Economic Bulletin

(1)

The Green Book:

Current Economic Trends

Statistical Appendices Economic News Briefing

Korea Grows 2.0% in 2019

Korea to Provide Financial Support Worth Over 100 Trillion Won to Buttress the Economy

Extra Spending Worth 10.9 Trillion Won Passed to Combat COVID 19

Korean FDI, Full Year and Q4 2019 8^th Year of Korea-US FTA: Trade Amounts to US $135.2 Billion in 2019

March 2020

Vol.42 No.3

(2)

Painter Kim Haksu (1919-2009), kept in the National Folk Museum of Korea

Dol Party, the first birthday party of life, was first celebrated in the 18th century when the infant mortality rate was high. As it was believed that those who survived the first year of life were more likely to live until they became old, neighbors celebrated together,

sharing food and wishing the child good health and longevity.

(3)

Statistical Appendices

45 02 The Green Book: Current Economic Trends

Overview 03

01. External economic situation 04

02. Private consumption 09

03. Facility investment 11

04. Construction investment 13

05. Exports and imports 15

06. Mining and manufacturing production 17

07. Service sector activity 19

08. Employment 21

09. Financial markets 25

9.1 Stock market 25

9.2 Exchange rate 26

9.3 Bond market 27

9.4 Money supply and money market 28

10. Balance of payments 30

11. Prices 32

11.1 Consumer prices 32

11.2 International oil and commodity prices 34

12. Real estate market 36

12.1 Housing market 36

12.2 Land market 38

13. Composite indices of business cycle indicators 40

Editor-in-Chief Suh Joong-Hae (KDI) Kim Yoon-Sang (MOEF) Editorial Board Suk Ran (MOEF) Lee Jae-Yeal (KDI) Yu Seong-Im (KDI) Coordinators Kim Dae-Hyun (MOEF) Lee Hyun-Jin (KDI) Editors

Shin Dong-Gyun (MOEF)

Republic of Korea

Economic Bulletin

2020 March

41 Economic News Briefing

Korea grows 2.0% in 2019

Korea to provide financial support worth over 100 trillion won to buttress the economy

Extra spending worth 10.9 trillion won passed to combat COVID 19 Korean FDI, full year and Q4 2019

8^th year of Korea-US FTA: Trade amounts to US $135.2 billion in 2019

(4)

THE GREEN BOOK:

CURRENT ECONOMIC TRENDS

Overview

01 External economic situation 02 Private consumption

03 Facility investment 04 Construction investment 05 Exports and imports

06 Mining and manufacturing production 07 Service sector activity

08 Employment 09 Financial markets 10 Balance of payments 11 Prices

12 Real estate market

13 Composite indices of business cycle indicators

(5)

Service output and construction investment increased in January 2020. Mining and manufacturing slowed, as well as facilities investment and retail sales.

Industrial production rose slightly by 0.1 percent from the previous month in January. Services improved (up 0.4%, m-o-m and up 0.7%, y-o-y), and mining and manufacturing fell (down 1.3%, m-o-m and down 2.4%, y-o-y). Industrial production dropped 0.5 percent year on year.

Retail sales (down 3.1%, m-o-m and up 1.8%, y-o-y) and facilities investment (down 6.6%, m-o-m and down 3.8%, y-o-y) went down from the previous month in January. Construction investment improved (up 3.3%, m-o-m and down 4.8%, y-o-y).

Exports improved in February, going up 4.5 percent year-on-year due to more days worked (3.5 days). Average daily exports, an indicator calculated according to the days worked, fell (US $2.08 billion (Feb 2019) → US $1.83 billion (Feb 2020).

The consumer sentiment index (CSI) dropped 7.3 points in February to 96.9. The business sentiment index (BSI) for the manufacturing sector plummeted, falling 11 points to 65, and the BSI outlook for March went down 8 points to 69.

The cyclical indicator of the coincident composite index in January rose 0.3 points to 100.5, and the cyclical indicator of the leading composite index rose 0.1 points to 100.3.

The economy added 492,000 jobs year-on-year in February backed by the service sector.

The unemployment rate fell 0.6 percentage points from a year ago to 4.1 percent.

Consumer prices rose 1.1 percent year-on-year in February. Fresh food prices and personal service costs grew slowly, and petroleum prices continued to rise. Core inflation rose 0.6 percent.

KOSPI fell in February, Korea treasury yields declining. The won stayed unstable.

Housing prices continued to rise in February (up 0.28% → up 0.34%, m-o-m), and Jeonse (lump-sum deposits with no monthly payments) prices grew at a slower pace (up 0.28% → up 0.21%, m-o-m).

The economy has seen confidence undermined and activities suspended amid the COVID-19 outbreak. Uncertainties have been growing in the real economy, as well as in the financial market.

Uncertainties are growing in the global economy, too. The global economic growth outlook, as well as outlooks for major economies, has been revised down, and volatility has been increasing in commodities markets and financial markets.

The government will continue to work to effectively control the disease and provide support for businesses affected. The government will work to make the 2020 supplementary budget ready for spending as soon as it is passed at the National Assembly. The government will stay vigilant about the impact of the outbreak on the real economy and the macroeconomic situation, and will be prepared for appropriate responses.

Overview

(6)

The US economy has been stable, job markets brisk and retail sales increasing. However, industrial production was affected in January by the Boeing 737 MAX production halt.

Nonfarm payrolls increased by 273,000 in February and the labor force participation rate stayed flat at 63.4 percent. The unemployment rate fell somewhat to 3.5 percent.

Labor force participation rate (%)

63.0 (Jul 2019) → 63.2 (Aug) → 63.2 (Sep) → 63.3 (Oct) → 63.2 (Nov) → 63.2 (Dec) → 63.4 (Jan 2020) → 63.4 (Feb)

Nonfarm payroll increase (m-o-m, thousand)

194 (Jul 2019) → 207(Aug) → 208 (Sep) → 185 (Oct) → 261 (Nov) → 184 (Dec) → 273 (Jan 2020) → 273 (Feb)

Unemployment rate (%)

4.0 (Jan 2019) → 3.8 (Feb) → 3.8 (Mar) → 3.6 (Apr) → 3.6 (May) → 3.7 (Jun) → 3.7 (Jul) → 3.7 (Aug) → 3.5 (Sep) → 3.6 (Oct) → 3.5 (Nov) → 3.5 (Dec) → 3.6 (Jan 2020) → 3.5 (Feb)

Retail sales grew 0.3 percent in January, staying positive backed by the strong job market.

Consumer confidence edged up in February to 130.7.

Conference Board Consumer Confidence Index (1985=100)

Industrial production fell 0.3 percent from the previous month in January amid the Boeing 737 MAX production halt. The ISM Manufacturing index fell in February, but stayed above 50.

ISM Manufacturing Index (base=50)

Existing home sales fell 1.3 percent month-on-month in January to an annual rate of 5,460,000 homes (up 9.6%, y-o-y). New home rose 7.9 percent to an annual rate of 760,000 units (up 18.6%, y-o-y).

Case-Shiller Home Price Index (y-o-y, %)

3.4 (Jan 2019) → 2.8 (Feb) → 2.5 (Mar) → 2.5 (Apr) → 2.3 (May) → 2.1 (Jun) → 2.0 (Jul) → 2.0 (Aug) → 2.1 (Sep) → 2.2 (Oct) → 2.5 (Nov) → 2.9 (Dec)

New home sales (m-o-m, %)

14.2 (Jan 2019) → 3.9 (Feb) →3.6 (Mar) → -5.3 (Apr) → -8.8 (May) → 21.9 (Jun) → -9.5 (Jul) → 7.3 (Aug) → 2.4 (Sep) → -2.5 (Oct) → -2.1 (Nov) → 2.3 (Dec) → 7.9 (Jan 2020)

US

1. External economic situation

(7)

(Percentage change from previous period)

2018 2019 2020

Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Jan Feb

Real GDP¹ 2.9 2.5 3.5 2.9 1.1 2.3 3.1 2.0 2.1 2.1 - -

- Personal consumption

expenditures 3.0 1.7 4.0 3.5 1.4 2.6 1.1 4.6 3.2 1.7 - -

- Nonresidential

fixed investment 6.4 8.8 7.9 2.1 4.8 2.1 4.4 -1.0 -2.3 -2.3 - -

- Residential

fixed investment -1.5 -5.3 -3.7 -4.0 -4.7 -1.5 -1.0 -3.0 4.6 6.2 - -

Industrial production 3.9 0.6 1.1 1.3 1.0 0.8 -0.5 -0.6 0.3 0.0 -0.3 -

Retail sales 4.9 0.9 1.3 0.8 0.4 3.6 0.2 1.8 1.4 0.4 0.3 -

Existing home sales -3.5 -0.8 -1.6 -2.2 -3.3 0.1 1.5 1.9 2.2 0.2 -1.3 -

Unemployment rate² 3.9 4.1 3.9 3.8 3.8 3.7 3.9 3.6 3.6 3.5 3.6 3.5

Consumer prices (y-o-y) 2.4 2.2 2.7 2.6 2.2 1.8 1.6 1.8 1.8 2.0 2.5 2.3 1. Annualized rate (%) 2. Seasonally adjusted Sources: US Department of Commerce, Bloomberg

US GDP growth and industrial production

-6 -4 -2 0 2 4 6

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

(%)

Sources: US Department of Commerce, Federal Reserve Board

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

US nonfarm payroll growth and unemployment rate

0 2 4 6 8 10 12

-1,000 -800 -600 -400 -200 0 200 400 600

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

(thousands) (%)

Sources: US Department of Labor

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

(8)

China’s GDP growth and fixed asset investment

0 10 20 30 40 50

4 6 8 10 12 14

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

(%) (%)

Source: China National Bureau of Statistics

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

China’s economy has been affected by the COVID-19 outbreak as exports and imports both plunged in January and February. The manufacturing PMI fell to the lowest in February.

Exports (y-o-y, %)

9.3 (Jan 2019) → -20.7 (Feb) → 14.0 (Mar) → -2.7 (Apr) → 1.1 (May) → -1.5 (Jun) → 3.4 (Jul) → -1.0 (Aug)

→ -3.2 (Sep) → -0.8 (Oct) → -1.3 (Nov) → 7.9 (Dec) → -17.2 (Jan-Feb, 2020)

Imports (y-o-y, %)

-0.9 (Jan 2019) → -4.4 (Feb) → -7.2 (Mar) → 4.5 (Apr) → -8.2 (May) → -6.8 (Jun) → -4.9 (Jul) → -5.5 (Aug)

→ -8.2 (Sep) → -6.2 (Oct) → 0.8 (Nov) → 16.5 (Dec) → -4.0 (Jan-Feb, 2020)

Manufacturing PMI (base=50)

49.7 (Jul 2019) → 49.5 (Aug) → 49.8 (Sep) → 49.3 (Oct) → 50.2 (Nov) → 50.2 (Dec) → 50.0 (Jan, 2020) → 35.7 (Feb)

China

(Percentage change from same period in previous year)

2018 2019 2020

Real GDP 6.7 6.9 6.9 6.7 6.5 6.1 6.4 6.2 6.0 6.0 -

Industrial production 6.2 6.8 6.6 6.0 5.7 5.7 6.5 5.6 5.0 5.9 -

Fixed asset investment

(accumulated, nominal) 5.9 7.5 6.0 5.4 5.9 5.4 6.3 5.8 5.4 5.4 -

Retail sales (nominal) 9.0 9.8 9.0 9.0 8.3 8.0 8.3 8.5 7.6 7.7 -

Exports 9.9 13.7 11.5 11.7 3.9 0.5 1.4 -1.0 -0.3 1.9 -17.2 (Jan-Feb)

Consumer prices¹ 2.1 2.2 1.8 2.3 2.2 2.9 1.8 2.6 2.9 4.3 5.4 5.2

Producer prices¹ 3.5 3.7 4.1 4.1 2.3 -0.3 0.2 0.5 -0.8 -1.2 0.1 -0.4

1. Quarterly data show an average of monthly data Source: China National Bureau of Statistics

(9)

2018 2019 2020

Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Jan

Real GDP 0.3 -0.5 0.5 -0.8 0.6 0.7 0.5 0.6 0.0 -1.8 -

Industrial production 1.0 -0.9 0.8 -0.7 1.3 -2.8 -2.5 0.7 -0.5 -4.0 0.8

Retail sales (nominal) 1.7 -0.4 0.5 0.9 0.7 0.1 -1.3 0.4 3.2 -6.1 0.6

Exports (y-o-y) 4.1 4.9 7.5 2.9 1.3 -5.6 -3.9 -5.6 -5.0 -7.8 -2.6

Consumer prices (y-o-y) 1.0 1.3 0.6 1.1 0.9 0.5 0.3 0.8 0.3 0.5 0.7

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

Japan’s GDP growth and industrial production

-25 -20 -15 -10 -5 0 5 10 15

-5 -4 -3 -2 -1 0 1 2 3

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

(%) (%)

Sources: Japan's Cabinet Office, Ministry of Economy Trade and Industry, Ministry of Finance, Statistics Bureau of Japan GDP (q-o-q, left) Industrial production (q-o-q, right)

Japan’s industrial production and retail sales have been weak since its October 2019 sales tax hike. The indexes continued to fall in January 2020, though at a slower pace.

Unemployment rate (%)

2.5 (Jan 2019) → 2.4 (Feb) → 2.5 (Mar) → 2.4 (Apr) → 2.4 (May) → 2.3 (Jun) → 2.3 (Jul) → 2.3 (Aug) → 2.4 (Sep) → 2.4 (Oct) → 2.2 (Nov) → 2.2 (Dec) → 2.4 (Jan 2020)

Industrial production (y-o-y, %)

-1.1 (Apr 2019) → -2.1 (May) → -3.8 (Jun) → 0.7 (Jul) → -4.7 (Aug) → 1.3 (Sep) → -7.7 (Oct) → -8.2 (Nov)

→ -3.1 (Dec) → -2.5 (Jan 2020)

Retail sales (y-o-y, %)

0.4 (Apr 2019) →1.3 (May) → 0.5 (Jun) → -2.0 (Jul) → 1.8 (Aug) → 9.1 (Sep) → -7.0 (Oct) → -2.1 (Nov) → -2.6 (Dec) → -0.3 (Jan 2020)

Japan

(10)

Eurozone’s GDP growth and industrial production

-12 -10 -8 -6 -4 -2 0 2 4 6

-4 -3 -2 -1 0 1 2

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

(%) (%)

Source: Eurostat

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

The Eurozone economy has seen employment stable and the manufacturing PMI improving.

However, there are uncertainties with regard to how the COVID-19 will affect the economy.

Unemployment rate (%)

7.8 (Jan 2019) → 7.8 (Feb) → 7.7 (Mar) → 7.6 (Apr) → 7.6 (May) → 7.5 (Jun) → 7.6 (Jul) → 7.5 (Aug) → 7.5 (Sep) → 7.4 (Oct) → 7.4 (Nov) → 7.4 (Dec) → 7.4 (Jan 2020)

Manufacturing PMI (base=50)

46.5 (Jul 2019) → 47.0 (Aug) → 45.7 (Sep) → 45.9 (Oct) → 46.9 (Nov) → 46.3 (Dec) → 47.9 (Jan 2020) → 49.2 (Fed)

Eurozone

(Percentage change from same period in previous year)

2018 2019 2020

Real GDP 1.9 0.3 0.4 0.2 0.4 1.2 0.5 0.1 0.3 0.1 - -

Industrial production 0.7 -1.2 0.2 -0.3 -0.8 -1.6 0.2 -0.8 -0.6 -1.2 2.3 -

Retail sales 1.6 0.0 0.9 -0.1 0.9 2.3 0.7 0.5 0.4 0.2 0.6 -

Exports (y-o-y) 4.1 2.5 4.6 5.1 4.0 2.7 3.7 2.1 3.2 2.1 - -

Consumer prices (y-o-y) 1.8 1.3 1.7 2.1 1.9 1.2 1.4 1.4 1.0 1.0 1.4 1.2 Source: Eurostat, Bloomberg

(11)

2016 2017 2018 2019

Annual Annual Q1 Q2 Q3 Q4 Annual¹ Q1¹ Q2¹ Q3¹ Q4¹Annual¹ Q1¹ Q2¹ Q3¹ Q4¹ Private consumption² 2.6 2.8 0.3 1.3 1.0 0.6 2.8 0.7 0.5 0.4 0.8 1.9 0.1 0.7 0.2 0.9

(y-o-y) - - 2.1 2.7 3.0 3.2 - 3.6 2.9 2.3 2.4 - 1.9 2.0 1.8 1.9

1. Preliminary 2. National accounts Source: The Bank of Korea

Private consumption (preliminary GDP) in the fourth quarter of 2019 rose 0.9 percent from the previous quarter and 1.9 percent compared with a year ago.

Retail sales dropped 3.1 percent from the previous month in January: Sales of durable goods (down 8.5%), semi-durable goods (down 2.2%) and nondurable goods (down 0.7%) all declined. The index increased 1.8 percent year-on-year.

2. Private consumption

2016 2017 2018 2019 2020

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

Retail sales 3.9 1.9 4.3 1.9 0.5 -0.4 0.6 2.4 0.9 0.5 0.3 1.9 0.6 -3.1

(y-o-y) - - - 5.4 5.0 3.9 3.0 - 1.6 2.0 2.2 3.4 4.5 1.8

- Durable goods² 4.6 5.3 5.7 3.9 0.6 -3.0 1.3 1.8 0.8 0.1 0.4 5.1 3.2 -8.5 · Automobiles 2.8 0.9 8.2 8.3 2.5 -5.5 2.5 2.8 -3.4 2.9 4.7 8.0 6.6 -20.1 - Semi-durable goods³ 2.3 -1.1 5.8 1.7 1.2 1.7 1.3 0.6 -1.0 1.0 -1.5 -1.2 -1.2 -2.2 - Nondurable goods⁴ 4.2 1.8 2.9 1.0 0.1 0.1 0.1 3.4 1.7 0.6 1.0 1.6 0.1 -0.7 1. Preliminary

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

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

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

Source: Statistics Korea

2019 2020

Jul Aug Sep Oct Nov Dec Jan Feb

Car sales at home (y-o-y, %) -3.7 -6.8 7.3 -1.1 -0.9 6.6 -15.7 -24.6

Department store sales (y-o-y, %) -3.4 4.5 -5.1 -3.7 3.3 -3.3 -0.3 -30.6 Large discount store sales (y-o-y, %) -10.7 0.4 -7.7 -3.2 2.5 -5.9 7.3 -19.6

Online sales (y-o-y, %) 1.7 9.2 4.3 5.4 2.9 5.1 3.3 27.4

Credit card use at home (y-o-y, %) 3.8 6.3 6.4 4.6 7.6 9.6 5.8 6.5

Consumer sentiment index 95.9 92.4 97.0 98.6 101.0 100.5 104.2 96.9

Number of Chinese tourists (y-o-y, %) 26.6 26.9 24.9 24.2 30.0 26.9 23.8 -76.1¹ 1. An advance estimate based on all Chinese entries, which can be different from the statistic released by the Ministry of Culture,

Sports and Tourism as it excludes diplomatic and military personnel

Sources: Bank of Korea, Credit Finance Association of Korea, Korea Automobile Manufacturers Association, data provided by retail industries

In February, online sales increased, while car sales at home, large discount store sales,

department store sales and the number of Chinese tourists all dropped.

(12)

Private consumption

-6 -4 -2 0 2 4 6 8

2009.Q1 2010.Q1 2011.Q1 2012.Q1 2013.Q1 2014.Q1 2015.Q1 2016.Q1 2017.Q1 2018.Q1 2019.Q1

(%)

Source: Bank of Korea (national accounts)

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

Retail sales by type

-15 -10 -5 0 5 10 15 20 25 30

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1 2020.1

(y-o-y, %)

Source: Statistics Korea (industrial activity trends)

Durable goods Semi-durable goods Nondurable goods

Retail sales

-10 -5 0 5 10 15

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1 2020.1

(%)

Retail sales (y-o-y) Retail sales (m-o-m)

(13)

2017 2018 2019 2020 Annual Annual Q1 Q2 Q3 Q4 Annual¹ Q1 Q2 Q3 Q4¹ Dec¹ Jan¹ Domestic machinery

orders received 18.4 4.8 15.7 1.6 -0.3 2.3 -0.9 -10.0 -1.8 -6.1 15.3 38.7 24.0

(q-o-q, m-o-m) - - 8.7 -5.4 4.6 -5.7 - -4.7 4.4 0.4 13.7 44.9 -14.9

-Public -22.5 9.5 -11.9 19.6 7.6 27.1 -6.7 -39.0 -39.3 -48.4 77.4 149.0 166.5

-Private 23.2 4.4 18.3 0.4 -0.8 0.3 -0.4 -7.9 1.1 -3.1 9.2 20.5 18.3

Machinery imports 18.8 -0.9 21.0 -1.2 -13.1 -8.2 -12.2 -25.5 -13.0 -4.8 -2.4 11.3 -11.8 Capacity utilization rate

(% to potential outcome) 73.5 73.8 73.5 74.1 74.1 73.6 73.3 71.9 72.3 74.6 74.1 75.2 75.8 Facility investment pressure² 1.3 1.4 -1.1 2.4 -0.2 4.7 0.2 -2.8 -0.4 1.3 2.3 6.4 -3.0 1. Preliminary

2. Production growth rate minus production capacity growth rate in the manufacturing sector (%p) Sources: Statistics Korea, Korea International Trade Association

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

2017 2018 2019

Annual Q1 Q2 Q3 Q4 Annual¹ Q1¹ Q2¹ Q3¹ Q4¹ Annual¹ Q1¹ Q2¹ Q3¹ Q4¹ Private consumption² 16.5 4.6 5.1 1.5 -1.2 -2.4 4.3 -8.4 -4.0 3.2 -7.7 -9.1 3.2 0.6 3.3 (y-o-y) - 19.8 19.2 17.4 10.4 - 10.2 -4.3 -9.4 -5.3 - -17.4 -7.0 -2.6 -2.5 - Machinery 23.0 10.4 0.8 4.9 -0.9 -5.0 5.7 -11.1 -7.9 0.1 -11.1 -5.0 -0.4 -2.6 8.8 -Transportation equipment -1.9 -12.9 21.5 -9.2 -2.2 6.7 -0.5 1.6 9.2 12.1 2.8 -19.5 13.9 8.6 -9.2 1. Preliminary 2. National accounts Source: Bank of Korea

2017 2018 2019 2020

Annual Annual Q1 Q2 Q3 Q4 Annual¹ Q1 Q2 Q3 Q4¹ Dec¹ Jan¹ Facility investment index 14.4 -3.6 4.5 -7.5 -5.3 -1.7 -6.2 -5.0 3.2 1.0 4.3 8.0 -6.6

(y-o-y) - - 11.1 -4.9 -12.3 -6.8 - -18.7 -6.7 -1.9 3.8 11.2 -3.8

- Machinery 20.0 -5.1 5.2 -7.6 -7.1 -2.4 -10.6 -5.9 2.8 -2.2 3.6 6.4 -6.0 - Transportation equipment 0.0 1.2 2.3 -6.9 0.2 0.4 6.3 -2.7 4.1 9.6 5.9 11.9 -8.0 1. Preliminary Source: Statistics Korea

Facility investment (preliminary GDP) in the fourth quarter of 2019 rose 3.3 percent quarter-on-quarter and fell 2.5 percent year-on-year.

3. Facility investment

The facility investment index fell 6.6 percent month-on-month in January 2020 as investment in machinery and transportation equipment decreased. The index fell 3.8 percent year-on-year.

Domestic machinery orders received and capacity utilization rates increased in January 2020, but other leading indicators fell, such as machinery imports, facility investment pressure and the BSI outlook in the manufacturing sector.

BSI outlook in the manufacturing sector (base=100, Bank of Korea)

76 (Apr 2019) → 77 (May) → 73 (Jun) → 75 (Jul) → 71 (Aug) → 72 (Sep) → 73 (Oct) → 72 (Nov) → 71 (Dec)

→ 73 (Jan 2020) → 77 (Feb) → 69 (Mar)

(14)

Facility investment

-30 -20 -10 0 10 20 30 40

2009.Q1 2010.Q1 2011.Q1 2012.Q1 2013.Q1 2014.Q1 2015.Q1 2016.Q1 2017.Q1 2018.Q1 2019.Q1

(%)

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

Leading indicators of facility investment

-40 -20 0 20 40 60

2 3 4 5 6 7 8 9 10

2009.Q1 2010.Q1 2011.Q1 2012.Q1 2013.Q1 2014.Q1 2015.Q1 2016.Q1 2017.Q1 2018.Q1 2019.Q1

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

Sources: Statistics Korea (machinery orders), Korea International Trade Association (machinery imports)

Machinery imports (right) Machinery orders (left)

Facility investment by type

-30 -20 -10 0 10 20 30 40

2009.Q1 2010.Q1 2011.Q1 2012.Q1 2013.Q1 2014.Q1 2015.Q1 2016.Q1 2017.Q1 2018.Q1 2019.Q1

(y-o-y, %)

Transportation equipment Machinery

(15)

2017 2018 2019

Annual Q1 Q2 Q3 Q4 Annual¹ Q1¹ Q2¹ Q3¹ Q4¹ Annual¹ Q1¹ Q2¹ Q3¹ Q4¹ Construction investment² 7.3 3.4 1.2 0.1 -1.5 -4.3 0.9 -2.5 -6.0 1.8 -3.1 -0.8 1.4 -6.0 7.0

(y-o-y) - 10.7 9.6 6.9 3.1 - 1.2 -2.5 -8.7 -5.7 - -7.2 -3.5 -3.7 1.1

- Building construction 12.4 3.9 2.1 2.0 -1.5 -3.8 0.2 -2.4 -5.5 0.7 -5.8 -0.7 -0.6 -6.4 4.9 - Civil engineering works -4.7 2.0 -1.0 -5.0 -1.5 -5.7 2.9 -2.8 -7.4 5.1 4.4 -1.2 6.9 -4.9 12.3 1. Preliminary 2. National accounts Source: Bank of Korea

2017 2018 2019 2020

Annual Annual Q1 Q2 Q3 Q4 Annual¹ Q1 Q2 Q3 Q4¹ Dec¹ Jan¹ Construction completed (constant) 11.4 -4.2 1.7 -4.4 -3.0 -4.2 -6.9 1.0 -1.8 -3.5 1.1 6.6 3.3

(y-o-y) - - 2.3 -2.4 -8.6 -7.0 - -10.2 -6.8 -8.2 -2.9 0.9 -4.8

- Building construction 19.4 -2.8 0.8 -3.0 -3.4 -4.2 -9.7 1.1 -4.3 -4.9 -0.2 6.0 3.0 - Civil engineering works -6.7 -8.1 4.3 -8.6 -1.6 -4.3 1.5 0.7 5.7 0.4 4.4 8.0 4.0 1. Preliminary Source: Statistics Korea

2017 2018 2019 2020

Annual Annual Q1 Q2 Q3 Q4 Annual¹ Q1 Q2 Q3 Q4¹ Dec¹ Jan¹ Construction orders

received (current value) -1.7 0.2 19.7 -11.7 -9.7 5.9 6.4 -5.5 -2.0 2.6 21.7 17.7 -6.4

(q-o-q, m-o-m) - - 11.5 -10.7 -6.7 5.9 - 0.7 -2.4 -3.1 28.8 9.5 -17.6

- Building construction -4.7 -5.0 20.4 -9.4 -26.8 1.7 6.8 -5.3 5.5 7.8 15.6 10.0 -3.2 - Civil engineering works 9.6 17.3 18.0 -18.9 61.3 21.7 5.6 -6.1 -10.5 -7.1 40.7 36.4 -15.7 Building permits² -4.0 -6.3 3.7 -7.2 -10.2 -10.4 -10.4 -12.6 -18.3 -12.2 1.9 8.3 -17.3 Apartment presales (thousand)³ 327 297 50 111 66 71 342 53 93 76 120 45 16 1. Preliminary 2. Floor area 3. Number of apartments sold for the period

Sources: Statistics Korea, Ministry of Land, Infrastructure and Transport, Real Estate 114

(Percentage change from same period in previous year, housing units)

Construction investment (preliminary GDP) in the fourth quarter of 2019 rose 7.0 percent quarter-on-quarter and 1.1 percent year-on-year.

4. Construction investment

Construction completed (constant) rose 3.3 percent month-on-month in January 2020 as both building construction and civil engineering works increased. The index fell 4.8 percent year-on-year.

Leading indicators decreased in January 2020, such as construction orders received, apartment presales and building permits. However, government spending on SOC is expected to increase in 2020.

Government SOC budgets (trillion won)

19.0 (2018) → 19.8 (2019) → 23.2 (2020)

(16)

Construction investment

2009.Q1 2010.Q1 2011.Q1 2012.Q1 2013.Q1 2014.Q1 2015.Q1 2016.Q1 2017.Q1 2018.Q1 2019.Q1

-10 -5 0 5 10 15 (%)

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

Construction investment by type

-30 -20 -10 0 10 20 30 40

2009.Q1 2010.Q1 2011.Q1 2012.Q1 2013.Q1 2014.Q1 2015.Q1 2016.Q1 2017.Q1 2018.Q1 2019.Q1

(y-o-y, %)

Building construction Residential buildings Civil engineering works

Leading indicators of construction investment

-100 -50 0 50 100 150 200

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1 2020.1

(y-o-y, %)

Sources: Statistics Korea (construction orders), Ministry of Land, Infrastructure and Transport (building permit area)

Construction orders Building permit area

(17)

(US $ billion)

2017 2018 2019 2020

Annual Annual Annual Q1 Feb Q2 Q3 Q4 Dec Jan Feb¹

Exports 573.69 604.86 542.22 132.65 39.48 138.49 134.73 136.36 45.67 43.26 41.26

(y-o-y, %) 15.8 5.4 -10.4 -8.5 -11.3 -8.7 -12.3 -11.8 -5.3 -6.3 4.5

Average daily exports 2.13 2.24 1.99 2.03 2.08 2.02 1.95 1.96 1.99 2.01 1.83 1. Preliminary Source: Korea Customs Service

(US $ billion)

2017 2018 2019 2020

Imports 478.48 535.20 503.34 123.80 36.65 128.77 124.96 125.81 43.69 42.72 37.15

(y-o-y, %) 17.8 11.9 -6.0 -6.5 -12.2 -3.3 -4.1 -9.7 -0.8 -5.4 1.4

Average daily imports 1.78 1.98 1.85 1.89 1.93 1.88 1.81 1.81 1.90 1.99 1.65 1. Preliminary Source: Korea Customs Service

Exports (preliminary) increased 4.5 percent year-on-year to US $41.26 billion in February.

By item, computers, machinery, semiconductors and vessels rose, while petroleum products, petrochemicals and automobiles fell. By region, shipments to the CIS, Latin America, the US and the ASEAN countries increased, while exports to the Middle East, Japan, the EU and China declined.

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

89.2 (computers), 10.6 (machinery), 9.4 (semiconductors), 8.0 (vessels), -0.9 (petroleum products), -9.7 (petrochemicals) -16.6 (automobiles)

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

12.2 (CIS), 11.3 (Latin America), 9.9 (US), 7.5 (ASEAN countries), -0.1 (Middle East), -0.3 (Japan), -2.0 (EU), -6.6 (China)

Average daily exports, an indicator calculated according to the days worked, fell 11.7 percent year-on-year to US $1.83 billion.

Growth in average daily exports (y-o-y, %)

-6.5 (Q1 2019) → -12.0 (Q2) → -14.2 (Q3) → -11.8 (Q4) -7.3 (Dec 2019) → 4.6 (Jan 2020) → -11.7 (Feb)

5. Exports and imports

Imports (preliminary) in February rose 1.4 percent year-on-year to US $37.15 billion.

Imports of consumer goods and capital goods rose, and commodities imports continued to decline.

Import growth by category (y-o-y, %, Jan

→ Feb)

-8.9 → 3.2 (consumer goods), -6.6 → 11.5 (capital goods), -3.5 → -4.6 (commodities)

(18)

Exports by item

-80 -60 -40 -20 0 20 40 60 80 100 120 140

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1 2020.1

(y-o-y, %)

Sources: Korea Customs Service, Ministry of Trade, Industry and Energy (export and import trends)

Export growth rate Automobiles Semiconductors Steel

Imports by category

-80 -60 -40 -20 0 20 40 60 80 100

2009.1 2010.1 2011.1 2012.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1 2020.1 (y-o-y, %)

Sources: Korea Customs Service, Ministry of Trade, Industry and Energy (export and import trends)

Import growth rate Commodities Capital goods (US $ billion)

2017 2018 2019 2020

Trade balance 95.22 69.66 38.89 8.86 2.83 9.72 9.77 10.54 1.98 0.54 4.12 1. Preliminary Source: Korea Customs Service

The trade balance (preliminary) posted a surplus of US $4.12 billion in February, staying in

the black for the 97

^th

consecutive month. Surpluses increased month-on-month.

(19)

2018 2019 2020

Annual Annual¹ Q4¹ Jan Nov Dec¹ Jan¹

Mining and manufacturing²

(q-o-q, m-o-m) - - 1.2 0.5 0.5 3.7 -1.3

(y-o-y) 1.5 -0.1 2.2 -0.9 1.3 6.2 -2.4

Manufacturing

Production (q-o-q, m-o-m) - - 1.4 0.5 0.4 3.9 -1.2

(y-o-y) 1.3 0.1 2.4 -0.4 1.3 7.0 -2.2

Inventory³ 6.8 -2.8 -2.5 -2.7 0.2 -2.2 4.1

Shipments -0.2 -0.6 -0.5 1.8 -1.4 3.5 -3.5

Capacity utilization rate 73.8 73.3 74.1 73.1 73.0 75.2 75.8

Production capacity (y-o-y) -0.1 -0.1 0.1 0.7 0.5 0.6 0.8

1. Preliminary

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

Mining and manufacturing fell 1.3 percent month-on-month in January: Manufacturing went down, as well as gas and electricity production. Year-on-year, the index declined 2.4 percent.

Compared to the previous month, semiconductors (up 3.3%), rubber and plastics (up 2.9%) and pharmaceuticals (up 3.3%) rose, while mechanical equipment (down 7.1%), broadcasting and communications equipment (down 24.1%), and electronic components (down 4.5%) declined.

Compared to a year ago, semiconductors (up 39.6%), pharmaceuticals (up 6.1%) and furniture (up 1.9%) rose, while automobiles (down 19.9%), electronic components (down 12.9%), and rubber and plastics (down 12.9%) declined.

The manufacturing inventory-shipment ratio rose 8.4 percentage points month-on-month to 114.0 percent as inventories increased 4.1 percent and shipments fell 3.5 percent.

Inventories of semiconductors (up 20.5%), chemical products (up 4.9%), and electrical equipment (up 7.2%) rose, while automobiles (down 1.9%), processed metals (down 1.9%) and beverages (down 8.2%) declined.

Shipments of audiovisual equipment (up 20.1%), automobiles (up 0.6%) and furniture (up 8.8%) rose, while semiconductors (down 6.9%), broadcasting and communications equipment (down 22.9%), and mechanical equipment (down 5.6%) fell.

The average operation ratio of the manufacturing sector improved 0.6 percentage points from the previous month to 75.8 percent.

6. Mining and manufacturing

(20)

Industrial production

-30 -20 -10 0 10 20 30 40 50

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1 2020.1

(%)

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

Shipment and inventory

-6 -4 -2 0 2 4 6 8

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1 2020.1

(m-o-m, %)

Shipment growth Inventory growth

Capacity utilization rate

60 65 70 75 80 85 90

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1 2020.1

(%)

(21)

Weight 2017 2018 2019 2020

Annual Annual Annual¹ Q1 Q2 Q3 Q4¹ Dec¹ Jan¹

Service activity index 100.0 1.9 2.3 1.4 0.3 0.3 0.6 0.6 0.1 0.4

- Wholesale & retail 21.1 0.7 1.7 -0.4 -0.6 -0.3 0.5 -0.2 0.0 -0.8

- Transportation & storage services 9.0 1.6 2.1 0.0 -0.4 -0.3 0.6 -0.7 0.4 -0.5 - Hotels & restaurants 6.2 -1.9 -1.9 -1.0 -0.8 0.4 -1.2 2.0 -0.3 0.5 - Information & communications services 8.0 1.9 2.2 3.5 4.0 0.5 0.3 0.4 -2.1 4.4 - Financial & insurance services 14.1 5.2 5.9 1.7 0.3 0.6 1.4 -0.2 0.5 3.2

- Real estate & renting 3.2 1.2 0.2 0.3 -1.3 -0.9 2.9 4.3 1.6 0.1

- Professional, scientific & technical services 7.1 -1.6 0.9 1.4 -0.9 0.9 0.2 0.4 0.9 1.0

- Business services 4.8 4.3 0.8 2.2 0.0 1.7 -0.5 2.9 2.3 -6.0

- Education services 10.6 0.0 -0.1 -0.5 -0.2 -0.6 0.1 -0.1 0.1 -0.1

- Healthcare & welfare services 9.4 6.5 5.6 8.1 1.8 1.7 2.9 1.7 -0.4 -0.6 - Entertainment & leisure 2.2 0.2 -0.6 1.2 2.6 -1.4 -1.4 3.2 0.3 4.4 - Membership organizations & personal

services 3.2 0.0 0.8 -1.5 -1.0 0.0 -1.3 1.3 0.2 -0.6

- Sewerage & waste management 1.1 0.4 3.1 -0.4 -2.4 0.2 3.3 1.1 0.3 -5.5 1. Preliminary

2019 2020

Jul Aug Sep Oct Nov Dec Jan Feb

Car sales at home (y-o-y, %) -3.7 -6.8 7.3 -1.1 -0.9 6.6 -15.7 -24.6

Department store sales (y-o-y, %) -3.4 4.5 -5.1 -3.7 3.3 -3.3 -0.3 -30.6 Large discount store sales (y-o-y, %) -10.7 0.4 -7.7 -3.2 2.5 -5.9 7.3 -19.6

Online sales (y-o-y, %) 1.7 9.2 4.3 5.4 2.9 5.1 3.3 27.4

Daily stock transactions (trillion won)¹ 8.6 8.7 8.5 9.8 10.3 9.2 11.9 14.2 Number of Chinese tourists (y-o-y, %) 26.6 26.9 24.9 24.2 30.0 26.9 23.8 -76.1² 1. Average

2. An advance estimate based on all Chinese entries, which can be different from the statistic released by the Ministry of Culture, Sports and Tourism as it excludes diplomatic and military personnel

Sources: Korea Automobile Manufacturers Association, Korea Exchange, data provided by retail industries

Service output increased 0.4 percent month-on-month in January. Information &

communications services, financial & insurance services and hotels & restaurants increased, while wholesale & retail and transportation & storage services declined. Compared to a year ago, the index rose 0.7 percent.

7. Service sector activity

In February, online sales and daily stock transactions increased, while department store

sales, large discount store sales and the number of Chinese tourists declined

(22)

Service sector activity

-4 -2 0 2 4 6 8 10

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1

(%)

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

Wholesale & retail

-6 -4 -2 0 2 4 6 8 10

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1 2020.1

(%)

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

January 2020 service output by business

-6 2 4 6 8

0

-2

-4

Wholesale

& retail

Transportation

& storage services

Financial

& insurance services

Business services

Healthcare &

social welfare services

Membership organizations

& personal services Total

index

Hotels

& restaurants Publishing

& communications services

Real estate

& renting

Education services

Entertainment

& leisure Professional,

scientific

& technical services

Sewerage

& waste management (y-o-y, %)

(23)

2018 2019 2020

Annual Q1 Q2 Q3 Q4 Annual Q1 Feb Q2 Q3 Q4 Jan Feb

Number of

employed (million) 26.82 26.28 27.02 27.02 26.97 27.12 26.46 26.35 27.26 27.38 27.39 26.80 26.84 Employment rate (%) 60.7 59.6 61.2 61.1 60.9 60.9 59.6 59.4 61.3 61.5 61.4 60.0 60.0 (Seasonally adjusted) 60.7 60.8 60.7 60.5 60.7 60.9 60.8 60.9 60.8 60.9 61.2 61.6 61.6 - 15 to 64 66.6 66.0 66.9 66.7 66.8 66.8 66.0 65.8 66.9 67.1 67.3 66.7 66.3 Employment growth

(y-o-y, thousand) 97 183 101 17 88 301 177 263 237 366 422 568 492

- Manufacturing -56 45 -91 -91 -88 -81 -143 -151 -64 -76 -41 8 34

- Construction 47 69 16 45 56 -15 -7 -3 -1 -1 -50 5 -10

- Services 51 18 125 6 55 348 240 311 295 391 466 468 382

· Wholesale & retail -72 -74 -50 -87 -77 -60 -52 -60 -39 -68 -83 -94 -106 · Hotels & restaurants -45 -24 -24 -69 -65 61 -5 1 56 95 98 86 14 · Healthcare & social

welfare services 125 51 148 142 159 160 196 237 126 163 155 189 202

- Wage workers 150 228 113 65 192 357 223 296 295 427 482 570 497

· Permanent workers 345 409 335 293 342 444 334 299 347 491 603 664 616 · Temporary workers -141 -124 -109 -162 -170 -56 -123 -43 -53 -33 -14 -32 -13

· Daily workers -54 -57 -113 -67 19 -31 12 40 1 -31 -108 -62 -107

- Nonwage workers -52 -45 -13 -48 -104 -56 -45 -33 -58 -61 -60 -2 -5

· Self-employed workers -44 -24 -3 -55 -93 -32 -39 -46 -26 -30 -34 -11 3

- Male 4 75 -14 -48 1 91 31 72 55 128 149 224 162

- Female 94 109 115 65 87 210 146 191 182 238 273 344 330

- 15 to 29 -3 26 -69 -27 58 41 22 21 30 39 74 65 -49

- 30 to 39 -61 -29 -33 -91 -92 -53 -108 -115 -65 -15 -24 18 19

- 40 to 49 -117 -85 -101 -143 -139 -162 -154 -128 -182 -162 -151 -84 -104

- 50 to 59 44 67 62 26 21 98 81 88 100 121 89 62 57

- 60 and above 234 203 241 252 239 377 336 397 354 383 435 507 570

The number of workers on payroll in February increased by 492,000 from a year ago to 26,840,000, and the employment rate (aged 15-64) rose 0.5 percentage points to 66.3 percent.

By industry, service and manufacturing jobs continued to increase, while construction jobs turned to a decrease.

By employment status, permanent workers rose, and temporary and daily workers fell.

8. Employment

(24)

Employment by industry

0 20 40 60 80 100

6 5 4 3 2 2018.1

3.8 17.6 7.6 71.1

3.8 17.5 7.5 71.2

4.5 17.1 7.5 70.9

5.2 16.6 7.5 70.3

5.5 16.7 7.5 70.0

5.5 16.5 7.5 70.1

7 5.4 16.6 7.5 70.1

8 5.5 16.5 7.5 70.2

9 5.5 16.7 7.6 69.9

10 5.5 16.7 7.7 69.8

11 5.3 16.5 7.8 70.1

12 4.4 16.9 7.8 70.7

2019.1 4.2 16.9 7.5 71.1

2 4.2 16.7 7.4 71.3

2020.1 4.4 16.6 7.4 71.3

2 4.4 16.6 7.3 71.4

3 4.7 16.6 7.4 71.0

4 5.2 16.4 7.4 70.8

5 5.5 16.2 7.5 70.5

7.5

6 5.5 16.1 70.5

7 5.6 16.0 7.5 70.6

8 5.6 16.1 7.4 70.5

5.7 9 16.1 7.4 70.6

10 5.6 16.1 7.4 70.5

11 5.3 16.2 7.4 70.7

12 4.5 16.5 7.5 71.2 (%)

Source: Statistics Korea (employment trends)

Agriculture, forestry & fisheries Manufacturing

Construction Services

Employment by status of workers

0 20 40 60 80 100

6 5 4 3 2

2018.1 7 8 9 10 11 12 2019.1 2 3 4 5 6 7 8 9 10 11 12 2020.1 2

52.0 21.1 3.7

52.4 21.2 3.7

51.5 21.2 3.9

50.9 21.2 4.2

50.8 21.1 4.3

50.8 21.0 4.4

50.7 21.1 4.3

51.3 21.1 4.4

51.2 21.0 4.3

51.2 20.9 4.2

51.1 20.7 4.2

52.3 20.6 3.7

53.1 20.9 3.6

53.1 20.8 3.7

52.6 20.9 3.8

51.8 20.9 4.0

51.5 20.8 4.2

51.7 20.8 4.2

51.8 20.7 4.2

52.2 20.7 4.2

52.5 20.6 4.2

52.5 20.5 4.1

52.7 20.3 3.9

53.7 20.2 3.6

54.4 20.4 3.6

54.4 17.8 17.5 18.1 18.3 18.4 18.4 18.5 18.1 18.0 18.1 18.2 17.5 17.0 17.2 17.5 18.0 18.1 17.9 18.0 17.8 17.7 17.8 17.8 17.3 16.5 16.8 5.4 5.2 5.3 5.4 5.4 5.4 5.4 5.2 5.5 5.6 5.8 5.8 5.4 5.3 5.2 5.3 5.4 5.4 5.3 5.2 5.0 5.2 5.3 5.2 5.1 4.8 20.4 3.6 (%)

Temporary workers Regular workers Daily workers

Self-employed workers Unpaid

Number of persons employed and employment growth

21 22 23 24 25 26 27 28

-400 -200 0 200 400 600 800 1,000

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1 2020.1

(thousands)

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

(25)

2018 2019 2020

Number of unemployed

(thousand) 1,073 1,181 1,105 1,065 942 1,063 1,241 1,303 1,176 946 891 1,153 1,153 Unemployment growth

(y-o-y, thousand) 50 19 31 102 50 -10 61 38 71 -119 -51 -71 -150

- Male 23 13 15 42 24 -3 38 36 53 -66 -39 -67 -76

- Female 27 6 17 60 25 -6 22 2 18 -53 -12 -4 -74

Unemployment rate (%) 3.8 4.3 3.9 3.8 3.4 3.8 4.5 4.7 4.1 3.3 3.1 4.1 4.1 (Seasonally adjusted) 3.8 3.8 3.8 4.0 3.9 3.8 3.9 3.7 4.0 3.5 3.6 4.0 3.3

- 15 to 29 9.5 10.0 10.1 9.4 8.3 8.9 9.7 9.5 10.6 8.1 7.1 7.7 9.0

- 30 to 39 3.4 3.3 3.6 3.6 3.0 3.3 3.4 3.5 3.8 3.2 2.9 2.9 3.3

- 40 to 49 2.5 2.5 2.5 2.6 2.3 2.3 2.6 2.8 2.4 2.1 2.0 2.0 2.4

- 50 to 59 2.5 2.5 2.6 2.6 2.3 2.5 3.0 3.2 2.6 2.3 2.2 2.8 2.9

- 60 and above 3.1 5.4 2.5 2.3 2.4 3.4 5.7 6.8 3.1 2.3 2.8 7.1 4.8

2018 2019 2020

Economically inactive

population (million) 16.29 16.62 16.02 16.13 16.38 16.32 16.67 16.73 16.03 16.22 16.35 16.71 16.71 Labor force

participation rate (%) 63.1 62.3 63.7 63.5 63.0 63.3 62.4 62.3 63.9 63.6 63.4 62.6 62.6 (Seasonally adjusted) 63.1 63.2 63.1 63.1 63.2 63.3 63.3 63.2 63.3 63.2 63.5 64.1 63.6 Growth in economically

inactive population (y-o-y, thousand)

104 68 110 126 112 31 44 -11 18 90 -29 -151 -26

- Childcare -76 -80 -87 -86 -50 -15 -26 -12 -11 -1 -24 8 -24

- Housework 76 52 85 94 75 -137 -88 -143 -143 -150 -169 -225 -87

- Education -106 -58 -62 -128 -176 -127 -141 -135 -146 -92 -131 -132 -149

- Old age 15 35 6 16 4 3 28 25 -4 -3 -11 -35 -18

- Rest 118 107 127 137 103 238 152 139 224 299 277 195 191

- Job seeking 24 15 17 2 64 54 107 120 52 41 19 -24 -22

The number of unemployed persons in February fell 150,000 year-on-year to 1,153,000, and the unemployment rate declined 0.6 percentage points to 4.1 percent.

The unemployment rate fell in all age groups from a year ago.

The economically inactive population in February decreased 26,000 from a year earlier to 16,708,000, and the labor force participation rate rose 0.3 percentage points to 62.6 percent.

The number of persons economically inactive due to rest (up 191,000) increased, and those

due to education (down 149,000) and housework (down 87,000) decreased. Job seekers

went down by 22,000.

(26)

Employment rate

55 56 57 58 59 60 61 62 63

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1 2020.1

(%)

Seasonally adjusted rate Original data

Unemployment rate

2 3 4 5 6

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1 2020.1

(%)

Labor force participation rate

59 60 61 62 63 64 65

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1 2020.1

(%)

(27)

Stock prices

300 600 900 1,200 1,500 1,800 2,100 2,400 2,700

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1 2020.1

(monthly average, points)

Source: Korea Exchange

KOSPI KOSDAQ

Jan 2020 Feb 2020 Change¹ Jan 2020 Feb 2020 Change¹ Stock price index (points) 2,119.0 1,987.0 -132.0 (-6.2%) 642.5 610.7 -31.8 (-4.9%) Market capitalization (trillion won) 1,427.0 1,337.7 -89.3 (-6.3%) 232.5 222.0 -10.5 (-4.5%)

Daily trade (trillion won) 6.4 7.6 1.2 (18.8%) 5.4 6.6 1.2 (-22.2%)

Foreign stock ownership (%, %p) 38.95 38.93 -0.02 (-0.1%) 10.57 10.53 -0.04 (-0.4%) 1. Change from the end of the previous month as of end-February 2020 Source: Korea Exchange

(Closing rate)

9.1 Stock market

In February KOSPI and KOSDAQ fell 6.2 percent and 4.9 percent, respectively, from the previous month due to foreign investors’ massive selloff amid the spread of COVID-19.

9. Financial markets

2014 2015 2016 2017 2018 2019 2020

Dec Dec Dec Dec Dec Dec Jan Feb Change²

Dollar-Won 1,099.3 1,172.5 1,207.7 1,070.5 1,115.7 1,156.4 1,191.8 1,213.7 -1.8 100 Yen-Won 913.0 974.1 1,035.4 949.3 1,008.9 1,059.8 1,093.1 1,114.8 -2.0 1. The exchange rate is based on the closing price at 3:30 p.m., local time.

2. Appreciation from the end of the previous month as of February 2020 (%) Source: Bank of Korea

(Closing rate¹)

9.2 Exchange rate

The dollar-won exchange rate rose to 1,213.7 won in February as the spread of COVID-19 dampened risk appetite.

The 100 yen-won exchange rate rose to 1,114.8 won due to a strong yen.

(28)

Foreign exchange rates

800 1,000 900 1,200 1,100 1,400 1,300 1,600 1,500

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1 2020.1

(month-end, ₩)

Source: Bank of Korea

Dollar-Won 100 Yen-Won

Interest rates

0 1 2 3 4 5 6 7 8

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1 2020.1

(monthly average, yearly, %)

Overnight call rate (daily) 3-yr Treasury bond yield 3-yr corporate bond yield

9.3 Bond market

Korea treasury yields fell in February as investors turned to the safety of sovereign debt amid fears over the spread of COVID-19, as well as on expectations of interest rate cuts in major countries.

Yield to maturity (m-o-m, basis points)

-20 (3 yrs), -20 (5 yrs), -23 (10 yrs), -13 (20 yrs), -10 (30 yrs)

2013 2014 2015 2016 2017 2018 2019 2020

Dec Dec Dec Dec Dec Dec Dec Jan Feb Change¹

Call rate (1 day) 2.52 2.03 1.52 1.27 1.58 1.89 1.39 1.25 1.26 1

CD (91 days) 2.66 2.13 1.67 1.52 1.66 1.93 1.53 1.42 1.41 -1

Treasury bonds (3 yrs) 2.86 2.10 1.66 1.64 2.14 1.82 1.36 1.30 1.10 -20 Corporate bonds (3 yrs) 3.29 2.43 2.11 2.13 2.68 2.29 1.94 1.90 1.71 -19 Treasury bonds (5 yrs) 3.23 2.28 1.81 1.80 2.34 1.88 1.48 1.38 1.18 -20 1. Basis points, change from the previous month as of end-February 2020 Source: Bank of Korea

(Closing rate, %)

(29)

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

2012 2013 2014 2015 2016 2017 2018 2019 2020

Annual Annual Annual Annual Annual Annual Annual Annual Oct Nov Dec Jan¹ Jan²

M1³ 3.8 9.5 10.9 18.6 15.4 9.2 4.9 4.3 5.3 7.0 9.6 11.5 945.1

M2 5.2 4.8 6.6 8.6 7.3 5.5 6.3 7.0 7.5 7.7 7.9 7.8 2,929.0

Lf⁴ 7.8 6.9 7.0 9.7 8.1 6.7 7.0 7.9 8.3 8.4 8.2 8.2 4,152.2

1. Preliminary

2. Balance at end-January 2020, trillion won

3. M1 excludes corporate MMFs and individual MMFs, and includes CMAs 4. Liquidity aggregates of financial institutions (mostly identical with M3) Source: Bank of Korea

9.4 Money supply and money market

M2 (monthly average) in January rose 7.8 percent from a year ago, continuing to expand since September 2017.

Bank deposits surged in February (down 15.1 trillion won → up 35.9 trillion won): Time deposits increased somewhat (up 1.5 trillion won → up 0.3 trillion won). Instant access deposits jumped (down 17.4 trillion won → up 38.6 trillion won) due to the inflows of corporate funds into their settlement accounts and local government surpluses into their easy access accounts.

Asset management company (AMC) deposits continued to increase (up 22.9 trillion won → up 16.9 trillion won). MMFs continued to increase (up 23.5 trillion won → up 15.2 trillion won).

Bond funds increased (up 1.0 trillion won → up 2.2 trillion won) with market interest rates falling, and stock funds continued to decline (down 2.8 trillion won → down 3.7 trillion won).

(Change from the end of the previous period, trillion won)

2012 2013 2014 2015 2016 2017 2018 2019 2020

Annual Annual Annual Annual Annual Annual Annual Annual Oct Nov Dec Jan Feb Feb¹ Bank deposits 37.0 41.0 115.4 100.3 80.8 79.5 91.6 106.3 4.8 30.3 -0.2 -15.1 35.9 1,770.1 AMC deposits 18.8 17.7 42.4 44.4 47.6 27.9 53.8 98.6 17.2 9.6 -8.1 22.9 16.7 689.3 1. Balance at end-February 2020 Source: Bank of Korea

(30)

Deposits in financial institutions

-20 -10 0 10 20 30 40 50 60

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1

(m-o-m, end of month balance, trillion won)

Total money supply

0 5 10 15 20 25 30 35

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1

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

Reserve money M1 Lf

(31)

(US $ billion)

2018 2019 2020

Annual Q3 Q4 Annual¹ Q1¹ Jan¹ Q2¹ Q3¹ Q4¹ Dec¹ Jan¹

Current account 77.47 28.69 19.52 59.97 12.19 3.30 10.45 19.20 18.13 4.33 1.01 - Goods balance 110.09 34.72 24.66 76.86 19.52 5.75 17.38 19.51 20.45 5.03 1.93 - Services balance -29.37 -7.44 -6.10 -23.02 -7.18 -3.53 -4.36 -5.37 -6.12 -2.50 -2.48 - Primary income

balance 4.90 3.18 2.64 12.20 1.52 1.68 -0.82 6.03 5.47 2.68 1.69

- Secondary

income balance -8.15 -1.77 -1.67 -6.06 -1.67 -0.60 -1.75 -0.97 -1.67 -0.87 -0.13 1. Preliminary Source: Bank of Korea

Korea’s current account (preliminary) posted a surplus of US $1.01 billion in January.

Goods account surpluses decreased compared to a year ago from US $5.75 billion to US

$1.93 billion.

Growth in goods exports (US $ billion, Jan 2019 → Jan 2020)

49.53 → 43.44 (-12.3%)

Growth in goods imports (US $ billion, Jan 2019 → Jan 2020)

43.78 → 41.52 (-5.2%)

Export growth by item in January (y-o-y, %, customs clearance basis)

59.0 (vessels), -3.4 (semiconductors), -3.8 (petroleum products), -17.1 (petrochemicals), -22.2 (automobiles)

Import growth by category in January (y-o-y, %, customs clearance basis)

-8.9 (consumer goods), -3.5 (commodities), -6.6 (capital goods)

Services account deficits decreased year-on-year from US $3.53 billion to US $2.48 billion.

Services balance (US $ billion, Jan 2019 → Jan 2020)

-1.53 → -1.33 (travel), -0.31 → -0.13 (transportation), 0.94 → 0.75 (construction), -0.49 → -0.29 (intellectual property rights), -0.83 → -0.55 (manufacturing), -1.21 → -1.00 (others)

Surpluses increased in the primary income account from US $1.68 billion to US $1.69 billion year-on-year. Deficits in the secondary income account decreased from US $0.60 billion to US $0.13 billion.

10. Balance of payments

The capital and financial account in January (preliminary) posted an outflow of US $2.55 billion.

**Net flows in capital & financial account* (US $ billion)**

9.88 (Sep 2018) → 10.66 (Oct) → 3.41 (Nov) → 6.66 (Dec) → 2.74 (Jan 2019) → 6.07 (Sep) → 10.24 (Oct)

→5.34 (Nov) → 5.71 (Dec) → 2.55 (Jan 2020)

* Positive figures represent net outflows, and negative figures represent net inflows.

(32)

Net outflows in foreign direct investment (FDI) increased from a year earlier (US $1.57 billion

→ US $1.94 billion): Inbound FDI (US $1.59 billion inflows → US $ 0.55 billion inflows) declined faster than Korean FDI (US $3.15 billion outflows → US $2.49 billion outflows).

Net outflows in portfolio investment decreased from a year earlier (US $5.01 billion → US

$0.42 billion): Foreign investment in Korean shares (US $1.06 billion inflows → US $5.92 billion inflows) increased faster than Korean investment in foreign shares (US $6.08 billion outflows → US $6.34 billion outflows).

Financial derivatives investment posted net outflows (US $0.16 billion inflows a year ago

→ US $0.34 billion outflows). Net inflows in other investment decreased (US $3.84 billion a year ago → US $1.61 billion).

Current account surpluses are expected to increase month-on-month in February given a rise in trade surpluses (US $0.5 billion → US $4.1 billion).

Current account balance

-6 -3 0 3 6 9 12 15 18

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1

(US $ billion)

Source: Bank of Korea (balance of payments trends)

Current account Goods account Services account

Capital & financial account balance

-12 -9 -6 -3 0 3 6 9 12 15

2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 2019.1 2020.1

(US $ billion)

Source: Bank of Korea (balance of payments trends)

Capital & financial account Portfolio investment Direct investment Financial derivatives