2.6 2.0 1.6 1.3 m-o-m 0.0 0.1  0.9  0.5 0.4  -0.5   0.0 0.4 0.5 0.1 0.0 0.1 -0.2 0.3 0.4 0.1 0.0   Retail Sales (Percentage change from the previous period, %)   2022 2023   2024 Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Q1 Q2 Q3¹ Jul   Aug¹  Sep¹ Retail sales -0.3 -0.9 -0.7 0.8 -1.5 -1.5 0.6 -0.5 -1.9 0.4 -0.5 -0.8 -0.5 -2.0    1.7   -0.4 (y-o-y) - 2.6 -0.2 -0.9 -2.3 - -0.8 -0.7 -2.7 -1.9 -2.1 -2.9 -1.9 -2.2   -1.3   -2.2 1. Preliminary Facility Investment Index (Percentage change from the previous period, %)   2022 2023                                    2024 Annual Q1 Q2 Q3 Q4 Annual Q1 Q2   Q3 Q4 Q1 Q2 Q3 Aug¹ Sep¹ Facility investment index 2.5 1.8 -2.2 9.8 -1.6 -4.9 -8.6 1.5 -1.9 5.0 -3.8 -0.2 10.1 -5.1 8.4 (y-o-y) - -0.7 -3.6 5.6 9.1 - -1.9 -1.3 -9.9 -6.0 0.3 -1.5 10.5 7.5 6.1 1. Preliminary    Construction Completed  (Percentage change from the previous period, %)   2022 2023                                    2024 Annual Q1 Q2 Q3 Q4    Annual Q1 Q2 Q3 Q4 Q1 Q2 Q3 Aug¹ Sep¹ Construction Completed (Constant) 2.8 -1.5 1.5 1.5 4.3 7.3 2.8 1.1 1.1 -2.5 4.9 -6.2 -4.2 -1.9 -0.1 (y-o-y) 2.7 -1.7 2.0 3.6 6.7 - 11.5 8.7 10.1 0.6 4.1 -3.0 -8.8 -9.2 -12.1 1. Preliminary Exports and Imports  (US$ billion, y-o-y, %)   2022 2023 2024 Annual Annual Q1 Q2 Q3          Q4 Q1 Q2     Q3    Oct        Oct Aug Sep Exports 683.58 632.23 151.22 155.78 157.10 168.12 54.99 163.40 171.51 173.76 57.73 58.77 57.52 (y-o-y, %) 6.1 -7.5 -12.8 -12.0 -9.7 5.7 4.9 8.1 10.1 10.6 11.0 7.5 4.6 Average daily exports 2.51 2.34 2.24 2.33 2.29 2.49 2.62 2.44 2.58 2.54 2.46 2.94 2.61 Imports 731.37 642.59 174.04 159.25 150.72 158.56 53.44 154.86 156.96 160.44 54.07 52.12 54.35 (y-o-y, %) 18.9 -12.1 -2.2 -13.2 -21.6 -10.7 -9.7 -11.1 -1.4 6.2 6.0 2.2 1.7 Average daily imports 2.68 2.38 2.58 2.38 2.20 2.35 2.54 2.31 2.36 2.34 2.30 2.61 2.47 Industrial Production (Mining, Manufacturing, Electricity and Gas Production)                 (Percentage change from the previous period, %) 2022 2023  2024 Annual Annual   Q1 Q2 Q3 Q4 Q1 Q2 Q3¹ Jun Jul Aug¹ Sep¹ Total Production2 m-o-m, q-o-q - - 0.4 2.6 1.3 2.2 -0.3 1.1 -0.9 0.7 -4.0 4.4 -0.2 y-o-y 1.0 -2.6 -8.3 -6.1 -0.4 4.8 5.9 4.8 2.5 3.8 5.2 3.8 -1.3 Manufacturing Production m-o-m, q-o-q - - 0.3 3.0 1.3 2.2 -0.5 1.5 -1.2 0.7 -4.2 4.4 -0.1 y-o-y 0.9 -2.6 -8.7 -6.2 -0.2 5.1 6.2 5.0 2.4 3.9 5.4 3.7 -1.4 Shipments (m-o-m, q-o-q) 0.3 -0.5 0.1 2.6 -0.8 2.0 -3.0 1.5 -1.0 2.6 -6.4 5.7 1.3 Inventory3 (m-o-m, q-o-q) 4.1 -2.1 3.4 -0.8 2.4 -6.6 1.0 -2.4 2.1 -2.9 2.8 1.3 -2.0 Production capacity (y-o-y) -0.5 0.1 -0.9 -0.8 0.0 2.1 1.6 1.1 0.3 0.8 0.8 0.9 -0.8 Average operation ratio4 74.5 71.9 70.6 72.0 72.3 72.5 72.7 73.5 73.0 73.8 71.1 74.3 73.5   1. Preliminary   2. Mining, Manufacturing, Electricity and Gas Production   3. End-point (month, quarter, and year)   4. Average operation ratio for the month (or quarter)    Service Output            (Percentage change from the previous period, %)   2021 2022 2023                             2024 Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4  Q1 Q2 Q3¹ Jul Aug¹ Sep¹ Service output 5.0 1.2 2.5 0.1 2.7 7.0 0.6 3.3 1.6 0.3 3.1 1.0 0.0 1.0 0.3  0.8 -0.3   0.3 0.4 0.3 -0.7     1. Preliminary Composite Indices of Coincident and Leading Indicators                                                                                            (Points)   2023  2024 Nov Dec Jan Feb Mar Apr May Jun Jul¹ Aug¹ Sep¹ Cyclical indicator of coincident composite index 99.9 99.8 99.9 100.1 99.8 99.7 99.1 99.0 98.3 98.3 98.2 m-o-m (points) 0.0 -0.1 0.1 0.2 -0.3 -0.1 -0.6 -0.1 -0.7 0.0 -0.1 Cyclical indicator of leading composite index 100.1 100.2 100.2 100.4 100.2 100.5 100.5 100.7 100.7 100.6 100.6 m-o-m (points) 0.3 0.1 0.0 0.2 -0.2 0.3 0.0 0.2 0.0 -0.1 0.0 1. Preliminary   Please refer to the attached files.