economic bulletin (vol. 35 no. 6)

7/28/2019 Economic Bulletin (Vol. 35 No. 6)

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ECONOMIC

BULLETIN

Republic of Korea

June 2013Vol.35 No.6

ISSN 2287-7266

| Economic Inormation and Education Center

The Green Book:Current Economic Trends

Policy IssuesCampaign Pledge Funding Plan to Carry Out Park Geun-hye

Administration AgendaRoadmap to Achieve 70% Employment

Economic News BriefngCreative Economy Action Plan Announced

Korea Grows 0.8% in Q1

Government Announces Plan to Enhance SME Productivity

Deputy Prime Minister Holds IR Conference in London

Statistical Appendices

03

47

59

63


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Economic BulletinRepublic o Korea

June 2013Vol.35 No.6

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 IssuesCampaign pledge funding plan to carry out Park Geun-hye administration

agenda

Roadmap to achieve 70% employment

Economic News Briefng

Statistical Appendices

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

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

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

..................................................................................................... 12

........................................................................................... 14.................................................................................................. 17

.................................................................. 19

................................................................................................ 22

.............................................................................................................. 24

........................................................................................................ 28

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......................................................... 35

................................................................................................... 40

.................................................. 45

............................................................................................................................ 47

..................................................................... 53

.......................................................................... 59

................................................................................ 63

Contents


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3The Green Book |

Te Green BookCurrent Economic Trends

Te Korean economy has seen mining & manuacturing production and service output improve,

led by exports, real estate and construction investment, while ination has remained stable.

However, consumption and acility investment have shown instability.

In April, the economy added 345,000 jobs year-on-year, an increase rom 249,000 in the previous

month, while both the employment and unemployment rates slightly improved.

Consumer price ination ell to 1.0 percent in May rom 1.2 percent a year ago, staying stable in

the 1.0 percent range, due to a all in agricultural and petroleum product prices.

Mining and manuacturing production rose by 0.8 percent month-on-month in April backed

by an increase in other transportation equipment and audio-visual communications equipment,

while service output increased by 0.2 percent, led by an improvement in real estate & renting and

proessional, scientic & technical services.

Despite strong durable goods sales, retail sales ell 0.5 percent month-on-month in April, as semi-

durable and nondurable goods sales went down.

Facility investment in April ell 4.0 percent rom the previous month due to a all in transportation

equipment investment, while construction investment jumped by 9.4 percent as both building

construction and civil engineering works increased.

Exports went up by 3.2 percent year-on-year in May, led by strong I related exports and exports

to China, despite a drop in steel and vessel exports and shipments to Japan. Te trade balance

remained in the black at US$6.03 billion.

Te cyclical indicator o the coincident composite index increased 0.2 points month-on-month in

April, and the leading composite index rose 0.1 points.

In May, stock prices rose in line with bullish global stock markets and as oreign capital owed

in. Te won weakened against the dollar, which strengthened due to improving US economic

indicators and the possibility that the Fed will taper its quantitative easing.

Housing prices grew at a aster rate in May, rom 0.2 percent to 0.3 percent month-on-month,

while the upward trend in rental prices slowed down rom 0.7 percent to 0.4 percent.

Overview


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4 | The Green Book

Te global economic recovery continues, led by the US and China, but the paceo the recovery is weak as the economic recession in the eurozone continues. TeOECD orecast the global economy would continue a muted and multiple speedrecovery seen over the last our years, and downgraded its growth rate orecast or2013 rom 3.4 percent in November 2012 to 3.1 percent in May.

Real economic indicators continue to be stagnant due to scal austerity andpoor condence, and there are worries that the eurozone recession will spread toGermany and France as the crisis extends over a long period o time. Te EuropeanCentral Bank (ECB) revised down its eurozone growth rate orecast or 2013 rom-0.5 percent in March to -0.6 percent in June.

Economic growth(q-o-q, %, Q3 2012[Q4[Q1 2013)eurozone (-0.1[ -0.6[ -0.2), Germany (0.2[ -0.7[ 0.1), France (0.1[ -0.2[ -0.2)

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

Despite strong exports and improving construction investment, the Korean economy may continue

to grow slowly as consumption and acility investment remain weak amid lingering uncertainties

due to the struggling eurozone economy and risks rom major countries loose monetary policies.

Te Korean government will closely watch the global and domestic economic situations and

reinorce its monitoring o global and domestic markets, while continuing to pursue policies tostimulate 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 to improve the health o the economy.


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5The Green Book |

Te US economy grew 2.4 percent (revised, annualized q-o-q) in the rst quarter o2013, a 0.1 percentage point decrease rom the advanced estimate o 2.5 percent,and economic indicators since March have been somewhat mixed.

Growth in the rst quarter o 2013 was marginally revised downward dueto decreases in inventory investment and government spending, despite an

improvement in consumption growth.

Contribution to growth rate(advanced estimates[ revised, %p)2.24 [ 2.40 (private consumption), 0.22 [ 0.23 (business investment), 0.31 [ 0.30 (housinginvestment), 1.03 [ 0.63 (inventory investment), -0.50 [ -0.21 (net exports), -0.80 [ -0.97(government spending)

Industrial production turned negative in April, alling 0.5 percent month-on-month, and the ISM manuacturing index, which orecasts corporate sentiment,ell below its baseline o 50.

ISM Manuacturing Index(base=50)

51.6 (Sep 2012)[ 51.7 (Oct)[ 49.9 (Nov)[ 50.2 (Dec)[ 53.1 (Jan 2013)[ 54.2 (Feb)[51.3 (Mar)[ 50.7 (Apr)[ 49.0 (May)

Retail sales changed to positive, increasing by 0.1 percent, and consumer sentimentgreatly improved, posting its largest increase since July 2007.

University o Michigan Consumer Sentiment Index78.3 (Sep 2012)[ 82.6 (Oct)[ 82.7 (Nov)[ 72.9 (Dec)[ 73.8 (Jan 2013)[ 77.6 (Feb)[78.6 (Mar)[ 76.4 (Apr)[ 84.5 (May)

Te housing market continued to recover as housing sales indicators improved(In April existing home sales increased by 0.6 percent month-on-month, and newhome sales by 2.3 percent), and housing prices rose or 12 consecutive months.

Case-Shiller Home Price Index(q-o-q, %)-0.4 (Q1 2012)[ 2.2 (Q2)[ 1.7 (Q3)[ 1.9 (Q4)[ 3.2 (Q1 2013)1.1 (Jan 2013)[ 1.3 (Feb)[ 1.1 (Mar)

US

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 2013. Q1

(%)


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6 | The Green Book

(Percentage change from previous period)

2011 2012 2013

Annual Annual Q1 Q2 Q3 Q4 Q1 Jan Feb Mar Apr May

Real GDP 1.8 2.2 2.0 1.3 3.1 0.4 2.4 - - - - -

- Personal consumption expenditure 2.5 1.9 2.4 1.5 1.6 1.8 3.4 - - - - -

- Corporate ixed investment 8.6 8.0 7.5 3.6 -1.8 13.2 2.2 - - - - -

- Housing construction investment -1.4 12.1 20.5 8.5 13.5 17.6 12.1 - - - - -

Industrial production 4.1 3.8 1.4 0.6 0.0 0.6 1.1 -0.1 0.9 0.3 -0.5 -

Retail sales 8.0 5.0 1.7 -0.3 1.3 1.5 1.0 0.1 1.1 -0.3 0.1 -

Existing home sales 2.4 9.9 5.5 -2.0 5.1 3.3 0.8 1.0 0.8 -0.2 0.6 -

Unemployment rate 9.0 8.1 8.3 8.2 8.1 7.8 7.7 7.9 7.7 7.6 7.5 7.6

Consumer prices 3.2 2.1 2.8 1.9 1.7 1.9 1.7 1.6 2.0 1.5 1.1 -

1. Preliminary

2. Annualized rate (%)

3. Seasonally adjusted

Source: US Department of Commerce

US nonarm payroll growth and unemployment rate

Sourse : US Department o Labor

800

600

400

200

0

-200

-400

-600

-800

-1,000

12

10

8

6

4

2

0

US nonfarm payroll growth (m-o-m, left) Unemployment rate (right)

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

(%)(thousand)

New Home Sales(m-o-m, %)-4.9 (Oct 2012)[ 9.0 (Nov)[ -0.5 (Dec)[ 15.7 (Jan 2013)[ -6.3 (Feb)[ 3.5 (Mar)[ 2.3 (Apr)

Te employment market showed mixed signs as the unemployment rate in Maymarginally increased rom the previous month to 7.6 percent while the nonarmsector added 175,000 jobs, exceeding the orecast o 163,000.

Nonarm payroll increase(m-o-m, thousand)138 (Sep 2012)[ 160 (Oct)[ 247 (Nov)[ 219 (Dec)[ 148 (Jan 2013)[ 332 (Feb)[ 142(Mar)[ 149 (Apr)[ 175 (May)

Nonarm payroll increase in May by industry(Out o 175,000 jobs added, thousand)178 (private sector): 0 (mining), -8 (manuacturing), 7 (construction), 179 (service)-3 (public sector)


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7The Green Book |

Chinese economic growth ell below the market expectation to 7.7 percent in therst quarter o 2013, and recent indicators have been mixed.

Exports and investment grew avorably, but weak consumption growth caused bythe cutting o lavish government spending, anticorruption policies and worries

about ood product sanitation led to weaker than expected growth.

Te Chinese economy is expected to gradually recover as the promotion ourbanization boosts investment and quantitative easing begins to have eects,but actors that constrain recovery remain, such as the lower than expectedmanuacturing PMI* and excessive housing market regulations.

* Te manuacturing PMI in April was 50.6, alling below market orecasts o 50.7 and below the2005-2012 April average o 56.0.

China

(Percentage change from same period in previous year)

2011 2012 2013

Annual Q3 Q4 Annual Q1 Q2 Q3 Q4 Dec Q1 Mar Apr

Real GDP 9.3 9.1 8.9 7.8 8.1 7.6 7.4 7.9 - 7.7 - -

Industrial production 13.9 13.8 12.8 10.1 11.6 9.5 9.1 10.0 10.3 9.5 8.9 9.3

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

Retail sales 17.1 17.3 17.5 14.3 14.9 13.9 13.5 14.9 15.2 12.4 12.6 12.8

Exports 20.7 20.7 14.4 8.3 8.8 10.5 4.5 9.5 14.1 18.4 10.0 14.7

Consumer prices 5.4 6.3 4.6 2.6 3.8 2.8 1.9 2.1 2.5 2.4 2.1 2.4

Producer prices 6.0 7.1 3.1 -1.7 0.1 -1.4 -3.3 -2.3 -1.9 -1.7 -1.9 -2.6

1. Preliminary

2. Quarterly change: average of monthly change

Source: China National Bureau of Statistics

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 2013. Q1

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


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8 | The Green Book

A recovery in the Japanese economy is maniesting, led by consumption andexports, as the economy grew 0.9 percent in the rst quarter o 2013, an increaseo 0.6 percent rom 0.3 percent in the previous quarter.

However, recovery signs remain weak as corporate acilities investment continuedto all, shedding 0.7 percent in the rst quarter.

Deation continued in April as consumer prices ell 0.7 percent despite importprices increasing 9.5 percent month-on-month.

Japan


2011 2012 2013

Annual Q3 Q4 Annual Q1 Q2 Q3 Q4 Q1 Mar Apr

Real GDP -0.6 2.5 0.1 2.0 1.5 -0.2 -0.9 0.0 0.9 - -

Industrial production -2.4 4.3 -0.4 -0.3 1.2 -2.0 -4.2 -1.9 2.2 0.2 0.9

Retail sales -1.2 0.5 -0.5 1.6 1.2 0.3 -0.9 -0.2 0.6 -1.5 0.7

Exports (y-o-y) -2.7 0.5 -5.5 -2.8 -1.6 4.8 -8.2 -5.5 1.2 1.1 3.8Consumer prices (y-o-y) -0.2 0.0 -0.2 -0.1 0.5 -0.2 -0.3 -0.1 -0.6 -0.9 -0.7

1. Preliminary

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 Ofce, 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 2013. Q1

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

Te eurozone economic recession continues as the unemployment rate in April hita record high at 12.2 percent, and the manuacturing PMI ell below the baselineo 50 or the 22nd consecutive month.

Unemployment rate(%)11.4 (Jul 2012)[ 11.5 (Aug)[ 11.6 (Sep)[ 11.7 (Oct)[ 11.8 (Nov)[ 11.8 (Dec)[ 12.0 (Jan2013)[ 12.1 (Feb)[ 12.1 (Mar)[ 12.2 (Apr) (youth unemployment: 24.4)

Manuacturing PMI(base = 50)45.1 (Aug 2012)[ 46.1 (Sep)[ 45.4 (Oct)[ 46.2 (Nov)[ 46.1 (Dec)[ 47.9 (Jan 2013)[47.9 (Feb)[ 46.8 (Mar)[ 46.7 (Apr)[ 48.3 (May)

Eurozone


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9The Green Book |


2011 2012 2013

Annual Q4 Annual Q1 Q2 Q3 Q4 Q1 Jan Feb Mar Apr

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

Industrial production 3.5 -2.1 -2.4 -0.5 -0.5 0.4 -2.4 0.2 -0.6 0.3 1.0 -

Retail sales -0.5 -1.2 -1.7 -0.3 -0.8 0.0 -1.5 0.3 0.9 -0.2 -0.1 -Exports (y-o-y) 12.7 8.3 7.4 8.6 8.1 7.4 5.5 1.3 5.2 -1.1 0.1 -

Consumer prices (y-o-y) 2.7 2.9 2.1 2.7 2.7 2.5 2.3 1.9 2.0 1.8 1.7 1.2

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 2013. Q1

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

Private consumption in the rst quarter o 2013 (preliminary GDP) ell 0.4 percent

quarter-on-quarter while increasing 1.5 percent year-on-year

2.

Privateconsumption


2011 2012 2013

Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Q1

Private consumption 2.4 0.7 0.6 0.1 -0.2 1.7 0.8 0.4 0.7 0.8 -0.4

(y-o-y) - 3.2 3.1 2.1 1.2 - 1.3 1.0 1.7 2.7 1.5

1. Preliminary

2. National accountsSource: The Bank of Korea


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10 | The Green Book

Retail sales in April ell 0.5 percent month-on-month as sales o semi-durablegoods, such as clothing, and nondurable goods, such as automobile uel, ell,despite an increase in durable goods sales, such as communications equipmentand computers. Year-on-year, the index increased 2.2 percent.

(Percentage change from previous period)2011 2012 20131

Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Q1 Mar1 Apr1

Retail sales 4.5 1.4 0.8 0.5 0.0 2.3 1.0 0.3 1.2 0.4 -1.3 1.6 -0.5

(y-o-y) - 5.3 6.2 4.0 2.6 - 2.8 1.4 2.6 2.5 0.1 1.7 2.2

- Durable goods 10.6 3.8 0.5 0.7 -0.9 5.3 2.5 1.9 2.8 2.3 -4.5 -3.2 2.1

Automobiles 7.0 5.2 -3.3 4.6 -11.3 2.4 2.4 9.4 -1.6 9.0 -9.0 4.1 -2.6

- Semi-durable goods 3.7 0.9 1.4 1.7 -2.7 -1.1 -0.4 0.3 -1.1 1.7 1.0 5.5 -4.3

- Nondurable goods 2.1 0.4 0.6 -0.1 1.6 2.3 0.9 -0.6 1.5 -1.1 -0.5 2.5 -0.1

1. Preliminary

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

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

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

Source: Statistics Korea

Tere is a possibility that retail sales in May will somewhat improve compared toApril due to an increase in home appliances and seasonal clothing sales.

Domestic car sales turned negative due to poor sales o mid-sized and ull-sizedsedans.

Department store sales turned positive in May as hotter-than-usual temperatures

spurred clothing sales, while sales at large discounters slowed a all due to a rise inhome appliances sales and without a high base eect rom a year ago, when the twoday monthly mandatory closure started.

Gasoline sales turned negative, or renery acility repairs by some companies ledto a all in sales volume, despite the domestic price o gasoline continuing to drop.

Gasoline prices(won/liter)1,915 (5th week Apr), 1,915 (1st week May), 1,904 (2nd week), 1,898 (3rd week), 1,896 (4th week),1,896 (5th week)

Credit card use rose at a slower pace compared to the previous month, but

maintained its positive trend.

(y-o-y, %)

2012 2013

Oct Nov Dec Jan Feb Mar Apr May

Credit card sales 9.2 14.2 7.1 6.2 3.4 5.6 4.5 3.6

Department store sales -0.4 9.1 -0.2 -8.2 1.7 7.5 -1.9 1.7

Large discount store sales -6.6 -1.7 -5.0 -24.6 8.9 -4.4 -9.8 -4.4

Domestic sales o gasoline 7.9 3.7 -2.8 2.9 -8.0 7.6 6.5 -1.2

Domestic sales o cars 4.3 13.2 7.5 1.6 -13.5 -1.0 0.8 -1.9

Sources: Credit Finance Association of Korea, Ministry of Trade, Industry and Energy, Korea National Oil Corporation, Korea Automobile Manufacturers

Association, Ministry of Strategy and Finance (for May data)


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11The Green Book |

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 2013. Q1

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

Retail sales

Source: 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


50

40

30

20

10

0

-10

-20

-30

(y-o-y, %)

2001. 1

Durable goods Semi-durable goods Nondurable 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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12 | The Green Book

Facility investment (preliminary GDP) increased 2.6 percent quarter-on-quarter

and decreased 11.9 percent year-on-year in the rst quarter o 2013.

(Percentage change from previous quarter)

2011 2012 2013

Annual Q3 Q4 Annual Q1 Q2 Q3 Q4 Q1

Facility investment 3.6 -1.8 -3.6 -1.9 10.4 -7.8 -5.2 -1.8 2.6

(y-o-y) - 1.1 -3.6 - 8.8 -3.5 -6.9 -5.2 -11.9

- Machinery 4.2 -2.3 -1.8 -1.1 11.3 -8.5 -6.0 -3.2 1.1

- Transportation equipment 1.4 -0.1 -10.8 -5.0 6.7 -5.2 -1.7 3.7 7.8

1. Preliminary

2. National accounts

Source: The Bank of Korea

3.Facility

investment

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 2013. 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 2013. Q1


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13The Green Book |

Facility investment declined 4.0 percent month-on-month in April, despite an

increase in machinery investment, due to poor equipment investment. Te index

ell 12.4 percent year-on-year.

(Percentage change from previous quarter)2011 2012 2013

Annual Annual Q1 Q2 Q3 Q4 Q1 Feb Mar Apr

Facility investment index 4.0 -2.0 6.4 -5.0 -6.8 0.8 -4.6 1.0 - 0.4 - 4.0

(y-o-y) - - 10.7 -2.7 -8.2 -6.9 -15.4 -22.5 - 8.1 -12.4

- Machinery 2.7 -2.2 8.1 -5.5 -6.9 -3.8 -5.8 0.2 - 3.4 0.7

- Transportation equipment 9.8 -1.1 -1.0 -1.8 -6.7 22.0 0.3 5.2 7.9 -17.9

1. Preliminary



2011 2012 2013

Annual Annual Q1 Q2 Q3 Q4 Q1 Feb Mar Apr

Domestic machinery orders 7.6 -13.4 -1.1 -19.8 -10.4 -21.5 -10.7 -34.1 14.1 2.7

(q-o-q, m-o-m) - - -5.3 -18.7 -2.0 3.9 5.2 -5.8 0.1 2.8

- Public -2.6 -11.0 126.1 -59.7 86.7 -54.6 -46.2 -75.8 103.0 77.0

- Private 8.8 -13.6 -8.7 -15.1 -16.0 -15.1 -5.5 -18.4 10.9 0.4

Machinery imports 7.1 -3.0 15.3 -4.3 -12.2 -8.2 -11.8 -23.1 -7.2 -7.2

Average manuacturing operation ratio 80.2 78.1 79.6 79.0 76.2 77.8 77.1 77.2 75.5 75.9Facility investment adjustment pressure 1.1 -1.4 0.7 -1.3 -3.0 -1.5 -2.9 -10.9 -4.0 0.9

1. Preliminary

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

Sources: Statistics Korea, Korea International Trade Association

Improving key leading indicators, such as corporate sentiment, machinery orders

and acility investment adjustment pressure, may bode well or acility investment,

but the low average manuacturing operation ratio may act as a negative actor.

Business survey index or manuacturing sector(Bank o Korea)75 (Sep 2012)[ 72 (Oct)[ 70 (Nov)[ 67 (Dec)[ 70 (Jan 2013)[ 72 (Feb)[ 76 (Mar)[

80 (Apr)[ 81 (May)[ 82 (Jun)


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14 | The Green Book

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 2013. Q1

Machinery orders (left) Machinery imports (right)

Construction investment (preliminary GDP) in the rst quarter o 2013 increased

4.1 percent quarter-on-quarter and 2.4 percent year-on-year.


2011 2012 2013

Annual Q3 Q4 Annual Q1 Q2 Q3 Q4 Q1

Construction investment -4.7 -0.4 0.1 -2.2 -1.5 -1.3 0.7 -1.2 4.1

(y-o-y) - -3.6 -1.7 - -0.4 -3.1 -0.3 -4.2 2.4

- Building construction -2.7 -0.3 -1.0 -1.7 0.3 -2.6 0.1 -0.3 4.6

- Civil engineering works -7.3 -0.7 1.5 -2.9 -3.9 0.4 1.5 -2.4 3.5

1. Preliminary

2. National accountsSource: The Bank of Korea

4.Construction

investment

Te value o construction completed (constant) in March improved 9.4 percent

month-on-month and 19.2 percent year-on-year, backed by strong building

construction and civil engineering works.


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15The Green Book |

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 2013. 1

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 2013. Q1

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


2011 2012 2013

Annual Annual Q1 Q2 Q3 Q4 Dec Q1 Feb Mar Apr

Construction completed (constant) -6.4 -5.8 -5.6 -0.9 1.0 1.4 2.1 4.4 5.5 -2.4 9.4

(y-o-y) - - -4.9 -9.7 -2.3 -5.6 -8.3 5.2 3.6 3.8 19.2

- Building construction -6.9 -7.6 -4.5 -4.8 1.0 1.8 3.0 7.6 5.4 1.6 8.2- Civil engineering works -5.6 -3.5 -6.9 4.1 0.9 1.0 1.1 0.6 5.7 -7.4 11.0

1. Preliminary



17/81

16 | The Green Book


2011 2012 2013

Annual Annual Q1 Q2 Q3 Q4 Dec Q1 Feb Mar Apr

Construction orders (current value) 6.1 -8.9 33.3 -0.7 -13.6 -33.1 -43.0 -41.2 -47.0 -20.7 -20.6

(q-o-q, m-o-m) - - 15.1 -14.8 -6.1 -20.4 -10.8 -5.9 57.7 -13.5 -5.6

- Building construction 14.0 -8.7 27.4 -7.0 -7.1 -27.4 -37.5 -33.6 -8.8 -13.7 -26.7

- Civil engineering works -6.0 -9.3 42.0 12.5 -26.3 -43.7 -51.6 -51.3 -72.5 -33.1 -7.3

Building permit area 9.9 -0.5 8.7 1.2 -7.3 -2.3 9.2 -12.4 -17.6 -14.2 -40.6

1. Preliminary

Sources: Statistics Korea, Ministry of Land, Infrastructure and Transport

Despite some positive actors, such as new home sales expected in new towns and

the possibility that the Housing Market Normalization Measures will stimulate the

housing market, construction investment has yet to pick up as construction orders

and other leading indicators continue to be weak.

Leading indicators o construction investment

Source: Statistics Korea (construction orders)

Ministry o Land, Inrastructure and Transport (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


18/81

17The Green Book |

5.Exports and

imports

Exports in May increased 3.2 percent (preliminary) year-on-year to US$48.37billion.

Exports grew at a aster pace in May, as weak steel and vessel exports and allingshipments to Japan were oset by strong I, rising exports to China and the US,and an increase in days worked by 0.5 days.

Export growth by item(y-o-y, %)62.5 (mobile phones), 17.4 (semiconductors), 6.2 (automobiles), -5.1 (petroleum products),-13.0 (steel), -33.3 (vessels)

Export growth by region(y-o-y, %)

16.6 (China), 11.8 (ASEAN countries), 21.6 (US), -11.6 (Japan), -14.6 (EU), -13.4 (Middle East)

Average daily exports, an indicator adjusted to days worked, amounted to US$2.10billion, increasing 1.0 percent year-on-year and picking up rom the previous

month.

Average daily export growth(y-o-y, %)3.9 (Nov 2012)[ 7.1 (Dec)[ 1.7 (Jan 2013)[ 2.5 (Feb)[ 4.7 (Mar)[ -8.0 (Apr)[ 1.0 (May)

Average daily exports(US$ billion)2.08 (May 2012), 1.90 (Jan 2013)[ 2.07(Feb)[ 2.11 (Mar)[ 1.93 (Apr)[ 2.10 (May)

Te eects o the weakening yen on the economy are continuing; exports toJapan keep slowing down and exports o items in competition with Japan, such asautomobiles and steel, continue to be poor.

Exports by item

Source: Korea Customs Service, Ministry o Trade, Industry and Energy (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


19/81

18 | The Green Book

Imports in May dropped 4.8 percent (preliminary) year-on-year to US$42.34billion.

Despite an increase in capital and consumer goods imports, imports continued adownward trend year-on-year as shrinking oil imports due to low oil prices led toa sharp decrease in commodities imports.

Import growth by category(May 1-31, preliminary, y-o-y, %)-14.6 (commodities), 5.8 (consumer goods), 4.2 (capital goods)

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 May Q1 Q2 Q3 Q4 Q1 Mar Apr May

Exports 547.87 46.87 134.85 140.13 133.13 139.77 135.47 47.44 46.27 48.37

(y-o-y, %) -1.3 -1.0 2.9 -1.7 -5.8 -0.4 0.5 0.2 0.4 3.2

Average daily exports 2.00 2.08 1.97 2.09 1.90 2.04 2.02 2.11 1.93 2.101. Preliminary

Source: Korea Customs Service

(US$ billion)

2012 2013


Imports 519.58 44.48 133.67 130.43 125.65 129.83 129.68 44.15 43.82 42.34

(y-o-y, %) -0.9 -1.8 7.8 -2.9 -6.9 -1.1 -3.0 -2.0 -0.3 -4.8

Average daily imports 1.90 1.98 1.95 1.96 1.79 1.89 1.94 1.96 1.83 1.84

1. Preliminary



20/81

19The 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

Mining and manuacturing production in April increased 0.8 percent month-on-

month and 1.7 percent year-on-year, led by strong other transportation equipmentand processed metals, despite a all in rened petroleum and electrical equipment.

Compared to the previous month, production o other transportation equipment(up 8.8%), processed metals (up 3.4%) and chemical products (up 1.4%) rose, whilerened petroleum (down 8.1%), electrical equipment (down 6.1%) and clothing &ur (down 3.8%) ell.

Compared to a year ago, production o semiconductors & parts (up 9.9%) andchemical products (up 6.4%) increased, while audio-visual communicationsequipment (down 14.6%), mechanical equipment (down 3.9%) and renedpetroleum (down 7.2%) went down.

6.

Mining andmanuacturing

production

(US$ billion)

2012 2013


Trade balance 28.29 2.39 1.18 9.70 7.47 9.94 5.78 3.29 2.45 6.03

1. Preliminary


Te trade balance (preliminary) in May posted a surplus o US$6.03 billion.


21/81

20 | The Green Book

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

Te manuacturing inventory-shipment ratio declined by 0.7 percentage pointsmonth-on-month as inventories decreased 0.6 percent and shipments stayed at.

Inventories o primary metals (up 1.1%), tobaccos (up 46.1%) and chemicalproducts (up 0.6%) rose month-on-month, while rened petroleum (down 13.4%),

automobiles (down 1.6%) and semiconductors & parts (down 0.6%) declined.

Shipments o other transportation equipment (up 8.7%), chemical products (up3.1%) and processed metals (up 3.0%) climbed, while rened petroleum (down7.8%), electrical equipment (down 5.9%) and clothing & ur (down 7.8%) slipped.

Te average operation ratio o the manuacturing sector rose by 0.4 percentagepoints month-on-month to 75.9 percent.

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


22/81

21The Green Book |

(Percentage change from previous quarter or month)

2012 2013

Annual Q1 Q2 Q3 Q4 Apr Q1 Feb Mar Apr

Mining and

manuacturing

activity2

Mining production (q-o-q, m-o-m) - 1.7 -0.5 -2.2 2.9 0.5 -0.9 -1.0 -2.4 0.8

(y-o-y) 0.8 3.6 1.1 -1.0 -0.1 -0.4 -1.7 -9.5 -2.9 1.7

Manuacturing production (q-o-q, m-o-m) - 1.7 -0.5 -2.3 3.0 0.4 -0.9 -1.3 -2.3 0.7

(y-o-y) 0.8 3.8 1.0 -1.1 -0.2 -0.5 -1.8 -9.8 -3.0 1.8

Shipment 0.7 1.8 -0.3 -2.4 2.0 0.4 -0.5 -1.5 -1.5 0.0

- Domestic demand -1.1 0.7 -0.3 -1.4 1.0 1.8 -0.8 -0.8 -2.8 0.2

- Exports 3.0 3.2 -0.3 -3.6 3.2 -1.1 -0.2 -2.2 0.3 -0.3

Inventory3 2.3 1.6 -1.8 -3.0 2.3 -0.5 0.8 -0.1 0.8 -0.6

Manuacturing

activity

Average operation ratio (%) 78.1 79.6 79.0 76.2 77.8 79.0 77.1 77.2 75.5 75.9

Production capacity4 2.2 3.1 2.3 1.9 1.3 2.3 1.1 1.1 1.0 0.9

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 increase as strong exportso mobile phone parts ollowing the launch o new models have boosted the

communications and semiconductor sectors, and production disruptions in theautomobile industry have eased due to the resumption o working weekends.

Growth o mobile phone exports(y-o-y, %)16.3 (Oct 2012)[ 23.4 (Nov)[ 12.6 (Dec)[ 32.3 (Jan 2013)[ 15.1 (Feb)[ 21.8 (Mar)[47.9 (Apr)[ 62.5 (May)

Growth o semiconductors exports(y-o-y, %)6.7 (Oct 2012)[ 12.9 (Nov)[ 1.0 (Dec)[ 7.2 (Jan 2013)[ 0.9 (Feb)[ 6.6 (Mar)[12.5 (Apr)[ 17.4 (May)

Growth o automobile exports(y-o-y, %)-4.4 (Oct 2012)[ 1.3 (Nov)[ -6.3 (Dec)[ 23.2 (Jan 2013)[ -16.3 (Feb)[ -11.5 (Mar)[-2.6 (Apr)[ 6.2 (May)

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


23/81

22 | The Green Book

Service output in April grew 0.2 percent month-on-month and 2.6 percent year-on-year, as growth in proessional, scientic & technical services and real estate &renting oset weaknesses in educational services and wholesale & retail.

Service output grew 0.4 percent in the rst quarter o 2013, showing a slightimprovement rom the previous quarter, when output remained unchanged.

Wholesale & retail ell 0.6 percent month-on-month as retail sales decreased dueto declining clothing and car uel sales.

Real estate & renting rose 3.9 percent, with housing transactions increasing rom67,000 in March to 80,000 in April.

Proessional, scientic & technical services rose 5.8 percent as an increase inconstruction investment led to growth in construction technology and engineeringservices.

Publishing & communications services and healthcare & social welare servicesrecovered rom the previous months slump, growing 1.7 percent and 1.3 percent,respectively.

7.Service sector

activity

Service output is expected to improve in May, led by real estate & renting andwholesale & retail, while nancial & insurance services may decline due to allingstock transactions.

Average daily stock transactions(trillion won)7.9 (Sep 2012)[ 6.8 (Oct)[ 6.2 (Nov)[ 5.8 (Dec)[ 6.3 (Jan 2013)[ 5.5 (Feb)[ 6.0 (Mar)[ 6.9 (Apr)[ 6.5 (May)


Weight2011 2012 20131

Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Q11 Mar1 Apr1

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 0.4 -0.8 0.2

- Wholesale & retail 21.6 3.8 1.6 1.0 0.4 -0.3 0.7 -0.1 0.6 0.1 0.7 -1.0 1.2 -0.6

- Transportation services 8.5 4.5 2.6 -0.4 1.1 -1.3 1.2 1.2 0.2 0.9 0.6 0.7 -0.8 0.5

- Hotels & restaurants 7.2 -1.3 -0.4 2.2 -2.7 -1.4 -1.2 -0.1 0.9 1.3 -1.9 -0.6 0.0 -1.0

- 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 1.2 -3.7 1.7

- 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 1.8 -1.7 -0.2

- 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 -2.8 1.1 3.9

- 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 -1.5 -7.2 5.8

- Business services 3.3 5.2 1.2 1.2 0.5 0.3 3.5 2.9 1.2 -1.7 -0.2 2.3 0.0 -1.1

- Educational services 10.9 2.2 0.5 -1.0 1.1 1.0 0.9 0.6 -1.4 0.0 0.9 1.0 -0.1 -1.5

- 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 1.2 -0.5 1.3

- 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 -0.1 2.0 -1.9

- Membership organizations 3.6 1.6 0.4 0.0 -0.2 -1.2 -1.4 -0.8 -0.4 1.9 -0.6 2.4 -2.6 -2.3

- 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 -1.0 6.5 1.81. Preliminary



24/81

23The 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

April 2013 service industry by business


7

5

3

1

-1

-3

-5

(y-o-y, %)

Sewe

rage,w

astem

anag

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

Healthc

are&social

welare

servi

ces

Educati

onalser

vices

Busin

essacilityma

nageme

nt&b

usiness

supports

ervice

s

Proes

sional,s

cientifc

&techn

ical

servic

es

Real

estate

&ren

ting

Finan

cial&

insur

anceser

vices

Publi

shing

&com

munic

ationss

ervice

s

Hotels&

resta

urants

Transporta

tions

ervice

s

Wholesal

e&retail

Totalind

ex


25/81

24 | The Green Book

Te number o workers on payroll in April increased by 345,000 rom a year earlierto 25,100,000 and the employment rate rose 0.1 percentage point rom the previousyear to 59.8 percent.

Month-on-month employment growth improved, with the number o employed

persons increasing in the 300,000 range or the rst time in three months and theemployment rate rising or the rst time in six months.

Workers in the manuacturing and service sectors grew by a larger margin,while growth in the number o workers in the construction sector slowed andemployment growth in the agriculture, orestry & sheries sector turned negative.

By status o workers, regular workers continued to increase while sel-employedworkers declined or the ourth straight month.

8.Employment

2010 2011 2012 2013

Annual Annual Q3 Q4 Annual Apr Q1 Q2 Q3 Q4 Q1 Mar Apr

Number o employed (million) 23.83 24.24 24.48 24.46 24.68 24.76 23.93 25.00 24.99 24.80 24.18 24.51 25.10

Employment rate (%) 58.7 59.1 59.5 59.4 59.4 59.7 57.8 60.2 60.0 59.4 57.7 58.4 59.8

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

Employment growth (y-o-y, thousand) 323 415 363 474 437 455 467 430 506 342 257 249 345

(Excluding agriculture, orestry & isheries) 405 440 414 497 451 484 498 454 504 344 266 244 367

- Manuacturing 191 63 -12 -75 14 -80 -102 -66 85 140 119 123 165

- Construction 33 -2 -35 71 22 53 79 33 17 -40 -64 -51 -10

- Services 200 386 472 514 416 525 541 491 397 236 199 156 186

- Agriculture, orestry & isheries -82 -25 -51 -23 -14 -29 -31 -24 2 -2 -9 5 -22

- Wage workers 517 427 392 374 315 322 360 281 317 303 329 322 466

Regular workers 697 575 572 500 436 339 413 379 485 469 554 611 659

Temporary workers -34 -78 -76 -10 -2 167 110 73 -79 -109 -152 -228 -202

Daily workers -146 -70 -104 -115 -120 -185 -163 -171 -89 -57 -73 -61 9

- Non-wage workers -194 -11 -29 100 121 133 108 150 189 39 -71 -73 -120

Self-employed workers -118 1 34 125 124 163 149 173 143 33 -28 -48 -90- Male 181 238 208 257 234 245 238 242 284 172 123 148 189

- Female 142 177 155 216 203 210 230 188 223 170 135 101 156

- 15 to 29 -43 -35 -1 -18 -36 25 1 -8 -57 -80 -117 -128 -133

- 30 to 39 -4 -47 -83 -56 -31 -75 -65 -80 33 -10 -15 -1 34

- 40 to 49 29 57 46 47 11 2 28 8 12 -3 12 -26 1

- 50 to 59 294 291 270 315 270 252 326 260 273 220 196 213 264

- 60 or more 47 149 131 185 222 251 178 251 245 215 181 191 179



26/81

25The 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

26

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 23 34 45 6 7 8 9 10 11 122012. 1 2013. 1

Services Construction Manufacturing Agriculture, forestry & fisheries

69.0

7.2

16.9

6.5

70.4

7.2

17.1

4.9

70.9

6.9

17.4

4.3

71.1

6.7

17.3

4.6

69.4

7.1

16.7

6.3

70.2

6.9

16.9

5.6

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 23 34 45 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

47.3

19.7

6.0

22.8

4.2

46.3

19.5

6.5

22.8

5.0

47.0

19.5

6.0

23.0

4.7

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


27/81

26 | The Green Book

Te number o unemployed persons in April decreased by 70,000 year-on-year to

825,000, while the unemployment rate ell 0.3 percentage points rom the previous

year to 3.2 percent.

Te unemployment rate ell year-on-year in all age groups excluding the 40s.

Te economically inactive population in April was up 269,000 rom a year earlier

to 16,070,000, while the labor orce participation rate decreased 0.2 percentage

points to 61.7 percent.

Te economically inactive population increased in all categories, including

education (up 164,000), rest (up 71,000) and housework(up 41,000).

2010 2011 2012 2013


Number o persons unemployed (thousand) 920 855 786 740 820 895 947 841 770 722 907 883 825

Unemployment growth (y-o-y, thousand) 31 -65 -88 -68 -35 -41 -82 -23 -16 -18 -40 -62 -70

- Male -7 -48 -48 -41 -26 -35 -54 -19 -16 -13 -7 -42 -46

- Female 38 -17 -40 -27 -9 -6 -28 -4 0 -6 -33 -20 -24

Unemployment rate (%) 3.7 3.4 3.1 2.9 3.2 3.5 3.8 3.3 3.0 2.8 3.6 3.5 3.2

(Seasonally adjusted) 3.7 3.4 3.2 3.1 3.2 3.4 3.5 3.3 3.1 3.0 3.3 3.2 3.1

- 15 to 29 8.0 7.6 6.7 7.1 7.5 8.5 8.2 8.1 6.8 7.0 8.4 8.6 8.4- 30 to 39 3.5 3.4 3.2 2.9 3.0 3.3 3.2 3.2 2.8 2.7 3.3 3.2 3.1

- 40 to 49 2.5 2.1 2.0 1.9 2.0 2.1 2.4 2.0 2.0 1.8 2.1 2.3 2.2

- 50 to 59 2.5 2.1 2.1 1.8 2.1 2.3 2.3 2.0 2.2 1.8 2.3 2.2 1.9

- 60 or more 2.8 2.6 2.1 1.8 2.4 2.3 4.4 2.0 1.9 1.6 3.4 2.3 1.3


2010 2011 2012 2013


Economically inactive population (million) 15.84 15.95 15.85 16.01 16.08 15.81 16.50 15.67 15.90 16.26 16.83 16.56 16.07

Labor orce participation rate (%) 61.0 61.1 61.5 61.1 61.3 61.9 60.1 62.3 61.8 61.1 59.9 60.5 61.7

(seasonally adjusted) 61.0 61.1 61.0 61.1 61.3 61.5 61.4 61.4 61.4 61.1 61.2 61.2 61.3

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

143 112 191 53 128 92 103 110 57 244 336 359 269

- Childcare -125 -5 17 23 -2 5 - 4 -7 -3 0 17 6

- Housework 201 101 143 103 123 163 85 181 101 126 143 117 41

- Education 12 -51 -78 -69 -12 -82 -28 -64 5 39 118 136 164

- Old age 80 -45 -22 2 148 173 76 174 156 186 154 129 4

- Rest -56 182 193 131 -53 -60 126 -71 -142 -125 -106 -68 71



28/81

27The 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

9.3 Bond market

3-year reasury bond yields rose 29 basis points in May to 2.78 percent rom theprevious months 2.49 percent. Te yields rose by a large margin due to risingreasury bond yields in the US and oreign investors selling o reasury bondutures.

9.4 Money supply & money market

M2 (monthly average) in March expanded 5.0 percent rom a year earlier.

M2 growth slowed as money supply in the private sector declined, resultingrom a decrease in bank loans and securities investment rom asset managementcompanies (AMC).

Interest rates

Source: The Bank o Korea

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

(End-period, %)

2007 2008 2009 2010 2011 2012 2013

Dec Dec Dec Dec Dec Dec Apr May Change1

Call rate (1 day) 5.02 3.02 2.01 2.51 3.29 2.77 2.78 2.50 -28

CD (91 days) 5.82 3.93 2.88 2.80 3.55 2.89 2.81 2.69 -12

Treasury bonds (3 yrs) 5.74 3.41 4.44 3.38 3.34 2.82 2.49 2.78 29

Corporate bonds (3 yrs) 6.77 7.72 5.56 4.27 4.21 3.29 2.85 3.14 29

Treasury bonds (5 yrs) 5.78 3.77 4.98 4.08 3.46 2.97 2.56 2.90 34

1. Basis point, changes from the previous month


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32 | The Green Book

Deposits in nancial institutions

Source: The Bank o Korea

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 2013. 1

Koreas current account (preliminary) in April posted a surplus o US$3.97 billion,

staying in the black or 15 consecutive months.

Despite robust exports o I products, such as mobile phones, the goods account

surplus narrowed rom US$4.16 billion in March to US$3.59 billion in April as

exports o automobiles, steel and vessels dropped along with exports to Japan.

Goods exports(US$ billion)47.99 (Mar 2013)[ 47.56 (Apr)

Goods imports(US$ billion)43.78 (Mar 2013)[ 43.97 (Apr)

Export growth by item(y-o-y, %)29.2 (mobile phones), 12.8 (semiconductors), -2.1 (automobiles), -8.0 (steel), -45.9 (vessels)

Export growth by region(y-o-y, %)16.1 (China), 8.2 (Southeast Asia), 1.9 (US), -11.3 (Japan), 4.8 (EU)

Despite deteriorating travel and transportation, the service account surplus

widened rom US$0.91 billion to US$1.45 billion, helped by business services and

intellectual properties.

10.Balance o

payments


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33The Green Book |

Te capital and nancial account (preliminary) in April posted a net outow o

US$2.61 billion.

Capital & nancial account balance(US$ billion)-0.91 (Jan 2013)[ -3.27 (Feb)[ -6.72 (Mar)[ -2.61 (Apr)

Te direct investment account swung to a net inow o US$0.30 billion rom a

net outow o US$1.87 due to an increase in oreign direct investment.

Net outow in portolio investment narrowed to US$1.92 billion rom US$3.39

billion due to a decrease in overseas equity investment.

Financial derivatives switched to a net outlow o US$0.31 billion rom a netinow o US$0.15 billion, while the net outow o the other investment account

widened to US$1.59 billion rom US$0.13 billion.

Te current account is expected to maintain a surplus, helped by a goods account

surplus resulting rom a trade surplus in May.

Service account(US$ billion, March[ April)-0.43[ -0.45 (travel), 0.90[ 0.77 (transportation), 1.16[ 1.18 (construction), -0.47[ -0.14(business service), -0.40[ -0.09 (intellectual property)

Te primary income account decit widened rom US$0.22 billion to US$1.09

billion due to cross-border dividend payments by rms whose scal year endedin December. Te secondary income account surplus contracted rom US$0.09

billion to US$0.02 billion.

(US$ billion)

2012 2013

Annual Apr Q1 Q2 Q3 Q4 Q1 Feb Mar Apr1

Current account 43.14 1.73 2.56 11.19 14.56 14.94 10.02 2.71 4.93 3.97

- Goods balance 38.34 1.75 2.61 8.52 13.34 13.98 9.39 2.56 4.21 3.59

- Service balance 2.68 0.55 -0.65 2.31 0.65 0.36 -0.48 -0.46 0.91 1.45

- Primary income balance 4.89 -0.42 1.49 0.82 1.04 1.54 1.38 0.63 -0.22 -1.09

- Secondary income balance -2.76 -0.14 -0.89 -0.47 -0.47 -0.93 -0.26 -0.02 0.09 0.02

1. Preliminary

Source: The Bank of Korea


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34 | 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 & financial account

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

Portfolio investment Direct investment Financial derivatives


36/81

35The Green Book |

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 inflation Producer price inflationCore inflation

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 May rose 1.0 percent year-on-year, staying stable at the 1.0percent range or seven consecutive months. Prices were unchanged rom theprevious month.

Core consumer prices, which exclude oil and agricultural products, rose 1.6percent year-on-year. Core consumer prices based on the OECD method, whichexclude ood and energy, rose 1.3 percent year-on-year. Consumer prices or basicnecessities, a barometer o perceived consumer prices, were up 0.2 percent year-on-year but down 0.4 percent month-on-month.

Te average expected annual ination ell 0.2 percentage points rom the previousmonth and the import prices declined 9.7 percent year-on-year.

Expected ination(%, over the next 12 months)3.5 (Aug 2012)[ 3.3 (Sep)[ 3.3 (Oct)[ 3.2 (Nov)[ 3.1 (Dec)[ 3.2 (Jan 2013)[ 3.2 (Feb)

[ 3.2 (Mar)[ 3.1 (Apr)[ 2.9 (May)

Import price increases(y-o-y, %, won base)-6.4 (Oct 2012)[ -7.9 (Nov)[ -9.0 (Dec)[ -10.6 (Jan 2013)[ -8.6 (Feb)[ -10.8 (Mar)[ -9.7 (Apr)

11.Prices and

international

commodity

prices

(%)

2012 2013

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

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

Year-on-Year 2.5 2.5 2.2 1.5 1.2 2.0 2.1 1.6 1.4 1.5 1.4 1.3 1.2 1.0

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

1.4 1.6

Consumer prices excluding ood and energy (y-o-y) 1.6 1.5 1.4 1.2 1.2 1.4 1.4 1.4 1.4 1.4 1.2 1.4 1.4 1.3

Consumer prices or basic necessities (y-o-y) 2.0 2.2 1.8 0.8 0.6 1.7 1.6 1.0 0.7 0.8 0.8 0.8 0.7 0.2



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38 | The Green Book

Domestic oil product prices continued to decrease due to stable international oilprices, but bounced back slightly helped by rising exchange rates.

Gasoline prices(won/liter)1,915.1 (1st week May)[ 1,904.1 (2nd week)[ 1,898.1 (3rd week)[ 1,896.3 (4th week)[ 1,896.4(5th week)

Exchange rate(won/$)1,104.8 (1st week May)[ 1,092.5 (2nd week)[ 1,110.1 (3rd week)[ 1,116.3 (4th week)[ 1,127.6(5th week)

Dubai crude prices and import prices

Source: Korea National Oil Corporation

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

(US$/barrel, period average)

2010 2011 2012 2013

Annual Annual Annual Nov Dec Jan Feb Mar Apr May

Dubai crude 78.1 105.9 109.0 107.3 106.4 107.9 111.1 105.6 101.7 100.3

Brent crude 79.7 111.0 111.7 109.3 109.2 112.7 116.2 109.0 102.8 102.8WTI crude 79.5 95.1 93.8 86.6 88.2 94.8 95.3 92.9 92.0 94.7


(won/liter, period average)

2010 2011 2012 2013

Annual Annual Annual Nov Dec Jan Feb Mar Apr May

Gasoline prices 1,710.4 1,929.3 1,985.8 1,956.0 1,935.6 1,924.6 1,952.5 1,986.5 1,949.4 1,899.9

Diesel prices 1,502.8 1,745.7 1,806.3 1,777.7 1,760.0 1,749.6 1,766.7 1,786.0 1,745.2 1,699.4



40/81

39The Green Book |

Te prices o international grain rose slightly due to concerns over unstable supply,while nonerrous metal prices ell, led by slowing demand.

International grain prices were high as temperatures were unusually low and theplanting o wheat and corn was delayed in the US, but the rise slowed towards theend o May due to expectations o improved supply.

World grain supply outlook or 2012-13(US Department o Agriculture, May, m-o-m)Production (8.3%), demand (5.1%), stocks-to-use ratio (0.8%p)

International grain prices in May(m-o-m, %)Corn (1.7), soybean (3.4), wheat (0.4)

Nonerrous metal prices continued to all due to improvements in production andweak demand as a result o poor economic indicators in major countries.

Nonerrous metal prices in May(m-o-m, %)

in (-4.3), lead (-0.7), nickel (-4.3), copper (0.3), zinc (-1.4), aluminum (-1.4)

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

(Period average)

2010 2011 2012 2013

Annual Annual Annual Oct Nov Dec Jan Feb Mar Apr May

2,553 3,062 3,006 3,110 3,067 3,037 2,996 2,990 2,947 2,880 2,828

* A weighted average index of 17 major commodities

Source: KOREA PDS


41/81


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41The Green Book |

Apartment sales transactions in April increased 17.0 percent rom the previousmonths 47,375 to 55,442, and were up 23.0 percent rom a year earlier (45,079).

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 May (up 0.4%, m-o-m).Rental prices in the Seoul metropolitan area and ve metropolitan cities rose 0.3percent and 0.5 percent each.

Apartment rental price increase in major districts in Seoul(m-o-m, %)Gangnam (-0.1), Seocho (-0.3), Songpa (-0.6), Gangdong (-0.9), Seongbuk (1.2)


2012 2013

Jul Aug Sep Oct Nov Dec Jan-May Jan Feb Mar Apr May May 131 May 201 May 271 Jun 31

Nationwide -0.2 -0.1 0.3 0.4 0.4 0.3 2.1 0.3 0.3 0.5 0.7 0.4 0.14 0.11 0.10 0.07

Seoul -0.5 -0.3 0.6 0.8 0.7 0.2 2.2 0.4 0.6 0.7 0.4 0.2 0.05 0.02 0.02 0.01

Gangnam2 -0.6 -0.4 0.8 1.0 0.9 0.3 1.9 0.5 0.6 0.6 0.2 0.1 0.04 0.01 0.00 0.01

Gangbuk

3

-0.4 -0.1 0.4 0.6 0.4 0.1 2.6 0.3 0.6 0.8 0.6 0.4 0.07 0.04 0.04 0.01Seoul metropolitan area -0.4 -0.2 0.4 0.5 0.4 0.1 2.1 0.2 0.3 0.5 0.7 0.3 0.10 0.08 0.06 0.06

5 metropolitan cities -0.1 -0.2 0.2 0.3 0.4 0.4 2.3 0.3 0.3 0.4 0.8 0.5 0.20 0.13 0.15 0.11

1. Weekly trends

2. Upscale area of Southern Seoul

3. Northern Seoul

Source: Korea Appraisal Board


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42 | The Green Book

12.2 Land marketNationwide land prices in April rose 0.13 percent month-on-month, and were 0.23

percent higher than the pre-crisis peak reached in October 2008.

Land prices in the Seoul metropolitan area (up 0.13%, m-o-m) continued to rise,

led by Seoul (up 0.16%, m-o-m).

Land price increases in Seoul metropolitan area(m-o-m, %)

-0.01 (Aug 2012)[ -0.02 (Sep)[ 0.03 (Oct)[ 0.04 (Nov)[ 0.06 (Dec)[ -0.01 (Jan 2013)[

0.05 (Feb)[

0.10 (Mar)[

0.13 (Apr)

Land prices continued to rise in areas excluding the Seoul metropolitan area (up

0.13%, m-o-m), with Sejong (up 0.62%, m-o-m) posting the highest growth rate in

the nation or the 14th straight month in April.

Land price increases in areas excluding Seoul metropolitan area(m-o-m, %)

0.11 (Aug 2012)[ 0.10 (Sep)[ 0.11 (Oct)[ 0.12 (Nov)[ 0.12 (Dec)[ 0.11 (Jan 2013) [

0.11 (Feb)[ 0.12 (Mar)[ 0.13 (Apr)

Monthly transaction volume

Source: Ministry o Land, Inrastructure and Transport

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

(thousand)

2009 2010 2011 2012 2013

Annual1

Annual1

Annual1

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

Nationwide 53 48 59 42 18 47 45 46 37 38 31 26 45 50 81 17 34 47 55

1. Monthly averageSource: Ministry of Land, Infrastructure and Transport


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44 | The Green Book

Land and consumer prices since 1970s

Source: Korea Appraisal Board (land prices), Statistics Korea (consumer prices)

Land trade volume

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

60

50

40

30

20

10

0

-10

-20

(y-o-y, %)

1975

Land price inflation Consumer price inflation

1980 1985 1990 1995 2000 2005 2010 2012

500,000

450,000

400,000

350,000

300,000

250,000

200,000

150,000

100,000

50,000

0

(thousand square meter)

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

Seoul metropolitan area Areas excluding the Seoul metropolitan area

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

(Land lot, thousand)

2009 2010 2011 2012 2013

Annual1

Annual1

Annual1

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

Nationwide 203 187 208 170 187 182 186 163 167 150 133 172 185 224 141 142 181 206

Seoul 22 16 18 13 14 15 15 13 12 10 9 15 16 20 10 10 15 18

Gyeonggi 46 41 43 33 37 36 35 32 34 30 27 35 36 45 29 28 33 39

Incheon 10 8 10 8 7 7 8 7 7 8 8 10 9 10 5 5 8 9

1. Monthly average

Source: Korea Land & Housing Corporation


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48/81

47Policy Issues |

Policy IssuesCampaign Pledge Funding Plan to Carry Out Park Geun-HyeAdministration Agenda

Background and meaning

Te Campaign Pledge Funding Plan consists o the ruling partys April generalelection pledges (March 2012), presidential election pledges (December 2012),and 140 tasks o the Park Geun-hye administration (May 2013). Te governmentplanned to dra a scal support plan in order to ulll with ease the promises madewith the Korean people.

Te Campaign Pledge Funding Plan is the rst o its kind in Korean history, andthus is also the rst time that this kind o plan was publicized to the Korean people.Tis was done to lay the oundation or a trustworthy and responsible governmentthat keeps its promises with the Korean people and does not lay nancial burdenson uture generations. Te plan will be a standard or establishing and carrying outministerial operational plans, preparing tax reorm bills, drawing budget proposals

and draing the national scal management plan.

Prime Minister Chung Hong-won hosted the National Policy CoordinationMeeting on May 31 and announced a iscal support action plan (henceorthto be called Campaign Pledge Funding Plan) to carry out the Park Geun-hyeadministrations agenda. Te Campaign Pledge Funding Plan was developed byholding discussions with the related ministries and business proessionals andthrough the Fiscal Strategy Meeting on May 16, which was attended by the entireCabinet.

he Campaign Pledge Funding Plan consists o the plans background andmeaning, an overview o the plan, an action plan, and a management plan.


49/81

48 | Policy Issues

(trillion won, 2013-2017 total)Amount required Funding measures

Total 134.8 Total 134.8

Economic Revitalization 33.9Revenue increase 50.7

Korean Peoples Happiness 79.3

Blooming o the Culture 6.7Expenditure cuts 84.1

Building a Foundation or a Peaceul Reuniication 17.6

(trillion won)

2013-2017Total

2013 2014 2015 2016 2017

Amount required 134.8 6.6 15.3 29.1 37.6 46.2

Funding(y-o-y, net growth)

134.87.4

(7.4)17.4

(10.0)30.5

(13.1)36.8(6.3)

42.6(5.8)

Te Campaign Pledge Funding Plan is not only about expanding tax revenuesand reducing tax expenditures, but also about upgrading Koreas tax revenue-expenditure system. By modiying tax reductions and exemptions, andlegitimizing the shadow economy, each income class will pay the appropriateamount in taxes according to the benets they receive rom society. Tegovernment will remove excess at rom the budget by cutting spending, which

will contribute to efciently reorming the structure o Koreas scal expenditures.

Overview

Te total cost or the administrations tasks rom 2013 to 2017 will be 134.8 trillionwon and thereore the government has prepared unding measures to cover theentire cost o 134.8 trillion. Te cost o the administrations tasks is split into ourpillars: economic revitalization (33.9 trillion won, 25%), Korean peoples happiness(79.3 trillion won, 59%), blooming o the Korean culture (6.7 trillion won, 5%), andbuilding a oundation or a peaceul reunication (17.6 trillion won, 13%). Teseamounts required will be nanced through a 50.7 trillion won expansion in taxrevenues and 84.1 trillion won in tax expenditure cuts.

Annual costs will gradually increase as the administrations tasks are phased-in

according to priority. Funding measures are concentrated in 2014 and 2015 inorder to have the strongest eect possible in the shortest amount o time.


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51/81

50 | Policy Issues

2. Expenditure side

A total o 84.1 trillion won, or 62 percent o the amount required to carry out thenational tasks, will be unded through spending cuts.

Spending cuts are being planned as a strategic and government-wide task, whichaims to provide stable public nance and improve the scal expenditure system.First, the government is pursuing permanent spending cuts rather than temporaryones based on revised regulations. In addition, discretionary spending cuts willbe reviewed rst, and cuts will be expanded to mandatory spending as well. Also,private as well as public nancial resources will be utilized through the method ogovernment paying the interest rate dierence between public unding and privateunding.

1) SOC Spending

Considering the current level o SOC stocks and increased investment* in the pastseveral years to ride out the economic crisis, there is much room or SOC spendingcuts.

* SOC budget (trillion won): 18.4 (2007)[ 25.0 (2013)

Investment in new projects will be made only when they are part o campaignpledges or urgently required, while existing investment plans will be reviewed interms o appropriateness.

However, the government will continue to maintain construction investment

at an appropriate level by utilizing private nance and investing in cultural oreducational acilities.

2) Industrial, SME and Energy Sectors

Te government will nd ways to utilize private capacity in the industrial, SMEand energy sectors.

Te government will adopt new measures to reduce electricity demand ratherthan oering nancial incentives or limiting electricity use, and public overseasresources development projects will be allowed to be invested by various investors.Similar or overlapping ministry-level projects, such as SME support, will be

adjusted through inter-governmental cooperation.

(trillion won)

Total 2013 2014 2015 2016 2017

Total 50.7 2.9 7.9 11.8 13.7 14.4

National tax revenue

- Adjusting tax breaks

- Legitimatizing shadow economy

- Increasing capital gains tax

48.0

18.0

27.2

2.9

2.9

0.1

2.7

-

7.6

1.8

5.5

0.3

11.1

4.8

6.0

0.4

12.9

5.7

6.3

0.9

13.6

5.7

6.7

1.2

Nontax revenue 2.7 - 0.3 0.7 0.8 0.9


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51Policy Issues |

However, investment related to vulnerable group support, including SMEs andsmall merchants, will continue to be expanded by utilizing private unds.

3) Agriculture, Forestry and Fishery Sectors

Considering the recent rise in investment* in the agriculture and orestry sectors,

investment priorities will be adjusted.

* Agriculture and orestry budget (trillion won): 15.7 (2007)[ 18.9 (2013)

Te government will review projects in terms o perormance and rearrangepriorities, while streamlining similar or overlapping projects.

However, the government will increase nancial support to help householdsengaging in the agriculture or shery industries stabilize their income and businessoperation. Te support will include item-specic nancial aid oered directlyby the government and arming or shery-related disaster insurance paymentsupport.

4) Welare Sector

Welare programs prioritized in the administrations tasks, such as the NationalHappiness Fund and ree education, will receive increased investment, and thegovernment will renew its eorts to improve welare investment efciency andoer the most satisactory programs.

Te government will streamline the welare delivery system in order to preventscal resources rom being wasted, and this includes upgrading the social securityinormation system. Welare beneciaries will be made more responsible as theywill be required to take more share o payment or welare programs.

Welare benets or vulnerable groups will not be reduced as the government willadopt rules that allow the welare program to continue or a certain period o timeaer it expires, and will introduce temporary emergency welare programs.

5) Utilizing Private Finance by Paying Interest Rate Diference

Te amount o public loans* in 2013 will be 29.3 trillion won, or 8.4 percent o totalexpenditures.

* Mostly consists o Housing loan (50.5%), SME Startup & Development loan (14.9%),

Private eachers Pension Fund (5.7%), Agriculture Stabilization Fund (6.4%), GovernmentEmployees Pension Fund (4.8%)

O the loans, 3.5 trillion won will be nanced by the private sector through themethod o government paying the interest rate dierence between public loansand private nancing.

Loans utilizing private sector nance will be phased in up to 5.5 trillion wonbetween 2014 and 2017, and the eligibility o the loans will be decided accordingto the situations o both policy recipients and private nancial institutions.


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52 | Policy Issues

Management plan

Te government will consistently gather public opinion through various discussionsand local government scal councils, and reect them in improving the plan.

Annual spending and nancing plans included in the Campaign Pledge FundingPlan will be a basis or drawing up the years budget plan, tax revision proposalsand scal management plan.

Te Campaign Pledge Funding Plan will be implemented as a rolling plan, which

will consistently be reecting changes in economic and scal situations.

Te government will regularly review the implementation o the Campaign PledgeFunding Plan and continue to develop issues regarding scal restructuring throughjoint public-private committees* and inter-governmental cooperation.

* Te ax Reorming Committee and Fiscal Restructuring Committee

(trillion won)

Total 2013 2014 2015 2016 2017

Total 84.1 4.5 9.5 18.7 23.1 28.1

Mandatory spending cuts 3.0 - 0.5 0.7 0.8 0.9

Discretionary spending cuts- SOC

- Industry

- Agriculture & Forestry

- Welare

(Housing)

- Others

34.811.6

4.3

5.2

12.5

(9.5)

1.2

--

-

-

-

-

-

5.81.7

0.9

0.8

2.2

(2.1)

0.2

9.62.7

1.3

1.3

4.0

(2.9)

0.3

9.53.5

1.0

1.3

3.4

(2.5)

0.3

9.93.7

1.1

1.8

2.9

(2.0)

0.4

Government paying interest rate dierencemethod

5.5 - 0.7 1.4 1.7 1.7

Adjusting overlapping investment withprevious administration

40.8 4.5 2.5 7.0 11.2 15.6


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53Policy Issues |

Policy IssuesRoadmap to Achieve 70% Employment

Background

Te Korean economy has seen growth without employment since the 1990s.Furthermore, the growth rate has gradually slowed, and the employment rate hasstayed in the 63 to 64 percent range since 2003.

Te export and manuacturing-oriented economic structure weakened jobcreating capacities, and SMEs and service industries, which account or most othe employment, have suered rom low productivity. Most jobs are dominated bymales working long hours, and this has been an obstacle to job creation.

Factors negatively aecting employment are difculties aced by emale workerswhen they want to be reemployed, youths receiving higher education and earlyretirement o baby boomers. Tese actors make it undamentally difcult to

achieve 70 percent employment. Since economic growth prospects are uncertain,the Korean economy needs to bring up a new paradigm or job creation.

Against this backdrop, the Korean government has drawn up the 70 percentEmployment Roadmap. Te roadmap has been designed to move the main axis oemployment rom the male labor orce working long hours in large manuacturersto the emale labor orce employed by SMEs or working in the service sector. Teroadmap has been designed to create a amily-riendly environment where reducedwork hours are possible along with part time employment and other various typeso employment. Te roadmap has been designed to induce tripartite job creationeorts by government, industry and labor.


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56 | Policy Issues

Te government will gradually increase the number o the Smart Work Centers topromote exible working; public employees are able to work at the closest SmartWork Center rom their home.

3. Women, youths and seniors participating in job markets together

Te government will help increase job market participation by removing obstaclesand supporting employee-specic programs.

1) Connecting employment with welare

Te government will reorm the National Basic Living Security Entitlement Systeminto a system which provides more benet to those working, while expandingsel-sustenance and rehabilitation benet recipients to those earning 50 percento the median income. o receive the benet, participating in sel-sustenance andrehabilitation programs is mandatory, and negligent participants will not be madeeligible or the benet.

Tere will be employment service or social security benet recipients, and theexisting employment service package will be improved to enhance recipientscapabilities to work. Support or career-interrupted women will be expanded,such as consultation programs designed to develop abilities to adapt to jobs, housework and childcare services, and programs to make them experience workplacesituations in advance.

Te government will launch a gateway, a center to provide on-the-spotemployment and welare services, to help the working poor and economicallyinactive population. Te government will also increase the number o proessionalconsultants at public employment centers. Private employment services will bepromoted as its operation will be made possible without getting a license.

2) Women

Childcare leave, public daycare service and daycare service at the workplace will besignicantly improved.

Childcare leave will be allowed or mothers with a child younger than nine yearsold, and companies will be obliged to oer childcare leave in addition to maternityleave. Mothers will be able to apply or childcare leave at the time when they applyor maternity leave, and this will help make childcare leave a regular practice.

A database or maternity leave substitutes will be expanded, and the governmentwill provide nancial support or maternity leave substitutes.

Daycare service at the workplace will be subject to relaxed regulations, and publicdaycare centers will cover 30 percent o total daycare children by 2017.

Te government will announce measures in June to create jobs in the social servicesector and develop the social service sector into an industry, along with a guidelineto improve the quality o social services, in particular care-giving service. Temeasures and guidelines will be a oundation to create as many as 250,000 jobs inthe social service sector, and contribute to increasing emale employment


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58 | Policy Issues

Expected efects

Te employment increase is projected to gain speed rom 2015, ollowing theestablishment o policy oundations including laws and regulations in 2013-2014.

Female employment is expected to greatly improve, particularly led by thosereturning to work, while youth employment is projected to jump by more than 7.3percentage points.

O the 2.38 million newly created jobs, 1.63 million are likely to be produced inthe creative economy section, such as culture, science & technology and health &welare.

Part time jobs are projected to account or 38.7 percent o the total jobs increased.


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60 | Economic News Briefng

Korea grows 0.8% in Q1 (Preliminary)

Koreas real gross domestic product (GDP) expanded by 0.8 percent in the rstquarter o 2013 compared to the previous quarter, according to preliminary datareleased by the Bank o Korea (BOK) on June 7. Te gures were revised downrom an earlier estimate o 0.9 percent. Te year-on-year growth rate was 1.5percent, matching the BOKs previous orecast.

On the production side, agriculture, orestry & sheries contracted by 4.4 percent

quarter-on-quarter, with output in the shery sector in particular declining by 8.1percent. Manuacturing grew by 1.3 percent, as the production o petrochemicals,electrical & electronic instruments and vessels increased. Construction grewby 4.0 percent, led by housing construction and civil engineering works, whileservices grew by 0.7 percent, due to growing output in transportation & storage,communications services and healthcare & social services.

Private consumption decreased by 0.4 percent, led by alling expenditures indurable and semi-durable goods. Facility investment increased by 2.6 percentdue to a rise in both machinery and transportation equipment investment, andconstruction investment rose by 2.5 percent, led by housing construction and

civil engineering works. Exports rose by 3.0 percent,

economic bulletin (vol. 35 no. 6)

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