Summary and Assessment
* All growth figures are on a year-on-year basis unless otherwise noted.
As the rising export trend continues in the Korean economy, private consumption and investment improved substantially maintaining the overall economy in the recovery phase.
The mining & manufacturing and service industries maintained their recent upward trends, which showed in their recent production.
The mining & manufacturing production index in September rose by 11.0%, registering a month-on-month growth of 5.4%, maintaining the rising trend over three consecutive months, favored by more working days and the effects from the national holidays. [Table 2-1]
By sector, automobile posted a sharp rise in production owing to the launching effects of new model vehicles. (-2.9% in Aug. 32.3% in Sep.)
The growth rate of service industry production in September registered 4.2%, up from the previous month (1.0%). [Table 2-4]
By sector, a turnaround growth was recorded in educational services, wholesale
& retail sale, transportation, and hotels & restaurants, which had shown a continuing decline.
The seasonally adjusted month-on-month growth rate rose to 2.6% from -0.8% in the previous month.
-30 -20 -10 0 10 20
3 6 9 12 3 6 9 12 3 6 9 12 3 6 9
2006 2007 2008 2009
Industrial P roduction Index S ervice P roduction Index
( Year-on-Year % Change)
Production-inventory cycle signaled overall recovery in the economy due to the rise in production and the slower decrease in inventory. [Table 2-3]
Whole Industry
-20 -15 -10 -5 0 5 10 15
-18 -12 -6 0 6 12 18
07.IV
07.III 08.I
08.II 08.III
08.IV 09.I
09.II
Inventory Growth (%)
Production Growth (%)
09.III
SemiconductorㆍIT
-30 -20 -10 0 10 20 30 40
-40 -20 0 20 40 60 80
07.III
07.IV 08.I 08.II
08.III
08.IV 09.I
09.II
Production Growth (%)
09.III
Inventory Growth (%)
Both coincident and leading indexes in September continued to improve, but their pace of improvement has somewhat moderated. [Table 2-1]
91 94 97 100 103
6 9 12 3 6 9 12 3 6 9 12 3 6 9
2007 2008 2009
-6 -3 0 3 6 9 12
Cyclical Component of Coincident Composite Index(left) 12-month Smoothed Change in Leading Composite Index(right)
(%) (Base=100)
Consumption-related economic indicators point to continuing improvement.
The consumer goods sales index in September recorded a growth rate of 6.7%, significantly up from the previous month (1.9%), mainly driven by durable goods. Its seasonally adjusted month-on-month growth rate registered 1.8%.
[Table 3-2]
By sector, durable goods consumption registered a growth rate of 26.5%, and quasi-durable and non-durable goods consumption recorded 2.6% and 0.3%, respectively.
Meanwhile, on a seasonally adjusted month-on-month basis, durable and non-durable goods consumption rose to record 9.0% and 1.3%, respectively, whereas that of quasi-durables recorded a fall of 6.6% due to base effects.
The shipment of domestic consumer goods showed a growth rate of 13.9%, significantly improved from the previous month (-1.3%). [Table 3-3]
Consumer sentiment index in October registered 117, up by 3p from the previous month, significantly higher than the benchmark index of 100. [Table 3-4]
-12 -8 -4 0 4 8 12
6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9
2005 2006 2007 2008 2009
Sales Index by Consumer Goods(3MA) Consumer Goods Shipment Index(3MA) (Year-on-Year % Change)
In September, investment-related indicators showed that construction investment has improved on a moderate pace amid the continuing improvement in equipment investment.
With equipment investment estimate index turning to increase, the overall
leading indicators for equipment investment appeared to continue their improvement trends. [Table 4-1]
Equipment investment estimate index registered a growth of 5.8%, a turnaround, which only took twelve months to recover as the investment in transport equipments expanded considerably.
Domestic machinery orders received, a leading indicator, recorded a 31.9% rise due to the increased orders received in both the private and public sectors.
[Table 4-3]
The value of construction completed registered a 6.0% rise, up from the previous month (-6.8%), as the public and civil works increased further and the construction sector posted a turnaround growth. [Table 5-2]
The construction orders received registered an increase of 58.4%, a turnaround from -29.5% of the previous month, and building construction permits also registered an increase of 31.4%, a turnaround from -7.4% of the previous month. [Table 5-3]
-60 -40 -20 0 20 40 60
3 6 9 12 3 6 9 12 3 6 9
2007 2008 2009
Machinery Orders Receiv ed(3MA) Construction Orders Receiv ed(3MA) (Year-on-Year % Change)
The trade account in October registered a smaller surplus ($3.79 billion) than the previous month with a slightly moderated recovery trend of exports and a moderation in the declining trend of imports.
Exports fell to record a year-on-year growth of -8.3%, a similar level to the previous month (-7.8%), with the continuing upward trend of semiconductor and LCDs. [Table 6-1]
Exports of automobiles turned to decrease by registering a -24.1% growth, while
wireless communication apparatus also posted a -30.1% growth, a further drop from the previous month.
Nevertheless, the overall improvement in exports seems to continue with the seasonally adjusted exports per workday recording a month-on-month rise of 4.2%.
Imports recorded a year-on-year growth rate of -16.3%, a slower decline than the previous month (-24.6%) mainly driven by consumer goods and raw materials. [Table 6-3]
Current account recorded a surplus of $4.2 billion, a significant increase from the previous month ($1.91 billion), influenced by the sharp increase in goods account surplus. [Table 6-6]
Goods account registered a large surplus of $5.45 billion, a large increase from the previous month ($3.33 billion), owing to the improved performance of exports of major items, such as automobile.
Service account recorded a decreased deficit of $1.63 billon, slightly smaller than the previous month ($1.79 billon), due to the fall in travel account deficit.
Capital account recorded a net inflow of $7.24 billion, an increase from the previous month ($5.46 billion) owing to the increased net inflow in portfolio investment account and the reduced net outflow in derivatives account. [Table 6-7]
The portfolio investment account recorded a net inflow of $7.92 billion, an increase from the previous month ($4.06 billion) due to the sharp rise in foreign investment in Korean stocks and Treasury bonds.
Derivatives account recorded a reduced net outflow of $300 million, down from the previous month ($720 million), as the profits relating to overseas derivatives transaction increased.
The labor market in September showed slightly improved employment conditions with 71,000 newly hired workers and a 3.6%
unemployment rate (seasonally adjusted), down by 0.2%p from the previous month. [Table 7-1]
The number of hired workers improved significantly from the previous month (3,000), indicating a slower decline. However, this is largely due to the Hope Work project, which took effect after June.
The employment rate and labor force participation rate fell by 0.6%p and 0.3%p to record 59.2% and 61.3%, respectively, a smaller decline than the previous month.
CPI in October recorded a 2.0% growth rate, lower than the previous month (2.2%), led by a slower price growth of industrial products and services. [Table 8-1]
The growth rate of commodity price recorded 2.0%, down from the previous month (2.2%) driven mainly by industrial products, especially petroleum, whereas the growth rate of service prices recorded 2.0%, slightly down from the previous month (2.1%).
Core inflation registered 2.6%, down from the previous month (2.7%), continuing its declining trend.
The purchase price of apartments nationwide registered a month-on-month growth rate of 0.4%, down from the previous month (0.8%), as the upward trend of Seoul and metropolitan areas crashed from 1.2% to 0.3% and from 0.9% to 0.3%, respectively. [Table 8-3]
-6 -4 -2 0 2 4 6 8 10 12 14
6 9 12 3 6 9 12 3 6 9 12 3 6 9
2006 2007 2008 2009
Manufacturing Price Agricultural Price Service Price
(Year-on-Year % Change)
During October, Korean stock prices experienced a fall amid stable signs in the interest rates and foreign exchange rates in domestic
financial markets.
The interest rate continued to remain fairly stable despite relatively sensitive responses affected by the changing expectations for a possible adjustment in the policy interest rate by the monetary authority.
Treasury bond yields recorded 4.44% as of late October, up by 5bp from the previous month.
AA- corporate bond yields recorded 5.58% at end-month (5bp down from the end of the previous month), while BBB- corporate bond yields recorded 11.77% at end-month (3bp up from the end of the previous month).
Accordingly, the term spread recorded 243bp as of late October, up from the previous month (239bp), while the credit spread between AA- and BBB- corporate bonds recorded 619bp, up by 2bp from the end of the previous month.
The KRW/USD exchange rate rose slightly to 1200.6 as of late October, influenced by adjustments in the global stock markets.
The KOSPI index closed at 1580.69 at the end of October, down from the end of the previous month, due to the concerns over the worsening corporate performance which might have been affected by the strong won since March.
0 2 4 6 8 10 12 14
3 6 9 12 3 6 9 12 3 6 9
2007 2008 2009
Target Rate Treasury Bonds Corporate Bonds(AA-) Corporate Bonds(BBB-) (%)
As contracted advanced economies are gradually improving, the global economy is showing signs of a relatively fast recovery led by China and emerging economies in Asia.
In advanced countries, economic contractions are beginning to moderate across overall sectors showing considerable improvements in production and consumption, but slow consumption due to low employment might work to
prevent meaningful economic improvement.
-12 -8 -4 0 4 8 12
3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9
2005 2006 2007 2008 2009
U .S . E uro Japan
(Year-on-Year % Change)
2 4 6 8 10
3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9
2005 2006 2007 2008 2009
U .S . E uro Japan
(%)
Developing economies are also faced with downside risks at home and abroad, but they are recovering fast as their domestic demand and exports improve and their economic indicators are showing signs of moving away from sagging conditions.
-60 -40 -20 0 20 40 60
3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9
2005 2006 2007 2008 2009
China India Taiw an
(Year-on-Year % Change)
-12
-9 -6 -3 0 3
3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6
2005 2006 2007 2008 2009
China India Brazil
(Year-on-Year % Change)
The US economy is edging closer to recovery by registering a quarter-on-quarter economic growth rate of 0.9% for the third quarter, as its housing economy stabilizes and its consumption improves despite the continuing low employment.
U.S. leading economic indicators have been improving fast since April, amid the two-month rise in personal consumption expenditures during September.
- 3 - 2 0 2 3 5 6
3 6 9 1 2 3 6 9 1 2 3 6 9 1 2 3 6 9 1 2 3 6 9
2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9
- 6 - 5 - 3 - 2 0 2 3
P e r s o n a l C o n s u m p t io n E xp e n d it u r e s (le ft ) L e a d in g In d e x(r ig h t ) (Y e a r - o n - Y e a r % C h a n g e )
Eurozone appears to be bottoming out from the severe recession with its production and major sentiment indexes improving, despite the signs of continued uncertainty of the real economy in the future, such as the increase in unemployment rate and the stagnation in retail sales.
- 3 0 - 2 0 - 1 0 0 1 0 2 0
3 6 9 1 2 3 6 9 1 2 3 6 9 1 2 3 6 9 1 2 3 6 9
2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9
6 0 7 0 8 0 9 0 1 0 0 1 1 0 1 2 0
In du s t ria l P r o d u c t io n (le ft ) E c o n o m ic S e n t im e n t In dic a t o r (r ig h t )
(Y e a r - o n - Ye a r % C h a n g e ) (T r e n d= 1 0 0 )
The Japanese economy shows signs of a gradual improvement in some of its major economic indicators, such as a significant slowdown in the declining trend of exports and leading economic indicators amid a slight fall in the unemployment rate.
Japan's unemployment rate during September registered 5.3%, a marginal fall from the previous month, while the exports decreased on a slower pace to register a -30.7% growth rate.
- 6 0 - 4 5 - 3 0 - 1 5 0 1 5 3 0
3 6 9 1 2 3 6 9 1 2 3 6 9 1 2 3 6 9 1 2 3 6 9
2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9
- 2 5 - 2 0 - 1 5 - 1 0 - 5 0 5 1 0
E x p o r t (le f t ) L e a d in g In d e x (r ig h t )
(Y e a r - o n - Y e a r % C h a n g e )
The Chinese economy is now on a fast track to recovery, registering a 8.9%
growth rate for the third quarter, as the declining trend of exports moderated further from the previous month, and its major domestic indicators such as consumption and investment successfully maintain the upward trends.
0 5 1 0 1 5 2 0 2 5
3 6 9 1 2 3 6 9 1 2 3 6 9 1 2 3 6 9 1 2 3 6 9
2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9
2 0 2 4 2 8 3 2 3 6
In d u s t r ia l P r o d u c t io n (le ft ) F ix e d A s s e t In v e s t m e n t (r ig h t )
(Y e a r - o n - Y e a r % C h a n g e )
The US dollar continues to remain weak, as the uncertainty of global financial markets has been considerably reduced by low interest rates and the implementation of stimulus policies by governments around the world.
The long-term interest rate after October turned to rise owing to the possibility of a large-scale issuance of Treasury bonds, while the instability in the financial markets has been significantly reduced with the continuation of declining short-term interest rate and the major volatility index falling to the post-crisis level.
2 .0 2 .5 3 .0 3 .5 4 .0 4 .5
1 2 3 6 9 1 2 3 6 9
2 00 7 2 00 8 20 09
0 1 2 3 4 5 6
T r e a s u r y B on d(le ft ) U S L ib or (r ig h t) (% , 5 -da y m o vin g a ve r a g e )
0 2 00 4 00 6 00 8 00 1 ,0 00 1 ,2 00
12 3 6 9 1 2 3 6 9
2 0 07 2 00 8 20 0 9
K o re a C h in a R u s s ia
(bp )
The values of euro and other currencies of some developing countries remain strong against the dollar, while stock prices in China soared owing to the improvement in the financial market and to the sharp increase in the demand for risky assets.
- 4 .5
- 1 .0
7 .8 7 .5
1 .2
- 1 .6
0 .0
3 .4
- 1 .6 - 0 .7
- 5 .5 - 2 .3
- 9 - 6 - 3 0 3 6 9 1 2
E u r o J a p a n C h in a R u s s ia T a i w a n K o r e a
S t o c k P r i c e C h a n g e C u r r e n c y R e v a lu a t i o n R a t e
( % )
