Press Release

MINISTRY OF STRATEGY AND FINANCE

www.mosf.go.kr CURRENT ECONOMIC SITUATION,MARCH 2018

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The Korean economy continues to recover as production and consumption rebounded due to a base effect. Investment continued to increase backed by strong exports.

The economy added 334,000 jobs year-on-year in January 2018. Employment picked up more than 300,000 jobs for the first time in four months due to an improvement in manufacturing and

construction. Young adult unemployment rose modestly (up 8.6%→ up 8.7%, y-o-y).

Consumer price inflation in February 2018 rose 0.4 percentage points from the previous month (up 1.0%→ up 1.4%, y-o-y) as vegetable prices increased due to severe cold weather.

Industrial production surged in January (down 0.5%→ up 1.2%, m-o-m). Mining and

manufacturing production rebounded (down 1.7%→ up 1.0%, m-o-m) due to strong automobiles and semiconductors, and service output edged up (down 0.2%→ up 0.8%, m-o-m) as professional, scientific & technical services and transportation services increased.

Retail sales picked up in January (down 2.6%→ up 1.7%, m-o-m) due to a base effect from the previous month when automobile sales dropped and as concerns over fine dust pollution pushed up sales of home electronic appliances, such as air purifiers.

Facility investment rose for the third consecutive month in January (up 6.0%→ up 6.2%, m-o-m) as imports of semiconductor manufacturing equipment increased. Construction investment edged up for the second straight month (up 1.7%→ up 8.2%, m-o-m) due to an increase in the value of construction completed for residential buildings.

In January, the cyclical indicator of the coincident composite index and the cyclical indicator of the leading composite index rose 0.1 points to 99.9 and 100.8, respectively.

Exports rose for the 16^th consecutive month in February (up 22.3%→ up 4.0%, y-o-y) backed by strong major export items amid the recovering global economy, despite less days worked (down 2.5 days) due to the Lunar New Year holiday.

In February, KOSPI fell due to concerns about Fed’s rate hike, and the dollar-won exchange rate rose amid the strong dollar. Government bond yields fluctuated.

Housing prices increased in February (up 0.14%→ up 0.20%, m-o-m) as the prices rose in the Seoul metropolitan area, and Jeonse (lump-sum deposits with no monthly payments) prices fell (down 0.05%

→ down 0.09%, m-o-m) due to increased supplies and seasonal factors.

Embargo: Release Date: March 9, 2018

Contact Information: Park Jeong-sang (044-215-2736/ Economic Analysis Division)

Press Release

MINISTRY OF STRATEGY AND FINANCE

www.mosf.go.kr

The economy is expected to stay on a recovery path backed by improving global economies and strong exports. However, young adult unemployment has been rising and external risks linger, such as trade issues and Fed’s rate hike.

The government will strengthen its risk management, and will work to successfully implement the 2018 economic policies, focusing on job creation and improvement in the real economy amid the current economic recovery.

Key Statistics

Employment

2014 2015 2016 2017 2018

Annual Q3 Q4 Annual Q1 Q2 Q3 Q4 Jan Jan

Number of employed (million)

25.90 26.18 26.41 26.72 26.62 26.73 26.10 26.92 27.00 26.88 25.88 26.21 Employment

rate (%) 60.5 60.5 60.6 61.2 60.9 60.8 59.6 61.3 61.4 61.0 59.1 59.5

(Seasonally

adjusted) 60.5 60.5 60.6 60.6 60.7 60.8 60.9 60.8 60.8 60.9 60.7 61.1

Consumer Price Index

2017 2018

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb y-o-y 1.9 2.2 1.9 2.0 1.9 2.2 2.6 2.1 1.8 1.3 1.5 1.0 1.4 m-o-m 0.3 0.0 -0.1 0.1 -0.1 0.2 0.6 0.1 -0.2 -0.7 0.3 0.4 0.8

Mining and Manufacturing Production

(q-o-q, m-o-m, %)

Mining and Manufacturing² 2016 2017 2018

Annual Annual¹ Q3 Q4¹ Jan Nov Dec¹ Jan¹

Mining (q-o-q, m-o-m) - - 0.8 -0.9 2.7 -1.2 -1.7 1.0

(y-o-y) 2.3 1.9 4.6 -3.8 1.5 -1.1 -4.6 4.6

Manufacturing

Production (q-o-q, m-o-m) - - 0.6 -1.0 2.8 -1.5 -2.2 1.6

(y-o-y) 2.4 1.6 4.6 -4.7 1.8 -1.9 -6.0 4.3

Shipment

-Domestic consumption -Exports

1.1 1.9 0.1

0.7 1.4 -0.3

0.9 0.6 1.3

-0.9 -1.3 -0.3

-0.4 0.0 -0.8

0.0 0.3 -0.3

-3.5 -3.5 -3.7

1.1 1.5 0.5

Inventory³ -1.6 9.7 0.1 3.6 0.6 -0.8 2.0 0.9

Average operation ratio 72.9 72.6 73.0 71.7 74.9 71.7 70.2 70.4 Production capacity

(y-o-y)

2.8 1.1 0.7 0.1 2.4 0.0 -0.1 0.5

1. Preliminary

2. Including mining, manufacturing, electricity and gas industry 3. End-period

MINISTRY OF STRATEGY AND FINANCE

www.mosf.go.kr

Service Output

(q-o-q, m-o-m, %)

2015 2016 2017 2018

Annual Annual Annual¹ Q1 Q2 Q3 Q4¹ Nov¹ Dec¹ Jan¹

Service

activity index ^{2.9 2.6 1.9 0.7 0.5 0.9 0.2 1.4 -0.2 0.8}

1. Preliminary

Retail Sales

(q-o-q, m-o-m, %)

2016 2017 2018

Annual Q3 Q4 Annual¹ Q1 Q2 Q3 Q4¹ Oct Nov¹ Dec¹ Jan¹

Retail

sales ^{3.9 -1.6 1.4 1.9 0.4 1.0 0.2 0.9 -3.2 4.8 -2.6 1.7} (y-o-y) - 3.1 2.2 - 1.6 1.0 3.2 2.1 -0.2 6.5 2.2 1.4

1. Preliminary

Facility Investment Index

(q-o-q, m-o-m, %)

2015 2016 2017 2018

Annual Annual Annual¹ Q1 Q2 Q3 Q4¹ Nov¹ Dec¹ Jan¹

Facility

investment index 6.9 -1.3 14.1 6.0 3.1 0.2 -1.7 2.5 6.0 6.2

y-o-y - - - 18.2 17.8 20.6 2.0 6.7 2.5 22.5

1. Preliminary

Construction Completed

(q-o-q, m-o-m, %)

2015 2016 2017 2018

Annual Annual Annual¹ Q1 Q2 Q3 Q4¹ Nov¹ Dec¹ Jan¹

Construction completed (constant)

5.0 15.4 10.1 4.3 -0.2 -0.3 0.0 -2.4 1.7 8.2

y-o-y - - - 17.7 13.6 12.7 -0.4 0.6 -0.1 15.6

1. Preliminary

Composite Index of Coincident and Leading Indicators

2017 2018

Jun Jul Aug Sep Oct Nov¹ Dec¹ Jan¹ Cyclical indicator of coincident

composite index 100.6 100.5 100.4 100.4 100.2 100.2 99.8 99.9

(m-o-m, %) -0.1 -0.1 -0.1 0.0 -0.2 0.0 -0.4 0.1

Cyclical indicator of leading

composite index 101.0 101.2 101.1 100.9 100.8 100.7 100.7 100.8

(m-o-m, %) 0.2 0.2 -0.1 -0.2 -0.1 -0.1 0.0 0.1

1. Preliminary

MINISTRY OF STRATEGY AND FINANCE

www.mosf.go.kr

Exports and Imports

(US$ billion, y-o-y, %)

2015 2016 2017 2018

Annual Annual Annual Q1 Q2 Q3 Q4 Feb Jan Feb¹

Exports 526.76 495.43 573.69 132.06 147.04 150.51 143.54 43.17 49.22 44.88

(y-o-y) -8.0 -5.9 15.8 14.7 16.7 24.0 8.4 20.2 22.3 4.0

Average daily exports

1.93 1.81 2.13 1.96 2.21 2.13 2.23 1.96 2.05 2.30

Imports 436.50 406.19 478.41 116.43 117.80 120.85 123.40 36.20 45.59 41.57

(y-o-y) -16.9 -6.9 17.8 24.1 18.6 18.0 11.6 24.1 21.1 14.8

Average daily imports

1.60 1.49 1.78 1.72 1.77 1.70 1.91 1.65 1.90 2.13

1. Preliminary