economic bulletin (vol. 35 no. 3)

7/28/2019 Economic Bulletin (Vol. 35 No. 3)

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ECONOMIC

BULLETIN

Republic of Korea

March 2013Vol.35 No.3

ISSN 2287-7266

| Economic Inormation and Education Center

The Green Book:Current Economic Trends

Policy IssuesOne Year Evaluation of Korea-US FTA

Economic News BriefngBank of Korea Holds Key Rate at 2.75%

Overseas Direct Investment Down 14.3% in 2012

Korea Now Ranks 8th in World Trade

Government Releases Report on Foreign-invested Firms

Statistical Appendices

03

49

53

57


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Economic BulletinRepublic o Korea

March 2013Vol.35 No.3

The Green Book: Current Economic TrendsOverview

1. External economic situation

2. Private consumption

3. Facility investment

4. Construction investment5. Exports and imports

6. Mining and manufacturing production

7. Service sector activity

8. Employment

9. Financial markets

9.1 Stock market

9.2 Exchange rate

9.3 Bond market

9.4 Money supply & money market

10. Balance of payments

11. Prices and international commodity prices

11.1 Prices

11.2 International oil and commodity prices

12. Real estate market

12.1 Housing market

12.2 Land market

13. Composite indices of business cycle indicators

Policy IssuesOne Year Evaluation of Korea-US FTA

Economic News Briefng

Statistical Appendices

......................................................................................................................... 03

..................................................................................... 04

.................................................................................................. 09

..................................................................................................... 13

........................................................................................... 16.................................................................................................. 18

.................................................................. 21

................................................................................................ 23

.............................................................................................................. 26

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Contents


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3The Green Book |

Te Korean economy has seen ination remain stable, while employment growth has been slowing down,and major economic indicators including production, consumption and investment have been sluggish.

In January, the economy added 322,000 jobs year-on-year, posting a slight improvement rom 277,000 in

the previous month, but the employment rate remained stagnant, showing no change rom the previousyear.

Consumer price ination stayed stable in the 1 percent range in February, down rom the previousmonths 1.5 percent to 1.4 percent, as alling livestock product prices oset increases in agricultural andpetroleum product prices.

Mining and manuacturing production ell 1.5 percent month-on-month in January due to weak audio-visual communications equipment and semiconductors, while service output decreased by 0.9 percentbecause o shrinking real estate & renting and wholesale & retail.

Despite an increase in semi-durable goods sales, retail sales in January ell 2.0 percent rom the previousmonth due to a decrease in durable goods sales.

Facility investment in January dropped 6.5 percent month-on-month due to weak transportationequipment and machinery investment. Construction investment went up 0.2 percent, led by animprovement in building construction.

Exports ell 8.6 percent year-on-year in February, despite increased average daily exports, due to areduction in working days as the Lunar New Year holiday ell in February. Te trade balance remainedin the black at US$2.54 billion.

Te cyclical indicator o the coincident composite index stayed unchanged month-on-month in January,and the leading composite index ell 0.2 points.

In February, both the stock prices and the won rose as uncertainties over North Koreas nuclear tests

eased, alertness to the weakening yen waned, and oreign investors became net buyers o Korean stocks.

Te decline in housing prices slowed rom 0.3 percent to 0.2 percent in January, while rental pricescontinued to increase by 0.3 percent.

External uncertainties linger as there are concerns arising rom the US sequester, Italys politicalinstability and the slow recovery o the European economy. Domestic uncertainties also persist due toweak consumption and sluggish investment.

Te Korean government will closely watch the global and domestic economic situations, and reinorcepolicy responses to stimulate the economy.

At the same time, the government will ocus on securing the lives o the low- and middle-income classes

through job creation and by stabilizing the prices o necessities, while continuing to adopt policies toimprove the health o the economy.

Overview

Te Green BookCurrent Economic Trends


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4 | The Green Book

Recent economic indicators or the US and China appear to be improving, butdownside risks remain, such as the current political uncertainty in the US and theeconomic recession in the eurozone.

Aer political negotiations ailed in the US, the across-the-board, automaticspending cuts known as the sequester went into eect on March 1, and scalanxieties remain as the temporary budget expires on March 27 and the debt limitis only postponed until May 19.

Te eurozone economy remains sluggish and Italy in the wake o early electionscontinues to experience difculties related to orming a new government. TeEuropean Commission downgraded their eurozone growth rate orecast rom 0.1percent to -0.3 percent.

Te US growth rate (quarter-on-quarter, adjusted) in the ourth quarter o 2012was adjusted upward rom the advanced estimate o -0.1 percent to 0.1 percent andmajor economic indicators such as sentiment and the housing market all improved.

Te growth rate adjustment reects accelerating growth in business and housinginvestment and a shi to net exports.

Contribution to growth rate(advanced estimate[ adjusted, %p)1.52 [1.47 (private consumption), 0.83 [ 0.96 (business investment), 0.36 [ 0.40 (housinginvestment), -0.25[ 0.24 (net exports), -1.33[ -1.38 (government spending)

Retail sales in January marginally increased month-on-month by 0.1 percent, andcondence increased, with the ISM Manuacturing Index in February reaching thehighest level since June 2011, despite scal anxieties.

ISM Manuacturing Index(base=50)50.2 (Jun 2012) [ 50.5 (Jul) [ 50.7 (Aug) [ 51.6 (Sep) [ 51.7 (Oct) [ 49.9 (Nov) [ 50.2(Dec)[ 53.1 (Jan 2013)[ 54.2 (Feb)

US

World GDP growth

6

5

4

3

2

1

0

-1

(%)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

1.External

economic

situation


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5The Green Book |

University o Michigan Consumer Sentiment Index72.3 (Jul 2012)[ 74.3 (Aug)[ 78.3 (Sep)[ 82.6 (Oct)[ 82.7 (Nov)[ 72.9 (Dec)[ 73.8 (Jan2013)[ 77.6 (Feb)

Te housing market continued to recover as housing prices continued to rise orthe 11th consecutive month and existing home sales in January increased by 0.4percent month-on-month.

Case-Shiller Home Price Index(seasonally adjusted)140.2 (May 2012) [ 141.6 (Jun) [ 142.0 (Jul) [ 142.7 (Aug) [ 143.2 (Sep) [ 144.1 (Oct)[145.0 (Nov)

(Percentage change from previous period)

2010 2011 2012 2013

Annual Annual Q3 Q4 Annual Q1 Q2 Q3 Q4 Dec Jan

Real GDP 2.4 1.8 1.3 4.1 2.2 2.0 1.3 3.1 0.1 - -

- Personal consumption expenditure 1.8 2.5 1.7 2.0 1.9 2.4 1.5 1.6 2.1 - -- Corporate ixed investment 0.7 8.6 19.0 9.5 7.7 7.5 3.6 -1.8 9.7 - -

- Housing construction investment -3.7 -1.4 1.4 12.1 11.9 20.5 8.5 13.5 17.5 - -

Industrial production 5.3 4.1 1.7 0.9 3.8 1.4 0.6 0.0 0.6 0.4 -0.1

Retail sales 5.5 8.0 1.2 1.9 5.0 1.7 -0.3 1.3 1.5 0.5 0.1

Existing home sales -3.4 2.4 1.7 2.8 9.9 5.5 -2.0 5.1 3.3 -1.2 0.4

Unemployment rate 9.6 9.0 9.1 8.7 8.1 8.3 8.2 8.1 7.8 7.8 7.9

Consumer prices 1.6 3.2 0.8 0.2 2.1 0.6 0.2 0.6 0.5 0.0 0.0

1. Preliminary

2. Annualized rate (%)

3. Seasonally adjusted

Source: US Department of Commerce

US GDP growth and industrial productionSource: US Department o Commerce & US Federal Reserve Board

10

8

6

4

2

0

-2

-4

-6

-8

-10

GDP (q-o-q, annualized rate) Industrial production (q-o-q)

2001. Q1 2002. Q1 2003. Q1 2004. Q1 2005. Q1 2006. Q1 2007. Q1 2008. Q1 2009. Q1 2010. Q1 2011. Q1 2012. Q1


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6 | The Green Book

Chinas GDP growth and xed asset investment

Source: National Bureau o Statistics o China

18

16

14

12

10

8

6

4

70

60

50

40

30

20

10

0

(%) (%)

2001. Q1 2002. Q1 2003. Q1 2004. Q1 2005. Q1 2006. Q1 2007. Q1 2008. Q1 2009. Q1 2010. Q1 2011. Q1 2012. Q1

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

Te Chinese economy continues to gradually recover as domestic actors, suchas consumption and investment, improved while exports registered double-digitgures or the second consecutive month in January.

At the National Peoples Congress, China proposed to maintain the same 7.5

percent growth rate target and emphasized accelerating structural reorms amidstable growth.

However, actors that may impede urther recovery remain, as there is thepossibility o strengthened government regulations to stabilize the housing market,the manuacturing PMI continues to all and the global economy remains poor.

Manuacturing PMI49.2 (Aug 2012)[ 49.8 (Sep)[ 50.2 (Oct)[ 50.6 (Nov)[ 50.6 (Dec)[ 50.4 (Jan 2013)[50.1 (Feb)

China

(Percentage change from same period in previous year)2011 2012 2013

Annual Q3 Q4 Annual Q1 Q2 Q3 Q4 Nov Dec Jan

Real GDP 9.3 9.1 8.9 7.8 8.1 7.6 7.4 7.9 - - -

Industrial production 13.9 13.8 12.8 10.1 11.6 9.5 9.1 10.0 10.1 10.3 -

Fixed asset investment (accumulated) 24.8 24.9 23.8 20.6 20.9 20.4 20.5 20.6 20.7 20.6 -

Retail sales 17.1 17.3 17.5 14.3 14.9 13.9 13.5 14.9 14.9 15.2 -

Exports 20.7 20.7 14.4 8.3 8.8 10.5 4.5 9.5 2.9 14.1 25.0

Consumer prices 5.4 6.3 4.6 2.6 3.8 2.8 1.9 2.1 2.0 2.5 2.0

Producer prices 6.0 7.1 3.1 -1.7 0.1 -1.4 -3.3 -2.3 -2.2 -1.9 -1.6

1. Preliminary2. Quarterly change: average of monthly change

Source: China National Bureau of Statistics


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7The Green Book |

Japanese exports in January registered its largest decit since 1985, but real

indicators somewhat improved, led by retail sales and industrial production.

Trade account balance(billion yen)

-523 (Jul 2012)[

-764 (Aug)[

-565 (Sep)[

-555 (Oct)[

-956 (Nov)[

-643 (Dec), -1,631(Jan 2013)

Japan


2011 2012 2013

Annual Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Nov Dec Jan

Real GDP -0.8 -1.8 -0.9 2.5 0.2 1.5 -0.2 -1.0 -0.1 - - -

Industrial production -2.4 -2.0 -4.0 4.3 -0.4 1.2 -2.0 -4.2 -1.9 -1.4 2.4 1.0

Retail sales -1.2 0.0 1.3 0.5 -1.0 1.3 -0.3 -1.2 0.2 -0.1 0.0 2.3

Exports (y-o-y) -2.6 2.7 -8.1 0.6 -5.4 1.0 9.2 -4.2 -5.7 -4.1 -5.8 6.4

Consumer prices (y-o-y) -0.3 -0.5 -0.4 0.1 -0.3 0.3 0.1 -0.4 -0.2 -0.2 -0.1 -0.3

1. Preliminary

2. Quarterly change: average of monthly change

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

Japans GDP growth and industrial production

Source: Japans Cabinet Oce, Ministry o Economy, Trade and Industry

6

4

2

0

-2

-4

-6

25

20

15

10

5

0

-5

-10

-15

-20

-25

(%) (%)

2001. Q1 2002. Q1 2003. Q1 2004. Q1 2005. Q1 2006. Q1 2007. Q1 2008. Q1 2009. Q1 2010. Q1 2011. Q1 2012. Q1

GDP (q-o-q, left) Industrial production (q-o-q, right)


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8 | The Green Book

Te eurozone economy in the ourth quarter o 2012 contracted by 0.6 percentcompared with the previous quarter, posting the lowest since the rst quartero 2009. Growth has been negative or three straight quarters. Eurozoneunemployment rose to a record high o 11.9 percent.

Unemployment rate(%)11.4 (Jun 2012) [ 11.4 (Jul) [ 11.5 (Aug) [ 11.6 (Sep) [ 11.7 (Oct) [ 11.8 (Nov) [ 11.8(Dec)[ 11.9 (Jan 2013)

Te manuacturing PMI ell short o its 50 point baseline or the 19th consecutivemonth in February and exports ell 3.1 percent year-on-year owing to thestrengthening euro.

Manuacturing PMI(base = 50)45.1 (Jun 2012) [ 44.0 (Jul) [ 45.1 (Aug) [ 46.1 (Sep) [ 45.4 (Oct) [ 46.2 (Nov) [ 46.1(Dec)[ 47.9 (Jan 2013)[ 47.9 (Feb)

However, retail sales rose 1.2 percent month-on-month in January owing tostrong increases in German and Belgian retail sales, each o which increased by3.1 percent.

Eurozone


2010 2011 2012 2013

Annual Annual Q3 Q4 Annual Q1 Q2 Q3 Q4 Dec Jan

Real GDP 2.0 1.4 0.1 -0.3 -0.5 0.0 -0.2 -0.1 -0.6 - -

Industrial production 7.4 3.5 0.8 -2.1 -2.4 -0.5 -0.5 0.4 -2.4 0.7 -

Retail sales 0.9 -0.5 0.3 -1.2 -1.7 -0.3 -0.8 0.0 -1.5 -0.8 1.2

Exports (y-o-y) 20.1 12.7 9.4 8.3 7.4 8.6 8.1 7.4 5.5 -3.1 -

Consumer prices (y-o-y) 1.6 2.7 2.7 2.9 2.1 2.7 2.7 2.5 2.3 2.2 2.0

1. Preliminary

Source: Eurostat

Eurozones GDP growth and industrial production

Source: Eurostat

3

2

1

0

-1

-2

-3

10

8

6

4

2

0

-2

-4

-6

-8

-10

(%) (%)

2001. Q1 2002. Q1 2003. Q1 2004. Q1 2005. Q1 2006. Q1 2007. Q1 2008. Q1 2009. Q1 2010. Q1 2011. Q1 2012. Q1

GDP (q-o-q, left) Industrial production (q-o-q, right)


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9The Green Book |

Private consumption in the ourth quarter (advanced estimates of GDP) increased

0.8 percent quarter-on-quarter and 2.8 percent year-on-year.

2.Private

consumption


2011 2012

Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4

Private consumption 2.3 0.6 0.8 0.2 -0.4 1.8 1.0 0.4 0.7 0.8

(y-o-y) - 2.9 3.0 2.1 1.1 - 1.6 1.1 1.6 2.8

1. Preliminary

2. National accounts

Source: The Bank of Korea

Despite an increase in semi-durable goods sales, retail sales ell 2.0 percent month-

on-month and 2.8 percent year-on-year in January, as sales o nondurable goods,

including ood products, and sales o durable goods, such as automobiles, ell.

Durable goods sales ell 7.1 percent month-on-month as demand or automobiles

took a sharp dive due to the expiration o the individual consumption tax cut.

Automobile sales dropped 13.8 percent in January. Nondurable goods sales ell

0.6 percent as sales were negatively aected by the late Lunar New Year holiday

and the expansion o orced Sunday closure o large discount stores, both o which

contributed to poor ood product sales.

Private consumption

Source: The Bank o Korea (national accounts)

14

12

10

8

6

4

2

0

-2

-4

-6

(%)

2001. Q1 2002. Q1 2003. Q1 2004. Q1 2005. Q1 2006. Q1 2007. Q1 2008. Q1 2009. Q1 2010. Q1 2011. Q1 2012. Q1

Private consumption (y-o-y) Private consumption (q-o-q)


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10 | The Green Book


2011 20121 20131

Annual Q1 Q2 Q3 Q4 Annual1 Q1 Q2 Q3 Q4 Nov Dec Jan

Retail sales 4.5 1.4 0.8 0.5 0.0 2.3 1.0 0.3 1.2 0.4 1.2 0.4 -2.0

(y-o-y) - 5.3 6.2 4.0 2.6 - 2.8 1.4 2.6 2.5 4.0 2.0 -2.8

- Durable goods 10.6 3.8 0.5 0.7 -0.9 5.3 2.5 1.9 2.8 2.3 0.3 2.9 -7.1 Automobiles 7.0 5.2 -3.3 4.6 -11.3 2.4 2.4 9.4 -1.6 9.0 -0.3 3.8 -13.8

- Semi-durable goods 3.7 0.9 1.4 1.7 -2.7 -1.1 -0.4 0.3 -1.1 1.7 0.9 0.0 0.8

- Non-durable goods 2.1 0.4 0.6 -0.1 -1.6 2.3 0.9 -0.6 1.5 -1.1 1.8 -0.8 -0.6

1. Preliminary

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

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

4. Non-durable goods: Food, medicine, cosmetics, fuel, tobacco, etc.

Source: Statistics Korea

Retail salesSource: Statistics Korea (industrial activity trend)

25

20

15

10

5

0

-5

-10

(%)

2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1

Consumer goods sales (m-o-m)Consumer goods sales (y-o-y)

2010. 1 2011. 1 2012. 1 2013. 1

Retail sales by type

Source: Statistics Korea (industrial activity trend)

50

40

30

20

10

0

-10

-20

-30

(y-o-y, %)

2001. 1

Durable goods Semi-durable goods Non-durable goods

2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1


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11The Green Book |

Specialized retailers sales increased, but sales at department stores, large discountstores and nonstore retailers all decreased.


2011 20121 20131

Annual Q1 Q2 Q3 Q4 Annual1 Q1 Q2 Q3 Q41 Nov Dec1 Jan1

Department stores 7.7 2.6 0.3 0.7 -0.1 1.8 -0.6 1.1 0.4 2.5 4.6 -3.9 -4.7

Large discount stores 5.6 -0.1 2.5 0.8 0.7 2.0 -0.7 0.8 1.2 -0.6 2.0 -2.3 -3.7

Specialized retailers2 3.5 0.0 2.8 -1.2 0.8 -0.5 0.0 -1.6 1.4 -2.2 -0.6 0.4 1.7

Nonstore retailers 8.3 -0.6 2.6 2.0 1.2 9.8 3.0 2.8 2.6 2.4 -1.7 -1.7 -1.3

1. Preliminary

2. Specialized retailers are defined as stores carrying a few (1 to 3) specialized items.


Although the expiration o the individual consumption tax cut continued to havea negative impact, retail sales may have marginally improved in February, astemporary actors, such as the late Lunar New Year holiday, were relieved.

Domestic sales o automobiles were poor in February due to the continuingnegative eects rom the expiration o the individual consumption tax cut and thereduced number o business days owing to the Lunar New Year holiday.

Department store and discount store sales turned positive in February as theLunar New Year Holiday-related demand increased, leading to an increase in oodproduct sales.

Gasoline sales in February took a large all year-on-year as domestic oil prices roseand outdoor activities declined owing to the cold weather and requent snowalls.February recorded 45mm o rainall in the rst 10 days o the month, the mostrainall since 1973 or the same period, and a total o 50.4mm o rainall or theentire month, 50 percent higher than average.Gasoline prices(won/liter)1,920 (5th week Jan)[ 1,923 (1st week Feb)[ 1,940 (2nd week)[ 1,968 (3rd week)[ 1,988 (4thweek)

Growth in credit card use increased due to an expansion in department store and

discount store sales.

(y-o-y, %)

2012 2013

Jul Aug Sep Oct Nov Dec Jan Feb

Credit card sales 13.7 8.0 15.7 9.2 14.2 7.1 6.2 8.1

Department store sales -1.3 -6.9 -0.8 -0.4 9.1 -0.2 -8.2 1.1

Large discount store sales -8.2 -3.3 0.2 -6.6 -1.7 -5.0 -24.6 10.2

Domestic sales o gasoline -2.1 -2.7 1.6 7.9 3.7 -2.8 2.7 -8.9

Domestic sales o cars -4.0 -20.2 -3.1 4.3 13.2 7.5 1.6 -13.5

Sources: Credit Finance Association of Korea, Ministry of Knowledge Economy, Korea National Oil Corporation, Korea Automobile Manufacturers AssociationMinistry of Strategy and Finance (for February data)


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12 | The Green Book

Department store and discount store sales (current value)

Source: Ministry o Knowledge Economy (monthly retail sales)

40

30

20

10

0

-10

-20

-30

(y-o-y, %)

Department store sales Discount store sales

2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1

Domestic sales o cars

Source: Korea Automobile Manuacturers Association (monthly automobile industry trend)

180

160

140

120

100

80

60

100

80

60

40

20

0

-20

-40

-60

(thousand) (y-o-y, %)

2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1

Domestic car sales growth (right)Domestic car sales (left)

Consumption conditions continued their positive trend as ination remainedstable and real wages grew, but the increases are expected to be gradual as the

housing market remains sluggish and household debt continues to be a burden.

Te consumer price increase has stayed in the 1 percent range or our consecutivemonths, and consumer sentiment has been hovering above the baseline or twomonths in a row.

Real wage growth(y-o-y, %)-2.9 (2011)[ 3.1 (2012)[ 4.7 (Q1 2012)[ 2.7 (Q2)[ 3.1 (Q3)[ 2.2 (Q4)

Consumer price ination(y-o-y, %)2.2 (Jun 2012)[ 1.5 (Jul)[ 1.2 (Aug)[ 2.0 (Sep)[ 2.1 (Oct)[ 1.6 (Nov)[ 1.4 (Dec)[ 1.5

(Jan 2013)[

1.4 (Feb)


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13The Green Book |

Consumer sentiment index

Source: The Bank o Korea

130

120

110

100

90

80

70

(base=100)

2001. Q1 2004. Q1 2007. Q1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1

Consumer Sentiment Index(CSI, base=100)101 (Jun 2012)[ 100 (Jul)[ 101 (Aug)[ 99 (Sep)[ 100 (Oct)[ 100 (Nov)[ 99 (Dec)[102 (Jan 2013)[ 102 (Feb)

Tere is also the possibility that consumption will be constrained owing to thepoor real estate market, as housing prices have allen or eight straight months and

debt payments continue to burden households.

Interest costs compared with household income(%)1.6 (2006)[ 1.7 (2007)[ 1.9 (2008)[ 2.0 (2009)[ 2.1 (2010)[ 2.3 (2011)[ 2.3 (2012)

Housing prices(m-o-m, %)-0.1 (Jul 2012)[ -0.1 (Aug)[ -0.2 (Sep)[ -0.1 (Oct)[ -0.1 (Nov)[ -0.1 (Dec)[ -0.1 (Jan2013)[ -0.1 (Feb)

Facility investment (advanced estimates of GDP) decreased 2.8 percent quarter-on-quarter and 5.1 percent year-on-year in the ourth quarter o 2012.

(Percentage change from previous quarter)

2010 2011 2012

Annual Annual Q3 Q4 Annual Q1 Q2 Q3 Q4

Facility investment 25.7 3.7 -1.8 -4.3 -1.8 10.3 -7.0 -4.8 -2.8

(y-o-y) - - 1.2 -3.3 - 8.6 -3.5 -6.5 -5.1

- Machinery 31.2 4.1 -2.5 -2.5 - 11.4 -7.5 -5.9 -

- Transportation equipment 8.3 1.9 0.9 -11.2 - 6.1 -4.6 -0.6 -

1. Preliminary



3.Facility

investment


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14 | The Green Book

Te acility investment index in January declined 6.5 percent month-on-month asboth machinery and transportation equipment investment dropped. Te index ell13.6 percent year-on-year.


2010 2011 2012 2013

Annual Annual Annual Q1 Q2 Q3 Q4 Nov Dec Jan

Facility investment index 25.8 4.0 -2.0 6.4 -5.0 -6.8 0.8 0.1 6.3 -6.5

(y-o-y) - - - 10.7 -2.7 -8.2 -6.9 -10.8 -6.3 -13.6

- Machinery 30.2 2.7 -2.2 8.1 -5.5 -6.9 -3.8 -0.1 2.7 -3.6

- Transportation equipment 8.9 9.8 -1.1 -1.0 -1.8 -6.7 22.0 0.3 21.2 -16.7

1. Preliminary


Facility investment


40

30

20

10

0

-10

-20

-30

(%)

2001. Q1 2002. Q1 2003. Q1 2004. Q1 2005. Q1 2006. Q1 2007. Q1 2008. Q1 2009. Q1 2010. Q1 2011. Q1 2012. Q1

Facility investment (q-o-q) Facility investment (y-o-y)

Facility investment by type


50

40

30

20

10

0

-10

-20

-30

-40

(y-o-y, %)

2001. Q1

Transportation equipment Machinery

2002. Q1 2003. Q1 2004. Q1 2005. Q1 2006. Q1 2007. Q1 2008. Q1 2009. Q1 2010. Q1 2011. Q1 2012. Q1


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15The Green Book |


2010 2011 2012 2013


Domestic machinery orders 8.0 7.6 -13.4 -1.1 -19.8 -10.4 -21.4 -26.4 -16.8 -5.4

(q-o-q, m-o-m) - - - -5.3 -18.7 -2.0 4.0 16.0 -0.1 2.3

- Public -45.7 -2.6 -11.0 126.1 -59.7 86.7 -54.6 -75.8 31.2 174.3

- Private 22.3 8.8 -13.6 -8.7 -15.1 -16.0 -15.1 -11.6 -21.6 -10.3

Machinery imports 40.4 7.1 -3.0 15.3 -4.3 -12.2 -8.2 -17.0 -7.5 -4.4

Average manuacturing operation ratio 80.3 80.2 78.1 79.6 79.0 76.2 77.8 78.0 78.4 78.1

Facility investment adjustment pressure 8.8 1.1 -1.4 0.7 -1.3 -3.0 -1.5 0.5 -1.9 6.9

1. Preliminary

2. Production growth rate minus production capacity growth rate in the manufacturing sector (%p)

Sources: Statistics Korea, Korea International Trade Association

Although corporate investment sentiment improved or three months in a row

and acility investment adjustment pressure increased, machinery orders remained

weak and domestic automobile sales declined, making it hard to predict the

developments o the index.

Business survey index or manuacturing sector(Bank o Korea)85 (Jun 2012)[ 81 (Jul)[ 70 (Aug)[ 75 (Sep)[ 72 (Oct)[ 70 (Nov)[ 67 (Dec)[ 70 (Jan

2013)[ 72 (Feb)[ 76 (Mar)

Machinery orders and machinery imports

Source: Korea International Trade Association (KITA), Statistics Korea

10

9

8

7

6

5

4

3

2

70

60

50

40

30

20

10

0

-10

-20

-30

-40

-50

(trillion won) (y-o-y, %)

2001. Q1 2002. Q1 2003. Q1 2004. Q1 2005. Q1 2006. Q1 2007. Q1 2008. Q1 2009. Q1 2010. Q1 2011. Q1 2012. Q1

Machinery orders (left) Machinery imports (right)


17/75

16 | The Green Book

Construction investment (preliminary GDP) in the ourth quarter o 2012 decreased1.3 percent quarter-on-quarter and 4.1 percent year-on-year.


2010 20111 2012

Annual Annual Q3 Q4 Annual Q1 Q2 Q3 Q4

Construction investment -3.7 -5.0 -0.5 0.1 -1.5 -1.2 -0.4 0.1 -1.3

(y-o-y) - - -4.0 -2.1 - 1.5 -2.1 -0.2 -4.1

- Building construction -1.6 -4.1 -1.1 -0.6 - 3.8 -3.6 -2.0 -

- Civil engineering works -6.2 -6.0 0.3 1.0 - -7.7 4.4 2.8 -

1. Preliminary



Construction investment


20

15

10

5

0

-5

-10

-15

(%)

2001. Q1 2002. Q1 2003. Q1 2004. Q1 2005. Q1 2006. Q1 2007. Q1 2008. Q1 2009. Q1 2010. Q1 2011. Q1 2012. Q1

Construction investment (y-o-y)Construction investment (q-o-q)

4.Construction

investment

Construction investment by type


50

40

30

20

10

0

-10

-20

-30

(y-o-y, %)

2001. 1

Building construction Residential buildings Civil engineering works

2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1


18/75

17The Green Book |

Te value o construction completed (constant) in January increased 0.2 percent

month-on-month and 9.4 percent year-on-year, thanks to strong building

construction.

(Percentage change from previous quarter)2010 2011 2012 2013


Construction completed (constant) -3.2 -6.4 -5.8 -5.6 -0.9 1.0 1.5 1.3 2.2 0.2

(y-o-y) - - - -4.9 -9.7 -2.3 -5.6 1.5 -8.2 9.4

- Building construction -7.0 -6.9 -7.6 -4.5 -4.8 1.0 1.8 -1.7 3.1 1.1

- Civil engineering works 2.2 -5.6 -3.4 -6.9 4.1 0.9 1.0 4.9 1.2 -0.9

1. Preliminary


(Percentage change from same period in previous year)

2010 2011 2012 2013

Annual Annual Annual Q1 Q2 Q3 Q4 Nov Dec JanConstruction orders (current value) -17.7 6.1 -8.9 33.3 -0.7 -13.6 -33.1 -20.0 -43.0 -53.0

(q-o-q, m-o-m) - - - 15.1 -14.8 -6.1 -20.4 4.4 -10.8 -24.2

- Building construction -8.9 14.0 -8.7 27.4 -7.0 -7.1 -27.4 -16.1 -37.5 -65.1

- Civil engineering works -28.3 -6.0 -9.3 42.0 12.5 -26.3 -43.7 -29.1 -51.6 -23.6

Building permit area 19.3 9.9 -0.5 8.7 1.2 -7.3 -2.3 3.1 9.2 -28.3

1. Preliminary

Sources: Statistics Korea, Ministry of Land, Transport and Maritime Affairs

Construction investment may continue to suer due to the struggling housing

market and a decline in construction orders.

Unsold new houses remained unchanged month-on-month, and housing

transactions decreased year-on-year with the expiration o the temporary

acquisition tax cut.

Unsold houses(thousand)

61 (Apr 2012)[ 62 (May)[ 62 (Jun)[ 67 (Jul)[ 70 (Aug)[ 72 (Sep)[ 73 (Oct)[ 76 (Nov)

[ 75 (Dec)[ 75 (Jan 2012)

Housing transaction growth(y-o-y, %)

-22.1 (Jul 2012)[ -34.6 (Aug)[ -44.3 (Sep)[ -15.2 (Oct)[ -8.0 (Nov)[ 2.4 (Dec)[ -5.7

(Jan 2013)


19/75

18 | The Green Book

Leading indicators o construction investment

Source: Statistics Korea (construction orders)

Ministry o Land, Transport and Maritime Afairs (building construction permit area)

340

290

240

190

140

90

40

-10

-60

-110

(y-o-y, %)

2001. 1

Construction orders Building permit area

2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1

5.

Exports andimports

Exports in February decreased 8.6 percent (preliminary) year-on-year to US$42.33

billion.

Exports posted negative growth despite an increase in average daily exports, asthere were 2.5 ewer working days compared to the same period o the previousyear due to the Lunar New Year holiday. Te average export growth o January andFebruary registered 0.6 percent.

Average daily exports(US$ billion)2.01 (Feb 2012)[ 2.07 (Feb 2013)

Working days(the number o days)23 (Feb 2012)[ 20.5 (Feb 2013) (-2.5 days)45.0 (Jan-Feb 2012)[ 44.5 (Jan-Feb 2013) (-0.5 day)

Average daily exports grew, driven by a strong perormance rom I related items,including mobile phones, LCDs and semiconductors. However, exports decreasedin most sectors due to a reduction in working days.

Export growth by item(y-o-y, %)10.2 (mobile phones), 6.2 (LCDs), 0.4 (semiconductors), 7.8 (petrochemicals), -15.1 (automobiles),-40.3 (vessels)


20/75

19The Green Book |

Average daily exports, an indicator adjusted to days worked, stood at US$2.07billion, up 2.5 percent year-on-year. Te indicator has grown or our consecutivemonths since November.

Average daily export growth(y-o-y, %)-2.4 (Sep 2012)[ -1.2 (Oct)[ 3.9 (Nov)[ 7.1 (Dec)[ 1.6 (Jan 2013)[ 2.5 (Feb)

Average daily exports(US$ billion)2.01 (Feb 2012), 1.97 (Q1), 2.10 (Q2), 1.90 (Q3), 2.09 (Dec), 1.90 (Jan 2013), 2.07 (Feb)

Exports to most regions declined due to ewer days worked, but average dailyexports remained strong thanks to exports to China and the ASEAN countries.

Export growth by region(y-o-y, %)-1.0 (China), 0.6 (ASEAN countries), -11.4 (US), -15.3 (EU)

Average daily export growth by region(y-o-y, %)11.1 (China), 12.9 (ASEAN countries), -0.6 (US), -5.0 (EU)

Excluding vessel exports, which have little to do with the current economicconditions as vessels are ordered two to three years beore delivery, exports grew

4.0 percent year-on-year during the months o January and February.

Imports in February dropped 10.7 percent (preliminary) year-on-year to US$40.27billion.

Despite a slight increase in consumer goods imports, imports ell year-on-year ascommodities and capital goods imports declined.

Import growth by category(Feb 1-28, preliminary, y-o-y, %)2.6 (consumer goods), -9.5 (commodities), -18.1 (capital goods)

Exports by type

Source: Korea Customs Service, Ministry o Knowledge Economy (export and import trend)

160

140

120

100

80

60

40

20

0

-20

-40

-60

-80

(y-o-y, %)

2001. 1

Export growth rate Automobiles Semiconductors Steel

2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1


21/75

20 | The Green Book

Exports and imports


60

50

40

30

20

10

0

-10

(US$ billion)

2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1

Exports Imports

2010. 1 2011. 1 2012. 1 2013. 1

Trade balance

Imports by type


100

80

60

40

20

0

-20

-40

-60

-80

(y-o-y, %)

2001. 1

Import growth rate Commodities Capital goods

2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1

(US$ billion)

2012 2013

Annual Q1 Q2 Q3 Q4 Feb Dec Jan Feb Jan-Feb

Exports 547.87 134.85 140.13 133.13 139.77 46.32 44.88 45.68 42.33 88.01

(y-o-y, %) -1.3 3.0 -1.7 -5.7 -0.3 -20.4 -5.7 10.9 -8.6 0.6

Average daily exports 2.00 1.97 2.09 1.90 2.04 2.01 2.09 1.90 2.07 1.98

Imports 519.58 133.67 130.43 125.65 129.83 45.10 43.07 45.21 40.27 85.47

(y-o-y, %) -0.9 7.8 -2.8 -6.9 -1.0 23.8 -5.2 3.9 -10.7 -3.6

Average daily imports 1.90 1.95 1.96 1.79 1.89 1.96 2.00 1.88 1.96 1.921. Preliminary

Source: Korea Customs Service


22/75

21The Green Book |

(US$ billion)

2012 2013

Annual Q1 Feb Q2 Q3 Q4 Dec Jan Feb Jan-Feb

Trade balance 28.29 1.18 1.22 9.70 7.47 9.94 1.81 0.48 2.06 2.54

1. Preliminary

Source: Korea Customs Service

Te trade balance (preliminary) in February posted a surplus o US$2.06 billion.

Mining and manuacturing production in January ell 1.5 percent month-on-month, as weakness in semiconductors & parts and audio-visual communicationsequipment oset growth in automobiles and other transportation equipment. Ona yearly basis, output rose 7.3 percent.

Compared to the previous month, production o automobiles (up 1.5%), othertransportation equipment (up 3.3%) and mechanical equipment (up 2.3%) rose,while production o audio-visual communications equipment (down 10.1%),semiconductors & parts (down 6.2%) and clothing & ur (down 18.8%) ell.

Compared to a year ago, production o semiconductors & parts (up 15.0%),

automobiles (up 17.9%) and other transportation equipment (up 24.7%) increased,while production o computers (down 62.6%), mechanical equipment (down 5.6%)and audio-visual communications equipment (down 6.8%) went down.

6.Mining and

manuacturing

production

Industrial production


50

40

30

20

10

0

-10

-20

-30

(%)

2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1

Industrial production (m-o-m) Industrial production (y-o-y)

2010. 1 2011. 1 2012. 1 2013. 1


23/75

22 | The Green Book

Shipment and inventory


10

8

6

4

2

0

-2

-4

-6

-8

-10

(m-o-m, %)

Shipment growth Inventory growth

2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1

Te manuacturing inventory-shipment ratio increased by 2.1 percentage pointsmonth-on-month as inventories rose 0.7 percent and shipments ell 1.1 percent.

Inventories o primary metals (up 3.2%), automobiles (up 4.4%) and electricequipment (up 5.9%) rose month-on-month, while rened petroleum (down6.8%), mechanical equipment (down 2.0%), and audio-visual communicationsequipment (down 6.0%) declined.

Shipments o rened petroleum (up 4.9%), other transportation equipment (up5.8%) and nonmetallic minerals (up 8.6%) climbed, while semiconductors & parts(down 7.0%), audio-visual communications equipment (down10.1%) and primarymetals (down 1.3%) slipped.

Te average operation ratio o the manuacturing sector ell by 0.3 percentagepoints month-on-month to 78.1 percent.

Average manuacturing operation ratio


100

90

80

70]

60

50

( %)

2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1


24/75

23The Green Book |

(Percentage change from previous quarter or month)

2011 2012 2013

Annual Q4 Annual1 Q1 Q2 Q3 Q4 Nov Dec Jan

Mining and

manuacturing

activity2

Mining production (q-o-q, m-o-m) - -0.7 - 1.7 -0.5 -2.2 2.9 2.1 1.6 -1.5

(y-o-y) 5.9 3.3 0.8 3.6 1.1 -1.0 -0.1 2.1 -0.5 7.3

Manuacturing production (q-o-q, m-o-m) - -0.7 - 1.7 1.0 -2.3 2.9 2.2 1.4 -1.1(y-o-y) 6.0 3.5 0.8 3.8 -0.3 -1.1 -0.2 1.9 -0.6 7.7

Shipment 5.6 -0.4 0.7 1.8 -0.3 -2.4 1.9 1.0 1.8 -1.1

- Domestic demand 4.0 -1.4 -1.1 0.7 -0.3 -1.4 0.9 0.6 1.3 -0.7

- Exports 7.7 0.9 3.0 3.2 -0.3 -3.6 3.0 1.6 2.3 -1.4

Inventory3 14.9 5.4 3.3 -2.4 -1.4 -0.1 7.0 4.0 2.5 0.7

Manuacturing

activity

Average operation ratio (%) 80.2 78.8 78.1 79.6 79.0 76.2 77.8 78.0 78.4 78.1

Production capacity4 4.9 4.0 2.2 3.1 2.3 1.9 1.3 1.4 1.3 0.8

1. Preliminary

2. Including mining, manufacturing, electricity, and gas industry

3. End-period

4. Percentage change from same period in previous year


Mining and manuacturing production is expected to rebound somewhat, withmajor exports, including semiconductors, LCDs and other I related products,improving.

Average daily export growth(y-o-y, %)-6.0 (Aug 2012) [ -2.4 (Sep) [ -1.2 (Oct) [ 3.9 (Nov) [ 7.1 (Dec) [ 1.6 (Jan 2013) [ 2.5(Feb)

Export amount(US$ billion, Jan[ Feb 2013)semiconductors (4.04[ 3.89), LCDs (2.34[ 2.10), wireless communications equipment (2.13[ 1.65)

Number o days worked24 (Jan 2013)[ 20.5 (Feb)

* A decrease in the number o days worked due to the Lunar New Year holiday negativelyaected exports in February.

Service output in January declined 0.9 percent month-on-month as weaknessesin real estate & renting and wholesale & retail oset growth in publishing &communications services and transportation services. On a year-on-year basis,service activity rose 1.7 percent.

Real estate & renting ell 7.2 percent rom the previous month, as housing

transactions plunged rom 108,000 in December 2012 to 27,000 in January 2013due to the expiration o the property acquisition tax cut.

7.Service sector

activity


25/75

24 | The Green Book

Although nancial & insurance services may alter due to decreased stocktransactions, service output is expected to improve in February, with wholesale &retail growing as a result o Lunar New Year holiday-related spending.


Weight2011 20121 20131

Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q41 Nov1 Dec1 Jan1

Service activity index 100.0 3.2 1.2 0.5 1.2 0.0 1.6 0.5 0.1 0.9 0.0 0.5 0.5 -0.9

- Wholesale & retail 21.6 3.8 1.6 1.0 0.4 -0.3 0.7 -0.1 0.6 0.1 0.7 1.3 -1.0 -0.9

- Transportation services 8.5 4.5 2.6 -0.4 1.1 -1.3 1.2 1.2 0.2 0.9 0.6 0.9 0.8 0.4- Hotels & restaurants 7.2 -1.3 -0.4 2.2 -2.7 -1.4 -1.2 -0.1 0.9 1.3 -1.9 -0.7 -1.1 -0.4

- Publishing & communications services 8.4 5.1 0.7 0.7 3.3 1.0 3.0 -0.4 0.6 1.6 -0.6 1.9 0.2 2.8

- Financial & insurance services 14.7 6.8 2.9 -0.5 3.9 -0.8 2.8 2.3 -2.6 3.1 0.5 -0.7 2.7 -0.6

- Real estate & renting 5.3 -7.6 -0.5 -0.6 0.9 -2.9 -4.3 -4.0 2.3 -1.3 1.6 2.4 -0.9 -7.2

- Proessional, scientiic & technical services 5.6 0.5 -3.7 2.7 1.1 4.1 4.0 -0.6 0.8 0.4 -0.7 0.2 1.3 -2.7

- Business services 3.3 5.2 1.2 1.2 0.5 0.3 3.5 2.9 1.2 -1.7 -0.2 -1.2 1.1 1.0

- Educational services 10.9 2.2 0.5 -1.0 1.1 1.0 0.9 0.6 -1.4 0.0 0.9 0.6 3.3 -2.5

- Healthcare & social welare services 7.5 6.4 3.0 0.9 1.4 1.5 5.8 1.4 2.5 1.0 0.2 -0.2 0.1 -1.1

- Entertainment, cultural & sports services 2.9 2.7 0.4 3.0 -1.0 1.4 2.8 0.9 2.7 -1.5 -3.0 0.7 -5.2 -2.1

- Membership organizations 3.6 1.6 0.4 0.0 -0.2 -1.2 -1.4 -0.8 -0.4 1.9 -0.6 -1.7 1.0 -0.3- Sewerage & waste management 0.6 3.3 -3.2 8.6 0.8 2.9 -0.3 -7.3 5.8 0.3 -4.8 3.9 -7.9 6.5

1. Preliminary


Wholesale & retail declined 0.9 percent month-on-month as the individualconsumption tax cut on home appliances and automobiles ended and also as theLunar New Year holiday ell in February this year instead o January.

Hotels & restaurants weakened or the ourth straight month, declining 0.4 percentdue to poor consumer condence.

Publishing & communications services rose 2.8 percent month-on-month, thanksto continuing improvement in wireless communications and increased productionin the broadcasting sector.

Wireless communications growth(y-o-y, %)3.7 (Sep 2012)[ 7.6 (Oct)[ 6.6 (Nov)[ 6.2 (Dec)[ 7.6 (Jan 2013)

Broadcasting growth(y-o-y, %)-2.5 (Sep 2012)[ 2.3 (Oct)[ 7.5 (Nov)[ 3.3 (Dec)[ 24.9 (Jan 2013)

ransportation services rose 0.4 percent, helped by robust exports.

Average daily export growth by month(y-o-y, %)-2.3 (Sep 2012)[ -1.2 (Oct)[ 3.9 (Nov)[ 7.1 (Dec)[ 1.6 (Jan 2012)[ 2.5 (Feb)


26/75

25The Green Book |

Service industry

Source: Statistics Korea (service industry activity trend)

20

15

10

5

0

-5

-10

(%)

2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1

Service industry activity (m-o-m)Service industry activity (y-o-y)

2010. 1 2011. 1 2012. 1 2013. 1

Wholesale & retail


20

15

10

5

0

-5

-10

(%)

2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1

Wholesale & retail (m-o-m)Wholesale & retail (y-o-y)

2010. 1 2011. 1 2012. 1 2013. 1

January 2013 service industry by business


6

4

2

0

-2

(y-o-y, %)

Sewe

rage,wa

stemanag

ement,

material

recov

ery&rem

ediation

activitie

s

Memb

ership

organiz

ations,r

epair

&

otherperso

nalse

rvices

Enter

tainm

ent,c

ultural&

sportss

ervice

s

Educati

onalser

vices

Healthc

are&social

welare

servi

ces

Busin

essacilityma

nageme

nt&b

usiness

supp

ortservi

ces

Proes

sional,s

cientifc

&techn

ical

servic

es

Real

estate

&ren

ting

Finan

cial&

insuran

ceser

vices

Publi

shing

&com

munic

ationss

ervice

s

Hotels&

resta

urants

Transp

ortati

onservi

ces

Wholesal

e&retail

Totalind

ex


27/75

26 | The Green Book

Te number o workers on payroll in January increased by 322,000 rom a year

earlier to 24,050,000 and the employment rate remained unchanged rom the

previous year at 57.4 percent.

Employment growth improved as temporary actors such as heavy snowall and

the cold spell were relieved.

Te number o workers in the manuacturing sector surged, while construction

workers declined by a smaller margin. Employment growth in the service sector

continued to slow down.

By status o workers, the number o regular workers continued to show strong

growth, while the number o sel-employed workers declined or the rst time in

18 months since August 2011.

2010 2011 2012 2013

Annual Annual Q2 Q3 Q4 Annual Jan Q1 Q2 Q3 Q4 Dec Jan

Number o employed (million) 23.83 24.24 24.57 24.48 24.46 24.68 23.73 23.93 25.00 24.99 24.80 24.40 24.05

Employment rate (%) 58.7 59.1 59.9 59.5 59.4 59.4 57.4 57.8 60.2 60.0 59.4 58.3 57.4

(Seasonally adjusted) 58.7 59.1 59.1 59.1 59.2 59.4 59.1 59.3 59.4 59.5 59.2 59.1 59.2

Employment growth (y-o-y, thousand) 323 415 402 363 474 437 536 467 430 506 342 277 322

(Excluding agriculture, orestry & isheries) 405 440 399 414 497 451 500 498 454 504 344 289 337

- Manuacturing 191 63 112 -12 -75 14 -114 -102 -66 85 140 112 156- Construction 33 -2 -41 -35 71 22 86 79 33 17 -40 -82 -48

- Services 200 386 331 472 514 416 543 541 491 397 236 252 220

- Agriculture, orestry & isheries -82 -25 3 -51 -23 -14 36 -31 -24 2 -2 -12 -15

- Wage workers 517 427 421 392 374 315 353 360 281 317 303 267 397

Regular workers 697 575 621 572 500 436 465 413 379 485 469 458 523

Temporary workers -34 -78 -137 -76 -10 -2 21 110 73 -79 -109 -111 -77

Daily workers -146 -70 -63 -104 -115 -120 -133 -163 -171 -89 -57 -80 -49

- Non-wage workers -194 -11 -19 -29 100 121 183 108 150 189 39 10 -75

Self-employed workers -118 1 -39 34 125 124 190 149 173 143 33 12 -21- Male 181 238 221 208 257 234 292 238 242 284 172 91 173

- Female 142 177 181 155 216 203 244 230 188 223 170 186 149

- 15 to 29 -43 -35 -74 -1 -18 -36 -21 1 -8 -57 -80 -77 -82

- 30 to 39 -4 -47 -13 -83 -56 -31 -48 -65 -80 33 -10 -40 -26

- 40 to 49 29 57 59 46 47 11 16 28 8 12 -3 -8 48

- 50 to 59 294 291 294 270 315 270 376 326 260 273 220 197 200

- 60 or more 47 149 137 131 185 222 213 178 251 245 215 205 182


8.Employment


28/75

27The Green Book |

Number o persons employed and employment growth

Source: Statistics Korea (employment trend)

Share o persons employed by industry


Share o persons employed by status o workers


1,200

1,000

800

600

400

200

0

-200

-400

25

24

23

22

21

(thousand) (million)

2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1

Number of employed (seasonally adjusted, right)Employment growth (y-o-y, left)

100

80

60

40

20

0

(%)

2011. 1 2 3 4 5 6 7 8 9 10 11 12 2 3 4 5 6 7 8 9 10 11 122012. 1 2013. 1

Services Construction Manufacturing Agriculture, forestry & sheries

69.0

7.2

16.9

6.5

70.4

7.2

17.1

4.9

70.9

6.9

17.4

4.3

68.7

7.3

16.7

6.9

69.0

7.1

16.6

6.8

69.2

7.1

16.5

6.8

69.3

7.1

16.4

6.8

69.1

7.2

16.3

7.0

69.2

7.2

16.2

7.0

69.7

7.2

16.3

6.5

70.3

7.2

16.6

5.6

70.8

7.1

17.1

4.7

71.0

7.2

17.0

4.4

70.2

7.6

16.9

5.0

69.2

7.5

16.5

6.5

68.7

7.4

16.4

7.1

69.1

7.1

16.5

7.0

68.9

7.3

16.5

7.0

69.1

7.1

16.6

6.9

68.4

7.3

16.7

7.2

68.4

7.2

16.8

7.2

68.8

7.1

16.9

6.8

69.2

7.0

17.3

6.1

69.9

7.0

17.8

4.9

70.3

7.0

17.9

4.4

100

80

60

40

20

0

(%)

2011. 1 2 3 4 5 6 7 8 9 10 11 12 2 3 4 5 6 7 8 9 10 12112012. 1 2013. 1

Unpaid family workers Self-employed workers Daily workers Temporary workers Regular workers

46.2

20.0

6.6

22.7

4.5

46.9

19.9

6.2

22.7

4.2

45.2

19.9

6.8

22.9

5.2

45.1

19.8

6.7

23.1

5.3

45.2

19.8

6.4

23.2

5.4

45.1

19.9

6.4

23.3

5.3

44.4

20.2

6.7

23.4

5.3

44.4

20.3

6.7

23.2

5.4

44.0

20.5

6.8

23.3

5.4

44.3

20.6

6.6

23.4

5.1

44.9

20.6

6.3

23.4

4.8

45.4

20.5

6.5

23.1

4.5

45.4

20.5

6.5

23.1

4.5

44.9

20.7

7.0

22.9

4.6

44.1

20.5

7.2

23.0

5.2

43.8

20.6

7.0

23.2

5.4

44.3

20.8

6.4

23.4

5.1

43.7

20.5

7.2

23.2

5.3

43.5

20.9

7.4

23.0

5.3

43.3

20.7

7.6

22.9

5.5

43.4

20.5

7.5

23.0

5.6

43.7

20.3

7.5

23.2

5.4

44.2

20.1

7.3

23.3

5.1

44.5

20.5

7.2

23.0

4.8

44.4

20.9

7.2

22.8

4.7


29/75

28 | The Green Book

Te number o unemployed persons in January decreased by 6,000 year-on-year to847,000, while the unemployment rate ell 0.1 percentage point rom the previousyear to 3.4 percent.

Te month-on-month unemployment rate (seasonally adjusted) inched up, but thiswas mostly due to seasonal actors such as school vacation, job searching and bidsor government job projects, which tend to push up the unemployment rate romJanuary to March.

2010 2011 2012 2013


Number o persons unemployed (thousand) 920 855 865 786 740 820 853 947 841 770 722 737 847

Unemployment growth (y-o-y, thousand) 31 -65 -3 -88 -68 -35 -65 -82 -23 -16 -18 -18 -6

- Male -7 -48 -32 -48 -41 -26 -41 -54 -19 -16 -13 10 8

- Female 38 -17 29 -40 -27 -9 -24 -28 -4 0 -6 -28 -13

Unemployment rate (%) 3.7 3.4 3.4 3.1 2.9 3.2 3.5 3.8 3.3 3.0 2.8 2.9 3.4(Seasonally adjusted) 3.7 3.4 3.4 3.2 3.1 3.2 3.2 3.5 3.3 3.1 3.0 3.0 3.2

- 15 to 29 8.0 7.6 7.9 6.7 7.1 7.5 8.0 8.2 8.1 6.8 7.0 7.5 7.5

- 30 to 39 3.5 3.4 3.5 3.2 2.9 3.0 2.8 3.2 3.2 2.8 2.7 2.7 3.3

- 40 to 49 2.5 2.1 2.1 2.0 1.9 2.0 2.3 2.4 2.0 2.0 1.8 1.7 2.0

- 50 to 59 2.5 2.1 2.0 2.1 1.8 2.1 2.0 2.3 2.0 2.2 1.8 1.8 2.2

- 60 or more 2.8 2.6 2.3 2.1 1.8 2.4 3.3 4.4 2.0 1.9 1.6 1.9 3.3


Te economically inactive population in January was up 239,000 rom a yearearlier to 16,980,000, while the labor orce participation rate remained unchangedat 59.5 percent.Te number o those economically inactive due to old age (up 175,000) andhousework (up 134,000) increased while those due to rest (down 184,000)decreased.

2010 2011 2012 2013


Economically inactive population (million) 15.84 15.95 15.56 15.85 16.01 16.08 16.74 16.50 15.67 15.90 16.26 16.71 16.98

Labor orce participation rate (%) 61.0 61.1 62.0 61.5 61.1 61.3 59.5 60.1 62.3 61.8 61.1 60.1 59.5

(seasonally adjusted) 61.0 61.1 61.2 61.0 61.1 61.3 61.1 61.4 61.4 61.4 61.1 60.9 61.1

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

143 112 66 191 53 128 7 103 110 57 244 315 239

- Childcare -125 -5 -16 17 23 -2 18 - 4 -7 -3 8 -9

- Housework 201 101 27 143 103 123 6 85 181 101 126 178 134

- Education 12 -51 -39 -78 -69 -12 -47 -28 -64 5 39 45 103

- Old age 80 -45 -58 -22 2 148 48 76 174 156 186 195 175

- Rest -56 182 163 193 131 -53 143 126 -71 -142 -125 -156 -184



30/75

29The Green Book |

Employment rate


Unemployment rate


Labor orce participation rate


64

63

62

61

60

59

58

57

56

55

(%)

2001. 1

Original rate Seasonally adjusted rate

2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1

6

5

4

3

2

(%)

2001. 1


2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1

65

64

63

62

61

60

59

58

57

(%)

2001. 1


2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1


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30 | The Green Book

9.Financial markets

9.1 Stock market

Te Korean stock price index in February rose 3.3 percent to 2,026 points rom theprevious months 1,962 points.

Despite the external uncertainties resulting rom North Koreas third nucleartest and Italys general election results, the KOSPI Composite rose due to easedvigilance on the weakening Japanese yen and oreign investors net buying.

Foreign investors became net buyers o Korean stocks in February, buying 1.9trillion won worth o stocks compared to selling 1.9 trillion won in the previousmonth.

9.2 Exchange rate

Te won/dollar exchange rate in February ell 6 won to 1,083.0 won rom 1,089.0won at the end o January.

Te won/dollar exchange rate uctuated within the 1,070 to 1,090 won range dueto a combination o upward pressures, such as North Koreas third nuclear testand political uncertainty in Italy, and downward pressures, such as the purchase o

securities by oreign investors and export nancing by banks.

(End-period)

KOSPI KOSDAQ

Jan 2013 Feb 2013 Change1 Jan 2013 Feb 2013 Change1

Stock price index (points) 1,961.9 2,026.5 64.6 (3.3%) 503.7 535.9 32.2 (6.4%)Market capitalization (trillion won) 1,135.2 1,173.2 38.0 (3.3%) 111.1 119.1 8.0 (7.2%)

Average daily trade value (trillion won) 4.4 3.7 -0.7 (-15.9%) 1.8 1.9 0.1 (5.6%)

Foreign stock ownership (%) 34.6 35.0 0.4 (1.2%) 8.3 8.5 0.2 (2.4%)

1. Change from the end of the previous month

Source: Korea Exchange

Stock prices

2,200

2,000

1,800

1,600

1,400

1,200

1,000

800

600

400

200

(monthly average, KOSPI Jan 4, 1980=100, KOSDAQ Jul 1, 1996=1,000)

2001. 1

KOSPI KOSDAQ

2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1


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31The Green Book |

(End-period)

2008 2009 2010 2011 2012 2013

Dec Dec Dec Dec Dec Jan Feb Change1

Won/dollar 1,259.5 1,164.5 1,134.8 1,151.8 1,070.6 1,089.0 1,083.0 -1.1

Won/100 yen 1,396.8 1,264.5 1,393.6 1,481.2 1,238.3 1,197.6 1,172.0 5.7

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.

Foreign exchange rate

Recent daily oreign exchange rate trend

1,800

1,600

1,400

1,200

1,000

800

600

(month-end,)

2001. 1

Won/dollar Won/100 yen

2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1

1,800

1,600

1,400

1,200

1,000

800

600

()

2008. 1. 2

Won/dollar Won/100 yen

2008. 8. 11 2009. 3. 18 2009. 10. 19 2010. 5. 25 2010. 12. 27 2011. 8. 3 2012. 3. 9 2012. 10. 16

Te won/100 yen exchange rate ell 25.6 won in February due to a weak yenresulting rom the expectations o aggressive monetary easing as the government-riendly Kuroda Haruhiko, president o the Asian Development Bank (ADB), wasappointed governor o the Bank o Japan (BOJ).


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32 | The Green Book

9.3 Bond market

3-year reasury bond yields ell 13 basis points in February to 2.63 percent romthe previous months 2.76, resulting rom a growing appetite or sae assets andnet buying o utures by oreign investors as the general election in Italy increaseduncertainty in the eurozone.

9.4 Money supply & money market

M2 (monthly average) in December expanded 4.5 percent rom a year earlier.

Although currency redemption in the government sector has continued, M2growth accelerated slightly as money supply in the oreign sector expanded due tothe current account surplus and oreign investors securities investment.

(End-period, %)

2007 2008 2009 2010 2011 2012 2013

Dec Dec Dec Dec Dec Dec Jan Feb Change1

Call rate (1 day) 5.02 3.02 2.01 2.51 3.29 2.77 2.76 2.76 -

CD (91 days) 5.82 3.93 2.88 2.80 3.55 2.89 2.84 2.82 -2

Treasury bonds (3 yrs) 5.74 3.41 4.44 3.38 3.34 2.82 2.76 2.63 -13

Corporate bonds (3 yrs) 6.77 7.72 5.56 4.27 4.21 3.29 3.13 2.99 -14

Treasury bonds (5 yrs) 5.78 3.77 4.98 4.08 3.46 2.97 2.89 2.74 -15

1. Basis point, changes from the previous month

Interest rates


10

9

8

7

6

5

4

3

2

1

(monthly average, yearly, %)

2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1

Overnight call rate (daily)3-yr corporate bonds yield 3-yr treasury bonds yield

2010. 1 2011. 1 2012. 1 2013. 1


34/75

33The Green Book |

Total money supply


40

30

20

10

0

-10

-20

(y-o-y, monthly average balance, %)

2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1

LfReserve money M1

2010. 1 2011. 1 2012. 1

Bank deposit growth turned negative in January while asset managementcompany (AMC) deposits turned positive. Bank deposit growth turned negative ascorporations withdrew unds to pay value added tax (VA). AMC deposits turnedpositive, led by corporate unds, due to inows o money market unds (MMF) anddecreasing market interest rates.

(Monthly change, end-period, trillion won)

2009 2010 2011 2012 2013

Annual Annual Annual Jan Annual Jan Dec Jan Jan 1

Bank deposits 54.8 36.9 58.9 2.1 37.0 -10.0 6.5 -2.4 1,133.4

AMC deposits -27.6 -16.7 -16.6 -5.2 18.8 5.7 -6.7 15.4 332.7

1. Balance at end January 2013, trillion won

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

2008 2009 2010 2011 2012

Annual Annual Annual Annual Q4 Annual Q1 Q2 Q3 Q4 Nov Dec Dec 1

M12 -1.8 16.3 11.8 6.6 2.6 3.8 1.8 3.6 4.3 5.5 5.3 5.8 454.4

M2 14.3 10.3 8.7 4.2 4.4 5.2 5.3 5.6 5.6 4.5 4.4 4.5 1,831.8

L3 11.9 7.9 8.2 5.3 6.2 7.8 7.5 8.5 7.9 7.1 7.1 7.34 2,446.34

1. Balance at end December 2012, trillion won

2. M1 excluding corporate MMFs and individual MMFs while including CMAs

3. Liquidity aggregates of financial institutions (mostly identical with M3)

4. Preliminary


35/75

34 | The Green Book

Deposits in nancial institutions


30

20

10

0

-10

-20

(y-o-y, end of monthly balance, trillion won)

2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1

Koreas current account (preliminary) in January posted a surplus o US$2.25billion, staying in the black or 12 consecutive months.

Te goods account surplus widened rom US$1.92 billion in December 2012 toUS$2.60 billion in January 2013 as exports to China and exports o major items,such as mobile phones, semiconductors and petroleum products, improved.

Goods exports(US$ billion)44.29 (Dec 2012)[ 47.14 (Jan 2013)

Goods imports(US$ billion)42.37 (Dec 2012)[ 44.55 (Jan 2013)

Export growth by item(y-o-y, %)14.6 (mobile phones), 9.0 (semiconductors), 10.8 (petroleum products), -22.1 (vessels)

Export growth by region(y-o-y, %)16.6 (China), 7.7 (Southeast Asia), 6.9 (Japan), 21.3 (US), -3.2 (EU)

Te goods account continued to show a strong surplus despite the act that itusually tends to deteriorate in January due to seasonal actors, such as the year-endeect and an increase in uel imports.

Te January current account had posted a decit or our years in a row.

Average monthly current account over the last ve years(US$ billion)

0.91 (Dec), -0.8 (Jan), 0.45 (Feb), 2.08 (Mar)

10.Balance o

payments


36/75


37/75

36 | The Green Book

Travel account balance

Source: The Bank o Korea (balance o payments trend)

4

3

2

1

-1

-2

-3

(US$ billion)

2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1

Travel paymentTravel revenue

2010. 1 2011. 1 2012. 1 2013. 1

Travel balance

Current account balance


8

6

4

2

0

-2

-4

-6

(US$ billion)

2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1

Current account

2010. 1 2011. 1 2012. 1 2013. 1

Goods account Service account

Capital & nancial account balance


15

10

5

0

-5

-10

-15

(US$ billion)

2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1

Capital & nancial account

2010. 1 2011. 1 2012. 1 2013. 1

Portfolio investment Direct investment Financial derivatives


38/75

37The Green Book |

(%)

2012 2013

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

Month-on-Month 0.5 0.4 -0.1 0.0 0.2 -0.1 -0.2 0.4 0.7 -0.1 -0.4 0.2 0.6 0.3

Year-on-Year 3.4 3.1 2.6 2.5 2.5 2.2 1.5 1.2 2.0 2.1 1.6 1.4 1.5 1.4

Consumer prices excluding oil and agriculturalproducts (y-o-y) 3.2 2.5 1.9 1.8 1.6 1.5 1.2 1.3 1.4 1.5 1.3 1.2

1.2 1.3

Consumer prices excluding ood and energy (y-o-y) 2.5 2.6 1.7 1.6 1.5 1.4 1.2 1.2 1.4 1.4 1.4 1.4 1.4 1.2

Consumer prices or basic necessities (y-o-y) 3.3 2.8 2.0 2.0 2.2 1.8 0.8 0.6 1.7 1.6 1.0 0.7 0.8 0.8


Prices

Source: Statistics Korea (consumer price trend) & The Bank o Korea (producer prices)

16

13

10

7

4

1

-2

-5

(y-o-y, %)

2001. 1

Consumer price ination Producer price inationCore ination

2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1

11.1 Prices

Consumer prices in February rose 1.4 percent year-on-year and 0.3 percent month-on-month, staying stable in the 1 percent range or our consecutive months.

Core consumer prices, which exclude oil and agricultural products, rose 1.3 percentyear-on-year and 0.2 percent month-on-month. Core consumer prices based onthe OECD method, which exclude ood and energy, rose 1.2 percent year-on-year and 0.3 percent month-on-month. Consumer prices or basic necessities, abarometer o perceived consumer prices, were up 0.8 percent year-on-year and 0.4percent month-on-month.

Expected annual ination remained unchanged rom the previous month and theprices o imports declined 10.6 percent year-on-year.

Expected annual ination(%)3.7 (Jul 2012)[ 3.5 (Aug)[ 3.3 (Sep)[ 3.3 (Oct)[ 3.2 (Nov)[ 3.1 (Dec)[ 3.2 (Jan 2013)

[ 3.2 (Feb)

Price increases in imports(y-o-y, %, won base)-0.9 (Jul 2012)[ 0.5 (Aug)[ -2.2 (Sep)[ -6.4 (Oct)[ -7.9 (Nov)[ -9.0 (Dec)[ -10.6 (Jan2013)

11.Prices and

international

commodity

prices


39/75

38 | The Green Book

Te prices o agricultural and oil products rose due to the heavy snow and coldweather, but those o livestock products ell, allowing the growth in overallconsumer prices to stabilize.

Agricultural, livestock & shery product prices increased 1.0 percent month-on-month. Agricultural (up 1.5%, m-o-m) and shery product prices (up 0.5%,m-o-m) rose due to the heavy snow and cold weather, while the prices o livestockproducts (down 0.3%, m-o-m) ell.

Manuactured product prices climbed 0.3 percent month-on-month. Te prices odurable goods (down 0.1%, m-o-m) and cosmetics (down 0.5%, m-o-m) stabilized,while those o oil products (up 1.0%, m-o-m) rose due to an increase in internationaloil prices.

Personal service prices rose 0.5 percent month-on-month due to rising dining outexpenses (up 0.4%, m-o-m) and other personal service prices (up 0.5%, m-o-m).

TotalAgricultural, livestock &

ishery products

Manuactured products Publicutilities

Housingrents

Publicservices

PersonalservicesOil products

Month-on-Month (%) 0.3 1.0 0.3 1.0 0.0 0.2 0.0 0.5

Contribution (%p) 0.28 0.08 0.09 0.05 0.00 0.02 0.00 0.15

Year-on-Year (%) 1.4 3.3 0.7 -1.9 4.2 3.1 1.1 0.9

Contribution (%p) 1.41 0.27 0.24 -0.11 0.20 0.29 0.15 0.27


Consumer price infation

Source: Statistics Korea (consumer price trend)

7

6

5

4

3

2

1

0

-1

(%)

2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1

Consumer price ination (m-o-m) Consumer price ination (y-o-y)

2010. 1 2011. 1 2012. 1 2013. 1


40/75

39The Green Book |

11.2 International oil and commodity prices

International oil prices rose until mid-February but slid later in the month.Meanwhile, domestic oil product prices increased.

Dubai crude prices rose until mid-February, reaching a ve-month high o 113.6dollars per barrel on February 13, but eventually ell as US inventories increasedand geopolitical risks eased as a result o the resumption o nuclear talks with Iran.

Dubai crude($/barrel)111.8 (1st week Feb)[ 113.3 (2nd week)[ 111.3 (3rd week)[ 107.9 (4th week, down 3.7% sinceend o January)

International oil prices

Source: Korea National Oil Corporation

160

140

120

100

80

60

40

20

0

($/B)

2001. 1

Dubai crude WTI crude

2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1

Contribution to consumer price infation

Source: Statistics Korea (consumer price trend)

5

4

3

2

1

0

-1

(%p)

2003

Agricultural, livestock &shery products

Public servicesHousing rents

Public utilities

Manufactured products

Personal services

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013. 2


41/75

40 | The Green Book

Domestic oil product prices had risen or our consecutive weeks since the rst

week o February due to rising international gasoline prices.

Gasoline prices(won/liter)1,922.6 (1st week Feb)[ 1,940.2 (2nd week)[ 1,967.6 (3rd week)[ 1,988.3 (4th week)

(US$/barrel, period average)

2010 2011 2012 2013

Annual Annual Annual Aug Sep Oct Nov Dec Jan Feb

Dubai crude 78.1 105.9 109.0 108.6 111.2 109.0 107.3 106.4 107.9 111.1

Brent crude 79.7 111.0 111.7 113.0 113.0 111.6 109.3 109.2 112.7 116.2

WTI crude 79.5 95.1 93.8 94.1 94.5 89.5 86.6 88.2 94.8 95.3Source: Korea National Oil Corporation

(US$/barrel, period average)

2010 2011 2012 2013


Gasoline prices 1,710.4 1,929.3 1,985.8 1,971.3 2,024.5 2,005.7 1,956.0 1,935.6 1,924.6 1,952.5

Diesel prices 1,502.8 1,745.7 1,806.3 1,784.8 1,836.6 1,820.8 1,777.7 1,760.0 1,749.6 1,766.7


Dubai crude prices and import prices


160

140

120

100

80

60

40

20

160

140

120

100

80

60

40

20

(thousand won/B) ($/B)

2004. 1

Dubai crude (import prices, won, left) Dubai international prices (dollar, right)

2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1


42/75

41The Green Book |

International grain prices showed a mixed trend, while nonerrous metal pricesgenerally ell in February.

Te prices o wheat and corn decreased due to expectations o production increasesin South America and the US Department o Agriculture (USDA) revising up itsorecast or inventories*, but soybean prices increased due to concerns over theweather conditions in South America**.

* Te USDA orecast 2013 US corn yields to increase 35 percent and inventories to rise to thehighest since 1988.

** Rainall in Argentina has allen short o average levels this year, depleting soil moisture in the

soybean producing areas.

Nonerrous metal prices continued to rise until early in the month but started toall in mid-February as investor sentiment was daunted by the lower than expectedPMI in China and political unrest in Italy.

Prices o nonerrous metals in February(m-o-m, %)Nickel (-9.5), tin (-6.2), lead (-6.0), aluminum (-5.0), copper (-4.4), zinc (-3.8)

(Period average)

2010 2011 2012 2013


2,553 3,062 3,006 3,108 3,172 3,110 3,067 3,037 2,996 2,990

* A weighted average index of 17 major commodities

Source: KOREA PDS

International commodity pricesSource: Bloomberg (CRB), The Bank o Korea (Reuters index)* CRB demonstrates a utures price index o 21 commodities listed on the US Commodity Transaction Market, including beans and other

crops, crude oil and jewelry.

470

430

390

350

310

270

230

190

150

4,000

3,000

2,000

1,000

0

1997. 1 1998. 1 1999. 1

CRB (left) Reuters index (right)

2005. 12004. 12003. 12002. 12001. 12000. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1


43/75

42 | The Green Book

12.1 Housing market

Nationwide apartment sales prices continued a downward trend in February,alling 0.2 percent rom the previous month.

Apartment sales prices in the Seoul metropolitan area (down 0.4%, m-o-m)declined by a smaller margin than the previous month (down 0.7%, m-o-m).

Apartment sales prices were steady in areas excluding the Seoul metropolitan area,with prices in Daegu (up 0.2%, m-o-m) and North Chungcheong Province (up0.0%, m-o-m) rising by a smaller margin. Apartment prices in the ve metropolitancities and other cities remained unchanged.


2012 2013

Apr May Jun Jul Aug Sep Oct Nov Dec Jan-Feb Jan Feb Feb 41 Feb 111 Feb 181 Feb 251

Nationwide 0.0 -0.1 -0.1 -0.3 -0.4 -0.3 -0.3 -0.2 -0.3 -0.5 -0.3 -0.2 -0.05 -0.06 -0.05 -0.02

Seoul -0.4 -0.6 -0.5 -0.8 -0.9 -0.7 -0.6 -0.5 -0.6 -1.0 -0.6 -0.4 -0.08 -0.13 -0.11 -0.05

Gangnam2 -0.6 -0.7 -0.6 -1.0 -1.3 -0.9 -0.7 -0.4 -0.7 -1.1 -0.8 -0.3 -0.06 -0.08 -0.09 0.00

Gangbuk3 -0.3 -0.4 -0.5 -0.6 -0.5 -0.4 -0.5 -0.6 -0.5 -0.9 -0.5 -0.5 -0.09 -0.18 -0.14 -0.10

Seoul metropolitan area -0.3 -0.4 -0.4 -0.6 -0.8 -0.7 -0.6 -0.5 -0.6 -1.1 -0.7 -0.4 -0.10 -0.12 -0.08 -0.07

5 metropolitan cities 0.2 0.1 0.1 -0.1 -0.3 -0.1 0.0 0.1 0.1 0.0 0.1 0.0 0.00 0.00 -0.02 0.00

1. Weekly trends

2. Upscale area of Southern Seoul

3. Northern Seoul

Source: Korea Appraisal Board (since Jan 2013)

12.Real estate

market

Apartment sales prices by region

Source: Kookmin Bank

4

3

2

1

0

-1

-2

(m-o-m, %)

2009. 1 7 7 7 7

Nationwide Metropolitan citiesSeoul metropolitan area

2010. 1 2011. 1 2012. 1 2013. 1


44/75

43The Green Book |


2012 2013

Apr May Jun Jul Aug Sep Oct Nov Dec Jan-Feb Jan Feb Feb 41 Feb 111 Feb 181 Feb 251

Nationwide 0.1 0.0 -0.1 -0.2 -0.1 0.3 0.4 0.4 0.3 0.6 0.3 0.3 0.08 0.13 0.10 0.13

Seoul -0.4 -0.5 -0.4 -0.5 -0.3 0.6 0.8 0.7 0.2 1.0 0.4 0.6 0.11 0.25 0.21 0.24

Gangnam2 -0.5 -0.5 -0.4 -0.6 -0.4 0.8 1.0 0.9 0.3 1.1 0.5 0.6 0.11 0.24 0.20 0.25

Gangbuk3

-0.3 -0.4 -0.4 -0.4 -0.1 0.4 0.6 0.4 0.1 0.8 0.3 0.6 0.10 0.250.22 0.22

Seoul metropolitan area -0.2 -0.2 -0.2 -0.4 -0.2 0.4 0.5 0.4 0.1 0.5 0.2 0.3 0.06 0.14 0.13 0.16

5 metropolitan cities 0.3 0.3 0.1 -0.1 -0.2 0.2 0.3 0.4 0.4 0.6 0.3 0.3 0.09 0.11 0.08 0.10

1. Weekly trends

2. Upscale area of Southern Seoul

3. Northern Seoul

Source: Korea Appraisal Board (since Jan 2013)

Apartment sales transactions in January decreased 79.1 percent rom the previousmonths 81,229 to 16,968, and were down 7.2 percent rom a year earlier (18,282).

Apartment rental prices by region

Source: Kookmin Bank

4

3

2

1

0

-1

-2

(m-o-m, %)

2009. 1 7 7 7 7

Nationwide Metropolitan citiesSeoul metropolitan area

2010. 1 2011. 1 2012. 1 2013. 1

Nationwide apartment rental prices continued to rise in February (up 0.3%,m-o-m). Rental prices in the Seoul metropolitan area and the ve metropolitancities rose 0.3 percent each.

Apartment rental price increase in major districts in Seoul(m-o-m, %)Gangnam (1.1), Seocho (0.2), Songpa (0.5), Seongdong (2.0), Gwangjin (1.1), Dongjak (0.9)


45/75

44 | The Green Book

(Monthly average, thousand)

2009 2010 2011 2012 2013

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

Nationwide 53 48 55 55 77 18 39 47 45 46 37 38 31 26 45 50 81 17

Source: Ministry of Land, Transport and Maritime Affairs

12.2 Land market

Nationwide land prices in January rose 0.03 percent month-on-month, but werestill 0.08 percent lower than the pre-crisis peak reached in October 2008.

Land prices in the Seoul metropolitan area ell overall, with prices in Seoul (down0.06%, m-o-m) turning negative.Land price increases in Seoul metropolitan area(m-o-m, %)0.10 (May 2012) [ 0.10 (Jun)[ 0.03 (Jul)[ -0.01 (Aug)[ -0.02 (Sep)[ 0.03 (Oct)[ 0.04(Nov)[ 0.06 (Dec)[ -0.01 (Jan 2013)

Land prices continued to rise in areas excluding the Seoul metropolitan area (up0.11%, m-o-m), with Sejong (up 0.66%, m-o-m) posting the highest growth rate inthe nation or the 11th straight month in January.

Land price increases in areas excluding Seoul metropolitan area(m-o-m, %)0.14 (Apr 2012) [ 0.14 (May) [ 0.13 (Jun) [ 0.13 (Jul) [ 0.11 (Aug) [ 0.10 (Sep) [ 0.11(Oct)[ 0.12 (Nov)[ 0.12 (Dec)[ 0.11 (Jan 2013)

Monthly transaction volume

Source: Ministry o Land, Transport and Maritime Afairs

140

120

100

80

60

40

20

0

(thousand)

2006. 1 2007. 1 2008. 1 2009. 17 7 7 77 77

Nationwide Areas excluding the Seoul Metropolitan areaSeoul metropolitan area

2010. 1 2011. 1 2012. 1 2013. 1


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45The Green Book |

Nationwide land transactions in January were 141,000 land lots, down 37.1 percent

rom the previous month but up 9.0 percent rom 129,000 a year earlier.

Monthly land transactions plummeted in Seoul (down 51.3%, m-o-m), Daegu

(down 59.0%, m-o-m), Gwangju (down 61.5%, m-o-m), and Daejeon (down 55.8%,

m-o-m).

ransactions o vacant land increased 0.9 percent month-on-month to 75,000

lots, making up 53.4 percent o the total amount o transactions, and were up 11.3

percent rom 68,000 a year earlier.

Land prices by region

Source: Korea Land & Housing Corporation (land price trend)

15

129

6

3

0

-3

-6

-9

-12

-15

-18

(%)

1994

Metropolitan area City County

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20122011

National average


2008 2009 2010 2011 2012 2013

Annual Annual Annual Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Nov Dec Jan

Nationwide -0.31 0.96 1.05 1.17 0.29 0.30 0.29 0.29 0.87 0.30 0.33 0.12 0.21 0.07 0.08 0.03

Seoul -1.00 1.40 0.53 0.97 0.40 0.28 0.17 0.12 0.33 0.17 0.26 -0.14 0.09 0.03 0.05 -0.06

Gyeonggi -0.26 1.22 1.49 1.47 0.26 0.38 0.43 0.39 0.97 0.34 0.34 0.17 1.32 0.06 0.07 0.04

Incheon 1.37 1.99 1.43 0.66 0.17 0.18 0.15 0.15 0.36 0.21 0.16 -0.03 0.13 0.00 0.10 0.01

Source: Korea Land & Housing Corporation


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48/75

47The Green Book |

Industrial output in January decreased 0.7 percent month-on-month but increased

3.5 percent year-on-year. Output in construction (up 0.2%, m-o-m) and public

administration (up 3.7%, m-o-m) rose, while output in mining & manuacturing

(down 1.5%, m-o-m) and services (down 0.9%, m-o-m) ell.

Te cyclical indicator o the coincident composite index remained unchanged inJanuary.

Five components, including the value o construction completed and mining &

manuacturing production, increased, while retail sales decreased.

Components o the coincident composite index in January(m-o-m)

value o construction completed (1.2%), mining & manuacturing production (0.7%), domestic

shipment (0.2%), service activity (0.1%), non-arm payroll employment (0.1%), retail sales

(-0.2%), imports (0.0%)

Te cyclical indicator o the leading composite index ell 0.2 points rom the

previous month.

Te consumer expectations index, KOSPI and the ratio o export to import prices

were higher compared to the previous month while ve components, including the

value o construction orders received and indicator o inventory cycle, ell.

Components o the leading composite index in January(m-o-m)

consumer expectations index (1.3p), KOSPI (0.8%), ratio o export to import prices (0.4%), value

o construction orders received (-9.6%), international commodity prices (-1.9%), indicator oinventory cycle (-2.9%p), domestic shipment o machinery (-2.1%), ratio o job openings to job

seekers (-0.7%p), spreads between long & short term interest rates (0.0%p)

2012 2013

Jun Jul Aug Sep Oct Nov1 Dec1 Jan1

Industrial output (m-o-m, %) -0.8 0.7 -1.4 1.1 -0.4 1.1 1.0 -0.7

(y-o-y, %) 0.0 1.5 -0.5 1.0 -1.0 1.4 -0.2 3.5

Coincident composite index (m-o-m, %) 0.4 0.5 -0.1 0.5 -0.1 0.6 0.5 0.4

Cyclical indicator o coincident composite index 99.7 99.8 99.3 99.3 98.9 99.1 99.2 99.2

(m-o-m, p) 0.0 0.1 -0.5 0.0 -0.4 0.2 0.1 0.0

Leading composite index (m-o-m, %) 1.0 0.6 0.1 -0.1 0.3 0.7 0.7 0.2

Cyclical indicator o leading composite index 100.0 100.1 99.8 99.4 99.3 99.6 100.0 99.8

(m-o-m, p) 0.7 0.1 -0.3 -0.4 -0.1 0.3 0.4 -0.2

1. Preliminary

13.Composite

indices o

business cycle

indicators


49/75

48 | The Green Book

Industrial output


Cyclical indicator of coincident composite index


Cyclical indicator o leading composite index


20

15

10

5

0

-5

-10

-15

(%)

2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1

Industrial output (m-o-m) Industrial output (y-o-y)

2010. 1 2011. 1 2012. 1 2013. 1

110

105

100

95

90

(points)

2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1

110

105

100

95

90

(points)

2001. 1 2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1


50/75

49Policy Issues |

Policy IssuesOne Year Evaluation o Korea-US FTA

Major outcomes

Te Korea-US FA has helped revitalize the Korean economy through brisk tradeand increased oreign investment. Tanks to the Korea-US FA, the economycould produce outcomes, which would otherwise have been less desirable amiddifcult external conditions, including the European scal crisis. In 2012, thebilateral trade amount reached US$101.9 billion, making Korea the third largest

trade partner o the US.

Te Korea-US FA also provided a more transparent and secure environment orinvestment. Korea was the second largest investment destination o the US lastyear, ollowing Japan.

(March 15, 2012 - February 28, 2013)

Export growth(y-o-y, %)

Total exports 1.4

Goods with FTA rates 10.4

Goods without FTA rates -3.6Import growth(y-o-y, %)

Total imports -9.1

Goods with FTA rates 4.1

Goods without FTA rates -20.1

FTA utilization(%, as o February 28, 2013)

Exports 69.6

Imports 62.1

Foreign investment growth (y-o-y, %) 113.6

Consumer price reduction (as o February 28, 2013 compared with March 15, 2012) 7 out o 8*

* Of almonds, wine, orange juice, grape juice, cars, grapefruits, lemons and walnuts, the prices of all products excluding walnuts have decreased.

Sources: Korea Customs Service, Ministry of Knowledge Economy, Korea Fair Trade Commission


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50 | Policy Issues

Outcomes by category

1. Exports to US increased

For products with Korea-US FA tari rates, the growth o exports to the USar exceeded the growth o exports to the other parts o the world, presenting anapparent positive eect o the Korea-US FA.

Te exports o automobile parts to the US increased by 10.9 percent while theexports o the same products to the rest o the world increased by 6.0 percent, andpetroleum product exports to the US rose by 29.3 percent while the exports o thesame products to the rest o the world increased by 3.9 percent. Te increase in

the petroleum product exports was in line with rising demand rom the US as thenation replaced its imports rom other countries with the Korean products that canbe supplied at a lower price owing to preerential tari rates. Agricultural productexports increased rom US$0.6 billion to US$0.65 billion, and agricultural productimports decreased rom US$7.14 billion to US$5.94 billion, dispelling concernsthat the trade pact would lead to a surge in agricultural product imports.

Exports without Korea-US FA tari rates ell by 3.5 percent, led by wirelesscommunications equipment and semiconductors, which decreased by 35.2 percentand 7.7 percent, respectively. However, the all is not entirely due to decliningUS demand, but partly because o expanded overseas production. Te FAcontributed to an increase in automobile exports to the US, although automobilesare not included in the FA. It is assumed that the trade agreement raised thebrand awareness o Korean car manuacturers.

Imports o products outside the FA dropped 9.1 percent, led by semiconductors,aircras and parts, semiconductor manuacturing equipment and steel products.Meanwhile, the imports o US cars increased 4.1 percent, as the tari rate ell rom8 percent to 4 percen

economic bulletin (vol. 35 no. 3)

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