PRESS RELEASE December 11, 2009
Research Department
E conomic O utlook for 2010 . Future Economic Prospects
Ⅰ
< Basic Assumptions of Economic Forecasts >
2009p) 2010e) 2011e) Global economic growth(%)
￭ -0.9 3.3 3.9
United States -2.5 2.0 2.6
Japan -5.3 1.6 1.8
Eurozone -3.9 0.7 1.5
China 8.5 9.3 8.7
Global trade growth (%)
￭ -10.0 4.2 5.3
Oil import unit price
￭
(US dollars per barrel)1) 61 83 90
Increase in
￭
other raw material price (%) -17.0 17.0 7.0
Note : 1) Proportion of oil imports : 80% from the Middle East, 20% from other regions (Period-average of CIF basis)
1. Economic growth
□ The GDP growth rate for 2010 is expected to register 4.6%.
ㅇ Growth momentum is predicted to strengthen gradually, showing 0.7% in the first half and 1.1% in the second half in period-on-period terms.
― In year-on-year terms, GDP growth is anticipated to reach 5.9% in the first half and 3.4% in the second half.
□ The GDP growth rate for 2011 is expected to rise to 4.8%
in line with the faster growth of the global economy.
Prospects for Economic Growth
(Period-on-period, %)
2009 2010e) 2011e)
1Q 2Q 3Q 4Qe) Yeare) 1st half
2nd
half Year Year GDP growth 0.1
(-4.2) 2.6 (-2.2)
3.2 (0.9)
0.3
(6.2) 0.2 0.7 (5.9)
1.1
(3.4) 4.6 4.8 Private
consumption 0.4 (-4.4)
3.6 (-0.8)
1.5 (0.8)
0.2
(5.9) 0.3 0.6 (4.3)
1.0
(2.9) 3.6 3.9 Construction
investment
5.2 (1.6)
1.7 (3.7)
-2.0 (2.7)
0.1
(4.0) 3.1 2.1 (2.2)
-0.6
(2.7) 2.5 2.6 Facilities
investment
-11.2 (-23.5)
10.1 (-15.9)
10.4 (-7.4)
2.3
(10.2) -9.6 0.7 (18.9)
1.9
(5.2) 11.4 8.3 Goods
exports
-3.4 (-14.1)
14.7 (-4.2)
5.2 (1.8)
0.3
(16.9) -0.1 1.0 (13.5)
3.0
(5.7) 9.3 10.6 Goods
imports
-6.2 (-17.4)
7.4 (-14.3)
8.6 (-7.9)
2.4
(11.8) -7.3 2.5 (17.3)
2.8
(9.3) 13.0 7.8 Notes : 1) Figures in parentheses represent year-on-year rates of increase
in the original series (%).
2) Figures of the 1st and the 2nd halves are the simple averages of the respective quarterly growth rates after seasonal adjustment.
Growth on the demand side is as follows:
□
① Private consumption : 0.3% in 2009 → 3.6% in 2010
ㅇ Private consumption is forecast to stage a sustained recovery thanks to the improvement in income conditions and brighter consumer sentiment.
(Period-on-period growth : 0.6% in the 1st half → 1.0% in the 2nd half)
② Facilities investment : △9.6% in 2009 → 11.4% in 2010 ㅇ Facilities investment is anticipated to experience rapid
growth led by rising global demand, improvements in the profitability of firms and a positive base-period effect.
(Period-on-period growth : 0.7% in the 1st half → 1.9% in the 2nd half)
③ Construction investment : 3.1% in 2009 → 2.5% in 2010 ㅇ Construction investment is forecast to show sustained
growth, centering around construction of residential buildings.
(Period-on-period growth : 2.1% in the 1st half → △0.6% in the 2nd half)
④ Goods exports (in volume terms) : △0.1% in 2009 → 9.3%
in 2010
ㅇ Goods exports are expected to mark a solidly-based growth thanks to a more favorable global trading environment.
(Period-on-period growth : 1.0% in the 1st half → 3.0% in the 2nd half)
2. Employment
The number of persons in employment is expected to
□
show an increase of about 170,000 in 2010.
The unemployment rate is anticipated to fall to 3.5% in ㅇ
2010 from this year's 3.7%.
□ For 2011, the increase in the number of persons in employment is expected to reach about 230,000 with the effect of economic growth spreading to weaker sectors, such as small- and medium-sized enterprises (SMEs).
The unemployment rate is forecast to register 3.4%.
ㅇ
Prospects for Employment
(Year-on-year, ten thousand, %)
2009 2010e) 2011e)
1Q 2Q 3Q 4Qe) Yeare) 1st half
2nd
half Year Year
Changes in the number of
persons employed
-15 (-0.6)
-13 (-0.6)
-0.1 (-0.0)
-1 (-0.1)
-7 (-0.3)
19 (0.8)
14 (0.6)
17 (0.7)
23 (1.0)
Unemployment rate
(original series) 3.8 3.8 3.6 3.4 3.7 3.6 3.5 3.5 3.4
( S. A. ) 3.5 3.9 3.7 3.5 - 3.5 3.5 - -
Note : 1) Figures in parentheses represent the rate of increase in the number of persons employed (%).
3. Prices
□ Consumer price inflation (annual average basis) is expected to be running at around 2.8% in 2010, similar to that of this year.
ㅇ It is anticipated to register 2.7% in the first half of 2010 and 2.9% in the second half, reflecting the gradually accentuated economic recovery and a progressive rise in global prices of raw materials.
□ Core inflation is expected to stand at around 2.5%, below consumer price inflation.
□ For 2011, consumer price inflation is forecast to rise to 3.2% with upward pressures increasing on the demand side following economic recovery.
Price Outlook
(year-on-year, %)
2009 2010e) 2011e)
1Q 2Q 3Q 4Qe) Yeare) 1st half
2nd
half Year Year Consumer
price
inflation 3.9 2.8 2.0 2.3 2.8 2.7 2.9 2.8 3.2
(1.5) (0.2) (0.8) (0.2) (2.7) (1.7) (1.3) (3.0) (3.1)
Core inflation 4.9 3.9 3.0 2.4 3.6 2.5 2.6 2.5 2.9
(1.0) (0.4) (0.4) (0.4) (2.3) (1.7) (0.8) (2.6) (2.8) Notes : 1) Figures in parentheses represent rates of increase compared to the
last month of the relevant previous period (%).
4. Current account
□ The current account surplus is likely to narrow to around 17 billion dollars in 2010 (around 43 billion dollars during 2009).
ㅇ As imports outpace exports, the goods account surplus will narrow (54.4 billion dollars in 2009 → 35.0 billion dollars in 2010) and also the deficits on the services, income and current transfers accounts will widen ( 11.4 billion dollars△ in 2009 → △18.0 billion dollars in 2010).
□ The current account surplus is expected to register around 9.0 billion dollars in 2011.
Current Account Prospects
(100 million dollars)
2009 2010e) 2011e)
1Q 2Q 3Q 4Qe) Yeare) 1st half 2nd half Year Year
Current account 86 132 103 109 430 73 97 170 90
Goods account 84 176 147 137 544 176 174 350 307
Exports(custom s clearance basis)
744 907 950 1,024 3,625 1,979 2,141 4,120 4,525 (-25.2) (-20.8) (-17.4) (10.0) (-14.1) (19.9) (8.5) (13.7) (9.8) Im ports(custom s
clearan ce basis)
714 737 848 921 3,220 1,877 2,048 3,925 4,390 (-32.7) (-35.8) (-31.0) (0.6) (-26.0) (29.3) (15.8) (21.9) (11.8) ServicesIncome․ ․
Current transfers account 2 -44 -44 -28 -114 -103 -77 -180 -217 Services account -19 -40 -53 -37 -149 -94 -110 -204 -245
(Travel account) 5 -11 -21 -8 -35 -33 -41 -74 -102
Note : 1) Figures in parentheses represent year-on-year changes(%).
. Assessment of the Economic Situation
Ⅱ
□ The annual rate of growth of the Korean economy is expected to rise from 0.2% in 2009 to 4.6% in 2010 and 4.8% in 2011, as its growth momentum is boosted by global economic recovery and improved consumer and investor sentiment.
ㅇ With policy effects declining, the private sector is anticipated to lead the growth.
ㅇ The growth momentum leaving out the carry-over effect* from the calculation of economic growth rate, is expected to register 2.2% in 2010 and 3.3% in 2011.
* Growth rate on the assumption that the level of GDP of the fourth quarter of the year will be maintained in each quarter of the following year.
Contribution to Growth by Sector Growth decomposition
Note : 1) Government contribution includes government spending and SOC investment.
□ Although employment conditions are expected to improve gradually with the expansion of economic growth, the rate of increase in the number of persons employed is unlikely to attain its pre-crisis level as the liquidation of small businesses act as a structural factor worsening employment conditions.
2006 2007 2010 2011
￭ Changes in the number of persons employed
(ten thousand)
29.5 28.2 17 23
□ Upward pressures on consumer price inflation are anticipated to rise gradually beginning in the second half of 2010 due to cost factors including a run-up in global oil prices and demand factors following on from economic recovery.
□ The current account is forecast to remain in surplus, but the surplus will narrow significantly, led downward by that on the goods account.
CPI Inflation and the Current Account
There is a considerable degree of uncertainty over the
□
forecasting path.
ㅇ High unemployment rates and dwindling bank lending in major countries may delay the recovery of consumption and investment.
― There remain factors at work that hinder the stability of global financial markets, including losses from U.S.
commercial real-estate lending and downward adjustments in the sovereign credit ratings of heavily indebted countries.
ㅇ Raw material prices, including global oil prices, may show a sharp rise if the recovery in demand is coupled with interruptions in supply and the inflow of investment funds into commodities markets.
ㅇ Fluctuations in the exchange rate of the Korean won against the US dollar may be heightened in the event of surges in foreign portfolio investment in/outflows under the impact of the dollar-carry trade.
