Economic Bulletin (Vol. 35 No. 7)

8/22/2019 Economic Bulletin (Vol. 35 No. 7)

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ECONOMIC

BULLETIN

Republic of Korea

July 2013Vol.35 No.7

ISSN 2287-7266

| Economic Inormation and Education Center

The Green Book:Current Economic Trends

Featured IssuePursuing Realistic Visions or the Financial Industry

(Interview with FSC Chairman Shin Je-Yoon)

Policy IssuesEconomic Policy Directions for the Second Half of 2013

Economic News BriefngKONEX Begins Trading on July 1

Korea-China Currency Swap to be Extended

Government to Boost Surveillance on Illegal Forex Transactions

Korea-EU FTA Tarifs Further Cut

Statistical Appendices

03

47

51

58

61


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Economic BulletinRepublic o Korea

July 2013Vol.35 No.7

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 manuacturing 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 o 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 o business cycle indicators

Featured IssuePursuing realistic visions or the fnancial industry

(Interview with FSC chairman Shin Je-Yoon)

Policy IssuesEconomic policy directions or the second hal o 2013

Economic News Briefng

Statistical Appendices

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

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

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

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

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

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

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

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

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

................................................................................................ 32

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

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

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

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

........................................... 51

.......................................................................... 58

................................................................................ 61

Contents


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3The Green Book |

Te Green BookCurrent Economic Trends

Te Korean economy has seen some economic indicators improve, including service outputand acility investment, while ination has remained stable. However, mining & manuacturingproduction, consumption and construction investment ell, and employment grew at a slower pace.

Real economic indicators excluding mining & manuacturing production, such as industrialproduction, service output, consumption and construction investment, moderately improved inthe second quarter until May, compared with the rst quarter, taking temporary actors in thepublic sector into account.

In May, the economy added 265,000 jobs year-on-year, down rom 345,000 in the previous month.

Consumer price ination stayed stable at 1.0 percent in June, as avorable weather conditions andlow international oil prices contributed to a continuous all in agricultural and petroleum productprices.

Mining and manuacturing production ell by 0.4 percent month-on-month in May, led by a dropin other transportation equipment, while service output increased by 0.2 percent, backed by animprovement in real estate & renting.

Despite strong semi-durable goods sales, retail sales ell 0.2 percent month-on-month in May, asdurable and nondurable goods sales went down.

Facility investment in May rose 1.2 percent rom the previous month due to strong machineryinvestment, while construction investment dropped by 4.3 percent as both building constructionand civil engineering works ell.

Exports declined by 0.9 percent year-on-year in June despite strong exports o vessels and I-related items such as mobile phones, due to ewer days worked and decreased shipments to Japan.Te trade balance remained in the black at US$5.52 billion.

Te cyclical indicator o the coincident composite index decreased 0.2 points month-on-month inMay, and the leading composite index rose 0.3 points.

In June, stock prices ell and the won weakened, due to the outow o oreign capital rom thestock market, which resulted rom worries regarding the early tapering o quantitative easing inthe US, and the strong dollar.

Apartment prices rose moderately by 0.1 percent in June rom the previous month, when the

prices registered a 0.3 percent increase, while the upward trend in rental prices slowed down rom0.4 percent to 0.3 percent.

Overview


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4 | The Green Book

Te global economy is expected to continue to steadily recover, led by the US,but the eurozone is still mired in recession and there is a possibility that Chineseeconomic growth will slow down owing to a change in its policy ocus to thequality o growth*.

* Rather than implementing short-term economic stimulus measures, China is currently ocusedon laying the oundation or sustainable growth through policy reorms, including stabilizingthe social saety net and investing in inrastructure to support urbanization (announced by theNational Peoples Congress in March, 2013).

Numerous potential risk actors remain, including political instability in Egyptand Portugal* and nancial market anxiety owing to recent talks o taperingquantitative easing in the US**.

* ensions are rising in the eurozone due to opposition within Portugal to urther austerity,and there are ears that oil prices will rise owing to the recent political upheaval in Egypt (themilitary overthrew the Morsi administration earlier in the month).

** Some investment banks, such as Goldman Sachs, predict that the US Federal Reserve willbegin tapering quantitative easing in September owing to avorable employment indicators.

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

Te Korean economy is expected to gradually recover in line with an improvement in globaleconomic situations and as policies have started to positively aect the economy. However, therestill remain downside risks that may arise rom the early tapering o quantitative easing in the USand the struggling eurozone economy.

Te Korean government will closely watch the global and domestic economic situations andreinorce 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 incomeclasses through job creation and by stabilizing the prices o necessities, while continuing to adoptpolicies to improve the health o the economy.


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5The Green Book |

US economic growth in the rst quarter o 2013 (nalized, annualized q-o-q) wassharply revised downward rom the previously reported 2.4 percent (revised) to 1.8percent, but recovery momentum in the US continues led by consumption and thehousing market.

Factors that contribute to GDP, including private sector spending, corporate

investment and exports, were all revised downward, but the housing marketcontinued to be a bright spot or the US economy as housing investment wasrevised upwards.

Contribution to growth rate(revised[ nalized, %p)2.40[1.83 (private consumption), 0.23[0.04 (corporate investment), 0.30[0.34 (housing investment),0.63[ 0.57 (inventory investment), 0.4[ -0.15 (exports), -0.97[ -0.93 (government spending)

Industrial production improved to 0.0 percent in May compared with the previousmonth (-0.4%), and the ISM Manuacturing Index, which shows business condence,registered above its baseline o 50 while beating market expectations (50.5).

ISM Manuacturing Index(base=50)51.7 (Oct 2012)[ 49.9 (Nov)[ 50.2 (Dec)[ 53.1 (Jan 2013)[ 54.2 (Feb)[ 51.3 (Mar)[

50.7 (Apr)[ 49.0 (May)[ 50.9 (Jun)

Retail sales showed stronger growth than the previous month, up 0.6 percent, andthe Conerence Board Consumer Condence Index registered its highest levelsince January 2008.

Consumer Condence Index73.1 (Oct 2012)[ 71.5 (Nov)[ 66.7 (Dec)[ 58.4 (Jan 2013)[ 68.0 (Feb)[ 61.9 (Mar)[69.0 (Apr)[ 74.3 (May)[ 81.4 (Jun)

Te housing market continued to recover, as home sales indicators improvedand housing prices rose or 13 consecutive months. Existing home sales in Mayincreased 4.2 percent, and new home sales improved 2.1 percent compared to theprevious month.

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 rom previous period)

2011 2012 2013

Annual Annual Q1 Q2 Q3 Q4 Q1 Apr May JunReal GDP 1.8 2.2 2.0 1.3 3.1 0.4 1.8 - - -

- Personal consumption expenditure 2.5 1.9 2.4 1.5 1.6 1.8 2.6 - - -

- Corporate ixed investment 8.6 8.0 7.5 3.6 -1.8 13.2 0.4 - - -

- Housing construction investment -1.4 12.1 20.5 8.5 13.5 17.6 14.0 - - -

Industrial production 4.1 3.8 1.4 0.6 0.0 0.6 1.0 -0.4 0.0 -

Retail sales 8.0 5.0 1.7 -0.3 1.3 1.5 1.0 0.1 0.6 -

Existing home sales 2.4 9.9 5.5 -2.0 5.1 3.3 1.0 0.6 4.2 -

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

Consumer prices 3.2 2.1 2.8 1.9 1.7 1.9 1.7 1.1 1.4 -

1. Preliminary 2. Annualized rate (%) 3. Seasonally adjustedSource: US Department o Commerce

US nonarm payroll growth and unemployment rateSourse : 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)

Case-Shiller Home Price Index(q-o-q, %)-0.4 (Q1 2012)[ 2.2 (Q2)[ 1.7 (Q3)[ 1.9 (Q4)[ 3.4 (Q1 2013)1.3 (Feb 2013)[ 1.9 (Mar)[ 1.7 (Apr)

New home sales(m-o-m, %)-4.9 (Oct 2012)[ 9.0 (Nov)[ -0.5 (Dec)[ 15.7 (Jan 2013)[ -2.8 (Feb)[ 1.3 (March)[ 3.3

(April)[ 2.1 (May)

Te unemployment rate was 7.6 percent in June, unchanged rom the previousmonth, but the job market continued to show signs o improvement as nonarmemployment increased by 195,000, greatly exceeding orecasts (165,000).

Nonarm payroll increase(m-o-m, thousand)160 (Oct 2012)[ 247 (Nov)[ 219 (Dec)[ 148 (Jan 2013)[ 332 (Feb)[ 142 (Mar)[ 199(Apr)[ 195 (May)[ 195 (Jun)

Nonarm payroll increase in June by industry(Out o 195,000 jobs added, thousand)202 (private sector): 1 (mining), -6 (manuacturing), 13 (construction), 194 (service),

-7 (public sector)


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7The Green Book |

Chinese economic growth in the rst quarter was 7.7 percent, alling below marketexpectations, while economic indicators were mixed as retail sales improved andindustrial production slowed down, and there is a possibility that growth will slowdown.

Consumption has been gradually improving, but has yet to pick up rom a year

ago due to the cutting o lavish government spending, anticorruption policiesand worries about ood product sanitation, and this could lead to a slowdown ingrowth.

Investment continues to be strong and there are signs pointing to a recovery, suchas an expansion in investment to promote urbanization. However, actors whichlimit a recovery remain, including the alling manuacturing PMI and restrictivereal estate market regulations.

Manuacturing PMI50.5 (Q1 2013), 50.6 (Apr)[ 50.8 (May)[ 50.1 (Jun)

Nonmanuacturing PMI55.4 (Q1 2013), 54.5 (Apr)[ 54.3 (May)[ 53.9 (Jun)

China

(Percentage change rom same period in previous year)

2011 2012 2013

Annual Q3 Q4 Annual Q1 Q2 Q3 Q4 Q1 Apr May

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 10.0 11.6 9.5 9.1 10.0 9.5 9.3 9.2

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

Retail sales 17.1 17.3 17.5 14.3 14.9 13.9 13.5 14.9 12.4 12.8 12.9

Exports 20.7 20.7 14.4 8.3 8.8 10.5 4.5 9.5 18.4 14.6 1.0Consumer prices 5.4 6.3 4.6 2.6 3.8 2.8 1.9 2.1 2.4 2.4 2.1

Producer prices 6.0 7.1 3.1 -1.7 0.1 -1.4 -3.3 -2.3 -1.7 -2.6 -2.9

1. Preliminary

2. Quarterly change: average o monthly change

Source: China National Bureau o 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

Signs o a Japanese recovery continue to maniest as indicators, such as industrialproduction, retail sales and exports, all continue to improve.

Deationary pressures appear to be easing as the May consumer price index ellonly 0.3 percent and core ination remained steady at 0.0 percent.

Business sentiment is improving as the ankan index or large manuacturers(baseline = 0) grew rom -8.0 in the rst quarter to 4.0 in the second quarter.

Japan


2011 2012 2013

Annual Q3 Q4 Annual Q1 Q2 Q3 Q4 Q1 Apr May

Real GDP -0.6 2.5 0.1 2.0 1.2 -0.2 -0.9 0.3 1.0 - -

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

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

Exports (y-o-y) -2.7 0.5 -5.5 -2.8 -1.6 4.8 -8.2 -5.5 1.2 3.8 10.1

Consumer prices (y-o-y) -0.3 0.0 -0.2 -0.0 0.3 0.1 -0.4 -0.2 -0.6 -0.7 -0.31. Preliminary

Sources: Japan's Cabinet Oice, Ministry o Economy, Trade and Industry, Ministry o Finance, Statistics Bureau o 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 recession in the eurozone continues as unemployment in May broke records,reaching 12.2 percent, and the manuacturing PMI ell below its baseline o 50 orthe 23rd consecutive month.

Unemployment rate(%)11.5 (Aug 2012) [ 11.6 (Sep)[ 11.7 (Oct)[ 11.8 (Nov)[ 11.8 (Dec)[ 12.0 (Jan 2013)[12.1 (Feb)[ 12.1 (Mar)[ 12.1 (Apr)[ 12.2 (May) (youth unemployment: 23.9)

Manuacturing PMI(base = 50)

46.1 (Sep 2012)[ 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)[ 48.8 (Jun)

Eurozone


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9The Green Book |


2011 2012 2013

Annual Annual Q1 Q2 Q3 Q4 Q1 Mar Apr Mar Jun

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

Industrial production 3.5 -2.4 -0.5 -0.5 0.4 -2.4 0.1 0.9 0.3 - -

Retail sales -0.5 -1.7 -0.3 -0.8 0.0 -1.5 0.2 -0.2 -0.5 - -Exports (y-o-y) 12.7 7.4 8.6 8.1 7.4 5.5 1.2 -0.1 9.1 - -

Consumer prices (y-o-y) 2.7 2.1 2.7 2.7 2.5 2.3 1.9 1.7 1.2 1.4 1.6

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 o Korea


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10 | The Green Book

Retail sales in May ell 0.2 percent compared with the previous month, as sales onondurable goods, such as automobile uel, and durable goods, such as computersand communications equipment, ell, despite an increase in semi-durable goodssales, such as clothing. Year-on-year, the index rose 0.5 percent.

(Percentage change rom previous period)2011 2012 20131

Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Q1 Apr1 May1

Retail sales 4.5 1.4 0.8 0.5 0.0 2.3 1.0 0.3 1.2 0.4 -1.2 -0.7 -0.2

(y-o-y) - 5.3 6.2 4.0 2.6 - 2.8 1.4 2.6 2.5 0.2 2.1 0.5

- Durable goods 10.6 3.8 0.5 0.7 -0.9 5.3 2.5 1.9 2.8 2.3 -4.4 2.1 -1.0

Automobiles 7.0 5.2 -3.3 4.6 -11.3 2.4 2.4 9.4 -1.6 9.0 -9.0 -2.6 0.2

- 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 -4.4 0.9

- Nondurable goods 2.1 0.4 0.6 -0.1 1.6 2.3 0.9 -0.6 1.5 -1.1 -0.5 -0.4 -0.2

1. Preliminary

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

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

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

Source: Statistics Korea

Tere is a possibility that retail sales in June will improve somewhat compared withMay due to an increase in seasonal clothing and home appliance sales.

Domestic car sales worsened due to poor midsize car sales.

Growth o department store sales accelerated rom the previous month backedby strong clothing sales due to the warm weather, and discount store sales turned

positive without a high base eect rom beore May 2012, when mandatory closureswere ully implemented, and owing to an increase in home appliance sales.

Gasoline sales turned negative as sales ell due to rising domestic oil prices.

Gasoline prices(won/liter)1,897 (1st week Jun)[ 1,898 (2nd week)[ 1,902 (3rd week)[ 1,908 (4th week)

(y-o-y, %)

2012 2013

Nov Dec Jan Feb Mar Apr May Jun

Credit card sales 14.2 7.1 6.2 3.4 5.6 4.5 3.6 4.1

Department store sales 9.1 -0.2 -8.2 1.7 7.5 -1.9 1.0 3.7

Large discount store sales -1.7 -5.0 -24.6 8.9 -4.4 -9.8 -4.3 4.3

Domestic sales o gasoline 3.7 -2.8 2.9 -8.0 7.6 6.5 2.6 -0.1

Domestic sales o cars 13.2 7.5 1.6 -13.5 -1.0 0.8 -1.9 -8.5

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

Association, Ministry o Strategy and Finance (or June 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 rom 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 o 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 rose 1.2 percent month-on-month in May, despite a decrease in

transportation equipment investment, due to an increase in machinery investment.

Te index ell 11.6 percent year-on-year.

(Percentage change rom previous quarter)2011 2012 2013

Annual Annual Q1 Q2 Q3 Q4 Q1 Mar Apr May1

Facility investment index 4.0 -2.0 6.4 -5.0 -6.8 0.8 -4.5 -0.2 -3.8 1.2

(y-o-y) - - 10.7 -2.7 -8.2 -6.9 -15.4 -7.9 -12.1 -11.6

- Machinery 2.7 -2.2 8.1 -5.5 -6.9 -3.8 -5.7 -3.2 1.0 2.3

- Transportation equipment 9.8 -1.1 -1.0 -1.8 -6.7 22.0 0.3 7.9 -17.9 -2.9

1. Preliminary



2011 2012 2013

Annual Annual Q1 Q2 Q3 Q4 Q1 Mar Apr May1

Domestic machinery orders 7.6 -13.4 -1.1 -19.8 -10.4 -21.5 -10.7 13.4 -0.3 16.9

(q-o-q, m-o-m) - - -5.3 -18.7 -2.0 3.9 5.2 -0.5 0.4 16.0

- Public -2.6 -11.0 126.1 -59.7 86.7 -54.6 -47.0 92.2 63.8 553.5

- Private 8.8 -13.6 -8.7 -15.1 -16.0 -15.1 -5.6 10.6 -2.3 5.3

Machinery imports 7.1 -3.0 15.3 -4.3 -12.2 -8.2 -11.8 -7.1 -7.2 -0.7

Average manuacturing operation ratio 80.2 78.1 79.6 79.0 76.2 77.8 77.1 75.4 75.5 75.4Facility investment adjustment pressure 1.1 -1.4 0.7 -1.3 -3.0 -1.5 -2.9 -4.1 0.5 -2.5

1. Preliminary

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

Sources: Statistics Korea, Korea International Trade Association

Despite an improvement in machinery orders and imports, acility investment

is likely to modestly grow due to the low average manuacturing operation ratio,

acility investment adjustment pressure and corporate sentiment.

Business survey index or manuacturing sector(Bank o Korea)72 (Oct 2012)[ 70 (Nov)[ 67 (Dec)[ 70 (Jan 2013)[ 72 (Feb)[ 76 (Mar)[ 80 (Apr)[

81 (May)[ 82 (Jun)[ 78 (Jul)


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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 o Korea

4.Construction

investment

Te value o construction completed (constant) in May declined 4.3 percent

month-on-month, as both building construction and civil engineering works ell.

Compared to a year ago, the index rose 12.5 percent.


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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 Mar Apr May1

Construction completed (constant) -6.4 -5.8 -5.6 -0.9 1.0 1.4 2.1 4.4 -2.5 9.8 -4.3

(y-o-y) - - -4.9 -9.7 -2.3 -5.6 -8.3 5.2 3.7 19.6 12.5

- Building construction -6.9 -7.6 -4.5 -4.8 1.0 1.8 3.0 7.6 1.5 9.0 -4.9- Civil engineering works -5.6 -3.5 -6.9 4.1 0.9 1.0 1.1 0.6 -7.4 10.8 -3.5

1. Preliminary



17/79

16 | The Green Book


2011 2012 2013

Annual Annual Q1 Q2 Q3 Q4 Dec Q1 Mar Apr May1

Construction orders (current value) 6.1 -8.9 33.3 -0.7 -13.6 -33.1 -43.0 -41.2 -20.7 -18.6 -19.1

(q-o-q, m-o-m) - - 15.1 -14.8 -6.1 -20.4 -10.8 -5.9 -13.5 -3.2 5.1

- Building construction 14.0 -8.7 27.4 -7.0 -7.1 -27.4 -37.5 -33.6 -13.7 -26.7 -46.4

- Civil engineering works -6.0 -9.3 42.0 12.5 -26.3 -43.7 -51.6 -51.3 -33.1 -1.0 79.3

Building permit area 9.9 -0.5 8.7 1.2 -7.3 -2.3 9.2 -12.4 -14.2 -14.2 -12.9

1. Preliminary

Sources: Statistics Korea, Ministry o Land, Inrastructure and Transport

Construction investment remains to be seen as there are both positive actors, such

as a rise in construction completed due to new home sales in new towns and a

decrease in unsold new houses, and negative actors, such as the expiration o the

acquisition tax cut and poor construction orders.

Unsold houses(thousand, Ministry o Land, Inrastructure and ransport)75 (Jan 2013)[ 73 (Feb)[ 71 (Mar)[ 70 (Apr)[ 67 (May)

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


18/79

17The Green Book |

5.Exports and

imports

Exports in June decreased 0.9 percent (preliminary) year-on-year to US$46.73billion.

Despite an improvement in vessel exports and shipments to the EU, export growthturned negative year-on-year in June, due to a all in steel exports and shipmentsto Japan, ewer days worked (22.5[21.5) and a high base eect.

Export growth by item(y-o-y, %)11.8 (vessels), 6.7 (semiconductors), 6.3 (mobile phones), -1.6 (automobiles), -7.7 (petroleumproducts), -13.2 (steel)

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

13.1 (EU), 5.7 (US), 5.4 (China), 0.0 (ASEAN countries), -16.6 (Japan), -23.1 (Middle East)

Export growth in 2012(y-o-y, %)

-5.0 (Apr 2012)[ -1.0 (May)[ 0.9 (Jun)[ -8.7 (Jul)

Export growth ell in most items and regions due to a decrease in days worked,while shipments to Japan continued to drop in line with the weakening yen.

Average daily exports, an indicator adjusted to days worked, amounted to US$2.17billion, an increase o 3.7 percent year-on-year, rising or the second consecutivemonth.

Average daily export growth(y-o-y, %)1.7 (Jan 2013)[ 2.6 (Feb)[ 4.5 (Mar)[ -8.0 (Apr)[ 1.0 (May)[ 3.7 (Jun)

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


19/79

18 | The Green Book

Imports in June dropped 1.8 percent (preliminary) year-on-year to US$41.22billion.

Despite an increase in capital and consumer goods imports, imports continued adownward trend year-on-year as shrinking oil imports caused by low oil prices ledto a sharp decrease in commodities imports.

Import growth by category(y-o-y, %)-6.4 (commodities), 2.1 (consumer goods), 7.4 (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 Q1 Q2 Q3 Q4 Jun Q1 May Jun1 Jan-Jun1

Exports 547.87 134.85 140.13 133.13 139.77 47.16 135.47 48.36 46.73 276.69

(y-o-y, %) -1.3 2.9 -1.7 -5.8 -0.4 0.9 0.4 3.2 -0.9 0.6

Average daily exports 2.00 1.97 2.09 1.90 2.04 2.10 2.00 2.10 2.17 2.051. Preliminary

Source: Korea Customs Service

(US$ billion)

2012 2013

Annual Q1 Q2 Q3 Q4 Jun Q1 May Jun1 Jan-Jun1

Imports 519.58 133.67 130.43 125.65 129.83 42.00 129.68 42.45 41.22 257.14

(y-o-y, %) -0.9 7.8 -2.9 -6.9 -1.1 -6.3 -2.9 -4.6 -1.8 -2.6

Average daily imports 1.90 1.95 1.96 1.79 1.89 1.87 1.94 1.85 1.92 1.90

1. Preliminary



20/79

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 May decreased 0.4 percent month-on-

month and 1.4 percent year-on-year, as poor semiconductors & parts and othertransportation equipment oset an increase in chemical products and renedpetroleum.

Compared to the previous month, production o chemical products (up 4.2%),rened petroleum (up 5.4%) and medical, precision & optical instruments (up6.8%) rose, while other transportation equipment (down 9.6%), semiconductors &parts (down 2.5%) and processed metals (down 2.5%) ell.

Compared to a year ago, production o semiconductors & parts (up 6.4%), chemicalproducts (up 5.9%) and medical, precision & optical instruments (up 15.5%)

increased, while mechanical equipment (down 6.8%), rened petroleum (down11.8%) and audio-visual communications equipment (down 16.1%) went down.

6.

Mining andmanuacturing

production

(US$ billion)

2012 2013

Annual Q1 Q2 Q3 Q4 June Q1 May Jun1 Jan-Jun

Trade balance 28.29 1.18 9.70 7.47 9.94 5.17 5.67 5.92 5.52 19.55

1. Preliminary


Te trade balance (preliminary) in June remained in the black or 17 months in arow, posting a surplus o US$5.52 billion.


21/79

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 rose by 0.1 percentage point month-on-month as inventories and shipments increased 0.2 percent and 0.1 percent,respectively.

Inventories o semiconductors & parts (up 3.0%), mechanical equipment (up 2.2%)and groceries (up 4.7%) rose month-on-month, while rened petroleum (down13.4%), primary metals (down 1.7%) and chemical products (down 1.5%) declined.

Shipments o audio-visual communications equipment (up 4.6%), chemicalproducts (up 4.3%) and rened petroleum (up 2.0%) climbed, while othertransportation equipment (down 10.4%), semiconductors & parts (down 1.8%)and clothing & ur (down 7.3%) slipped.

Te average operation ratio o the manuacturing sector ell by 0.1 percentagepoint month-on-month to 75.4 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


22/79

21The Green Book |

(Percentage change rom previous quarter or month)

2012 2013

Annual Q1 Q2 Q3 Q4 May Q1 Mar Apr May

Mining and

manuacturing

activity2

Mining production (q-o-q, m-o-m) - 1.7 -0.5 -2.2 2.9 1.2 -0.9 -2.4 0.6 -0.4

(y-o-y) 0.8 3.6 1.1 -1.0 -0.1 3.1 -1.7 -2.9 1.6 -1.4

Manuacturing production (q-o-q, m-o-m) - 1.7 -0.5 -2.3 3.0 1.4 -0.9 -2.3 0.5 -0.4

(y-o-y) 0.8 3.8 1.0 -1.1 -0.2 3.2 -1.8 -3.0 1.5 -1.5

Shipment 0.7 1.8 -0.3 -2.4 2.0 1.8 -0.5 -1.4 -0.2 0.1

- Domestic demand -1.1 0.7 -0.3 -1.4 1.0 0.9 -0.8 -2.8 0.3 0.3

- Exports 3.0 3.2 -0.3 -3.6 3.2 2.8 -0.2 0.3 -0.6 -0.3

Inventory3 2.3 1.6 -1.8 -3.0 2.3 0.4 -0.8 -0.8 -0.7 0.2

Manuacturing

activity

Average operation ratio (%) 78.1 79.6 79.0 76.2 77.8 79.5 77.1 75.4 75.5 75.4

Production capacity4 2.2 3.1 2.3 1.9 1.3 2.4 1.1 1.1 1.0 1.0

1. Preliminary

2. Including mining, manuacturing, electricity, and gas industry

3. End-period

4. Percentage change rom same period in previous year


Production in the I sector is expected to slow down rom the previous monthin line with declining production growth o communications equipment andsemiconductors aer demand or new mobile phone models peaked. However,mining and manuacturing production is expected to slightly increase as theresuming o working weekends has helped the automobile industry rebound andaverage daily exports have picked up.

Growth o mobile phone exports(y-o-y, %)32.3 (Jan 2013)[ 15.1 (Feb)[ 21.8 (Mar)[ 47.9 (Apr)[ 57.1 (May)[ 6.3 (June)

Growth o semiconductors exports(y-o-y, %)7.2 (Jan 2013)[ 0.9 (Feb)[ 6.6 (Mar)[ 12.5 (Apr)[ 17.2 (May)[ 6.7 (June)

Growth o automobile exports(y-o-y, %)23.2 (Jan 2013)[ -16.3 (Feb)[ -11.5 (Mar)[ -2.6 (Apr)[ 5.3(May)[ -1.6 (June)

Growth o average daily exports(y-o-y, %)1.7 (Jan 2013)[ 2.6 (Feb)[ 4.5 (Mar)[ -8.0 (Apr)[ 1.0 (May)[ 3.7 (June)

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


23/79

22 | The Green Book

Service output in May grew 0.2 percent month-on-month and 1.6 percent year-on-year, as growth in proessional, scientic & technical services and nancial &insurance services oset weaknesses in educational services and wholesale & retail.

Service output grew 0.3 percent in the rst quarter o 2013, showing a slight

improvement rom the previous quarter, when output remained unchanged.

Wholesale & retail declined 0.6 percent month-on-month as retail sales decreaseddue to alling sales o communications equipment, computers and car uel.

Real estate & renting rose 1.4 percent, with housing transactions increasing rom80,000 in April to 90,000 in May.

Hotels & restaurants and nancial & insurance services somewhat recovered romthe previous months slump, rising 1.4 percent and 1.0 percent, respectively.

Educational services continued to contract, declining 1.4 percent rom the previousmonth.

7.Service sector

activity

Service output is expected to improve in June, 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)[ 5.8 (Apr)


Weight2011 2012 20131

Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Q1 Apr1 May1

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 0.3 0.4 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 -0.6 -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 0.7 -0.3

- 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 -0.9 1.4- 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 1.1 1.5 -0.2

- 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 1.1 -0.6 1.0

- 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 -2.7 3.7 1.4

- 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 -1.6 7.3 1.8

- Business services 3.3 5.2 1.2 1.2 0.5 0.3 3.5 2.9 1.2 -1.7 -0.2 2.4 -0.4 -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 0.9 -0.5 -1.4

- 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 1.4 1.5 0.1

- 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 0.1 -0.3

- 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 -2.0 2.7- 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 1.8 2.2

1. Preliminary



24/79

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

May 2013 service industry by business


8

6

4

2

0

-2

-4

(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


25/79

24 | The Green Book

Te number o workers on payroll in May increased by 265,000 rom a year earlier

to 25,400,000 and the employment rate ell 0.1 percentage point rom the previous

year to 60.4 percent.

Workers in the service sector continued to grow, while growth in the number o

workers in the manuacturing sector slowed and workers in the construction andagriculture, orestry & sheries sectors declined by a wider margin.

By status o workers, regular workers continued to increase while sel-employed

and temporary workers continued to decrease.

8.Employment

2010 2011 2012 2013

Annual Annual Q3 Q4 Annual May Q1 Q2 Q3 Q4 Q1 Apr May

Number o employed (million) 23.83 24.24 24.48 24.46 24.68 25.13 23.93 25.00 24.99 24.80 24.18 25.10 25.40

Employment rate (%) 58.7 59.1 59.5 59.4 59.4 60.5 57.8 60.2 60.0 59.4 57.7 59.8 60.4

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

Employment growth (y-o-y, thousand) 323 415 363 474 437 472 467 430 506 342 257 345 265

(Excluding agriculture, orestry & isheries) 405 440 414 497 451 493 498 454 504 344 266 367 306

- Manuacturing 191 63 -12 -75 14 -67 -102 -66 85 140 119 165 105

- Construction 33 -2 -35 71 22 33 79 33 17 -40 -64 -10 -13

- Services 200 386 472 514 416 531 541 491 397 236 199 186 187

- Agriculture, orestry & isheries -82 -25 -51 -23 -14 -21 -31 -24 2 -2 -9 -22 -41

- Wage workers 517 427 392 374 315 309 360 281 317 303 329 466 453

Regular workers 697 575 572 500 436 356 413 379 485 469 554 659 661

Temporary workers -34 -78 -76 -10 -2 89 110 73 -79 -109 -152 -202 -190

Daily workers -146 -70 -104 -115 -120 -136 -163 -171 -89 -57 -73 9 -19

- Non-wage workers -194 -11 -29 100 121 163 108 150 189 39 -71 -120 -188

Self-employed workers -118 1 34 125 124 186 149 173 143 33 -28 -90 -117

- Male 181 238 208 257 234 276 238 242 284 172 123 189 153

- Female 142 177 155 216 203 196 230 188 223 170 135 156 112

- 15 to 29 -43 -35 -1 -18 -36 -19 1 -8 -57 -80 -117 -133 -85

- 30 to 39 -4 -47 -83 -56 -31 -95 -65 -80 33 -10 -15 34 11

- 40 to 49 29 57 46 47 11 25 28 8 12 -3 12 1 -28

- 50 to 59 294 291 270 315 270 282 326 260 273 220 196 264 230

- 60 or more 47 149 131 185 222 278 178 251 245 215 181 179 136



26/79

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 4 55 6 7 8 9 10 11 122012. 1 2013. 1

Services Construction Manufacturing Agriculture, forestry & sheries

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

69.2

7.1

16.4

6.7

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 4 55 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

46.2

19.5

6.7

22.6

5.0

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


27/79

26 | The Green Book

Te number o unemployed persons in May decreased by 9,000 year-on-year to

797,000, while the unemployment rate ell 0.1 percentage point rom the previous

year to 3.0 percent.

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

50s.

Te economically inactive population in May was up 273,000 rom a year earlier

to 15,850,000, while the labor orce participation rate ell 0.2 percentage points to

62.3 percent.

Te number o those economically inactive due to childcare(down 8,000) decreased,

while those due to education (up 118,000), rest (up 74,000) and housework (up

66,000) increased.

2010 2011 2012 2013


Number o persons unemployed (thousand) 920 855 786 740 820 807 947 841 770 722 907 825 797

Unemployment growth (y-o-y, thousand) 31 -65 -88 -68 -35 -12 -82 -23 -16 -18 -40 -70 -9

- Male -7 -48 -48 -41 -26 -21 -54 -19 -16 -13 -7 -46 -7

- Female 38 -17 -40 -27 -9 9 -28 -4 0 -6 -33 -24 -2

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

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

- 15 to 29 8.0 7.6 6.7 7.1 7.5 8.0 8.2 8.1 6.8 7.0 8.4 8.4 7.4

- 30 to 39 3.5 3.4 3.2 2.9 3.0 3.1 3.2 3.2 2.8 2.7 3.3 3.1 3.0

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

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

- 60 or more 2.8 2.6 2.1 1.8 2.4 1.7 4.4 2.0 1.9 1.6 3.4 1.3 1.6


2010 2011 2012 2013


Economically inactive population (million) 15.84 15.95 15.85 16.01 16.08 15.58 16.50 15.67 15.90 16.26 16.83 16.07 15.85

Labor orce participation rate (%) 61.0 61.1 61.5 61.1 61.3 62.5 60.1 62.3 61.8 61.1 59.9 61.7 62.3

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

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

143 112 191 53 128 56 103 110 57 244 336 269 273

- Childcare -125 -5 17 23 -2 21 - 4 -7 -3 0 6 -8

- Housework 201 101 143 103 123 157 85 181 101 126 143 41 66

- Education 12 -51 -78 -69 -12 -65 -28 -64 5 39 118 164 118

- Old age 80 -45 -22 2 148 170 76 174 156 186 154 4 21

- Rest -56 182 193 131 -53 -103 126 -71 -142 -125 -106 71 74



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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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28 | The Green Book

9.Financial markets

9.1 Stock market

Te Korean stock price index in June ell 6.9 percent to 1,863 points rom the

previous months 2,001 points.

Te KOSPI Composite declined as concerns over an early reduction o quantitativeeasing in the US led oreign investors to sell stocks.

Foreign investors turned net buyers o Korean stocks in June, selling 5.1 trillion

won worth o stocks compared to buying 1.0 trillion won in the previous month.

9.2 Exchange rate

Te won/dollar exchange rate in June rose 12.3 won to 1,142.0 won rom 1,129.7

won at the end o May.

Te won/dollar exchange rate rose to the 1,140 won range due to a rise in the value

o the US dollar caused by expectations o a reduction in quantitative easing in the

US, and also due to concerns over a credit crunch in China.

Stock prices

2,200

2,000

1,800

1,600

1,400

1,200

1,000

800

600

400

200

(monthly average, KOSPI Jan 4, 1980=100, KOSDAQ Jul 1, 1996=1,000)

2001. 1

KOSPI KOSDAQ

2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1

(End-period, point, trillion won)

KOSPI KOSDAQ

May 2013 Jun 2013 Change1 May 2013 Jun 2013 Change1

Stock price index (points) 2,001.1 1,863.3 -137.8 (-6.9%) 577.9 519.1 -58.8 (-10.2%)Market capitalization (trillion won) 1,164.2 1,084.2 -80.0 (-6.9%) 131.1 117.7 -13.4 (-10.2%)

Average daily trade value (trillion won) 4.2 4.1 -0.1 (-2.4%) 2.3 1.7 -0.6 (-26.1%)

Foreign stock ownership (%) 34.5 33.9 -0.6 (-1.7%) 8.8 9.1 0.3 (3.4%)

1. Change rom the end o the previous month

Source: Korea Exchange


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29The Green Book |

Foreign exchange rate

Daily oreign exchange rate trend

1,800

1,600

1,400

1,200

1,000

800

600

(month-end,)

2001. 1

Won/dollar Won/100 yen

2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1

1,800

1,600

1,400

1,200

1,000

800

600

()

2008. 1. 2

Won/dollar Won/100 yen

2008. 8. 11 2009. 3. 18 2009. 10. 19 2010. 5. 25 2010. 12. 27 2011. 8. 3 2012. 3. 9 2012. 10. 16

Te won/100 yen exchange rate surged to the 1,200 won range with the strong

yen/dollar exchange rate, but ell back to the 1,156 won range as the yen weakened

again.

(End-period)

2008 2009 2010 2011 2012 2013

Dec Dec Dec Dec Dec May Jun Change1

Won/dollar 1,259.5 1,164.5 1,134.8 1,151.8 1,070.6 1,129.7 1,142.0 -6.3

Won/100 yen 1,396.8 1,264.5 1,393.6 1,481.2 1,238.3 1,120.2 1,156.3 7.1

1. Appreciation rom the end o the previous year (%); the exchange rate is based on the closing price at 3:00 p.m., local time.


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30 | The Green Book

9.3 Bond market

3-year reasury bond yields rose 10 basis points in June to 2.88 percent rom the

previous months 2.78 percent. Te yields rose due to oreign investors net selling

o reasury bond utures as well as institutional selling caused by concerns over an

early reduction o quantitative easing in the US.

9.4 Money supply & money market

M2 (monthly average) in April expanded 5.1 percent rom a year earlier.

M2 growth accelerated as money supply in the government sector increased due to

budgetary ront-loading, and also as money supply in the oreign sector increased

due to an improved current account.

Interest rates


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 May Jun Change1

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

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

Treasury bonds (3 yrs) 5.74 3.41 4.44 3.38 3.34 2.82 2.78 2.88 10

Corporate bonds (3 yrs) 6.77 7.72 5.56 4.27 4.21 3.29 3.14 3.31 17

Treasury bonds (5 yrs) 5.78 3.77 4.98 4.08 3.46 2.97 2.90 3.14 24

1. Basis point, changes rom the previous month


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31The Green Book |

Total money supply


40

30

20

10

0

-10

-20

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

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

LfReserve money M1

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

Bank deposits and asset management company (AMC) deposits surged in May.

Bank deposits surged (-7.4 trillion won[7.6 trillion won), led by instant access

deposits, as corporate unds that had been lost due to tax payments in the previous

month returned.

AMC deposits also grew by a large margin (-10.1 trillion won[7.6 trillion won),

led by money market unds (MMF).

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

2008 2009 2010 2011 2012 2013

Annual Annual Annual Annual Annual Q1 Q2 Q3 Q4 Feb Mar Apr Apr1

M12 -1.8 16.3 11.8 6.6 3.8 1.8 3.6 4.3 5.5 8.0 7.4 8.7 475.3

M2 14.3 10.3 8.7 4.2 5.2 5.3 5.6 5.6 4.5 5.3 5.0 5.1 1,867.7

L3 11.9 7.9 8.2 5.3 7.8 7.5 8.5 7.9 7.1 8.1 6.8 6.94 2,512.54

1. Balance at end April 2013, trillion won

2. M1 excluding corporate MMFs and individual MMFs while including CMAs

3. Liquidity aggregates o inancial institutions (mostly identical with M3)

4. Preliminary

(Monthly change, end-period, trillion won)

2009 2010 2011 2012 2013

Annual Annual Annual Mayr Annual May Mar Apr May May 1

Bank deposits 54.8 36.9 58.9 -0.4 37.0 11.6 1.4 -11.5 12.2 1,139.8

AMC deposits -27.6 -16.7 -16.6 4.1 18.8 3.6 2.1 -3.9 10.0 341.7

1. Balance at end May 2013, trillion won


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32 | The Green Book

Deposits in nancial institutions


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 May posted a surplus o US$8.64 billion,

staying in the black or 16 consecutive months.

Te goods account surplus widened rom US$3.93 billion in April to US$8.64

billion in May due to improving exports o I products, such as mobile phones,

and exports to China and the US, along with alling oil prices leading to a decrease

in imports.

Goods exports(US$ billion)47.48 (Apr 2013)[ 49.59 (May)

Goods imports(US$ billion)

43.94 (Apr 2013)[ 42.32 (May)

Export growth by item(y-o-y, %)57.1 (mobile phones), 17.2 (semiconductors), 5.3 (automobiles), -12.3 (steel), -34.3 (vessels)

Export growth by region(y-o-y, %)21.6 (US), 16.6 (China), 11.8 (ASEAN), -11.6 (Japan), -14.0 (EU)

Te service account surplus narrowed rom US$1.45 billion to US$1.13 billion as a

result o deteriorating travel and intellectual property accounts.

10.Balance o

payments


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33The Green Book |

he capital and inancial account (preliminary) in May posted a net outlow o

US$11.6 billion.

Capital & nancial account balance(US$ billion)-0.91 (Jan 2013)[ -3.27 (Feb)[ -6.72 (Mar)[ -2.61 (Apr)[ -11.60 (May

1)1. Preliminary

Te direct investment account swung to a net outow o US$1.48 billion rom a

net inow o US$0.30 billion due to a decrease in oreign direct investment.

Net outow in portolio investment narrowed to US$1.17 billion rom US$1.92

billion as oreign investors equity investment turned to a net inow.

Financial derivatives switched to a net inlow o US$0.65 billion rom a net

outow o US$0.31 billion, while the net outow o the other investment account

widened to US$8.53 billion rom US$1.58 billion due to nancial institutions net

repayment.

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

surplus resulting rom a trade surplus (US$5.52 billion) in June.

Service account(US$ billion, April[May)-0.45[ -0.58 (travel), -0.09[ -0.34 (intellectual property), 0.77 [ 0.86 (transportation), 1.18[ 1.24 (construction), -0.14[ -0.30 (business services)

Te primary income account swung to a surplus o US$0.19 billion rom a decit

o US$1.09 billion as the cross-border dividend payments (March-April) by rmswhose scal year ended in December were completed. Te secondary income

account surplus widened slightly rom US$0.02 billion to US$0.04 billion.

(US$ billion)

2012 2013

Annual May Q1 Q2 Q3 Q4 Q1 Mar Apr May1

Current account 43.14 3.61 2.56 11.19 14.56 14.94 10.02 4.93 3.93 8.64

- Goods balance 38.34 1.75 2.61 8.52 13.34 13.98 9.39 4.21 3.54 7.27

- Service balance 2.68 1.59 -0.65 2.31 0.65 0.36 -0.48 0.91 1.45 1.13

- Primary income balance 4.89 0.34 1.49 0.82 1.04 1.54 1.38 -0.22 -1.09 0.19

- Secondary income balance -2.76 -0.08 -0.89 -0.47 -0.47 -0.93 -0.26 0.09 0.02 0.04

1. Preliminary



35/79

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


10

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 & nancial account

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

Portfolio investment Direct investment Financial derivatives


36/79

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 June rose 1.0 percent year-on-year, staying stable at the 1.0percent range or eight consecutive months. On a monthly basis, prices ell 0.1percent.

Core consumer prices, which exclude oil and agricultural products, rose 1.4percent 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 0.3 percent year-on-year but down 0.2 percent month-on-month.

Te average expected annual ination ell 0.1 percentage point rom the previousmonth to 2.8 percent and the import prices declined 9.6 percent year-on-year.

Expected infation(%, over the next 12 months)3.3 (Sep 2012)[ 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)[ 2.8 (Jun)

Import price increases(y-o-y, %, won base)-7.9 (Nov 2012)[ -9.0 (Dec)[ -10.6 (Jan 2013)[ -8.6 (Feb)[ -10.8 (Mar)[ -9.7 (Apr)[ -9.6 (May)

11.Prices and

international

commodity

prices

(%)

2012 2013

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

Month-on-Month 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 -0.1

Year-on-Year 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 1.0

Consumer prices excluding oil and agriculturalproducts (y-o-y) 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 1.4

Consumer prices excluding ood and energy (y-o-y) 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 1.3

Consumer prices or basic necessities (y-o-y) 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 0.3



37/79

36 | The Green Book

Te prices o agricultural (down 4.7%, m-o-m) and oil products (down 0.1%,m-o-m) ell as a result o avorable weather conditions and stable oil prices, andthose o public services and personal services remained unchanged rom theprevious month, contributing to stabilizing consumer prices.

Agricultural, livestock & shery product prices decreased 2.1 percent month-on-month. Te prices o livestock products (up 3.3%, m-o-m) rose, while agricultural(down 4.7%, m-o-m) and shery product prices (down 0.9%, m-o-m) ell.

Manuactured product prices inched up 0.2 percent month-on-month. Te priceso processed ood (up 0.1%, m-o-m) rose, while those o oil products (down 0.1%,m-o-m) declined.

Personal service prices remained unchanged rom the previous month as diningout expenses (up 0.2%, m-o-m) rose but other personal service prices (down 0.1%,m-o-m) ell.

Consumer price infation

Source: Statistics Korea (consumer price trend)

7

6

5

4

3

2

1

0

-1

(%)

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

Consumer price inflation (m-o-m) Consumer price inflation (y-o-y)

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

TotalAgricultural, l ivestock &

ishery products

Manuactured products Publicutilities

Housingrents

Publicservices

PersonalservicesOil products

Month-on-Month (%) -0.1 -2.1 0.2 -0.1 0.0 0.2 0.0 0.0

Contribution (%p) -0.09 -0.17 0.06 0.00 0.00 0.02 0.00 0.00

Year-on-Year (%) 1.0 -2.3 0.4 -5.1 5.6 2.6 0.7 1.3

Contribution (%p) 1.04 -0.19 0.12 -0.30 0.28 0.24 0.09 0.42Source: Statistics Korea


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37The Green Book |

11.2 International oil and commodity prices

International oil prices stayed unchanged in June, although it uctuated due tosome geopolitical risks and concerns over the US reducing quantitative easing.Meanwhile, domestic oil product prices inched up due to rising exchange rates.

Te prices o Dubai crude rose to US$103 per barrel in mid-June due to geopoliticalrisks in the Middle East such as the Syrian civil war, but ell to US$98 per barrel,resulting rom concerns over a reduction o quantitative easing in the US and acredit crunch in China.

Dubai crude($/barrel)99.4 (1st week June)[ 100.6 (2nd week)[ 101.9 (3rd week)[ 98.8 (4th week, down 0.2% romMay average)

International oil prices

Source: Korea National Oil Corporation

160

140

120

100

80

60

40

20

0

($/B)

2001. 1

Dubai crude WTI crude

2002. 1 2003. 1 2004. 1 2005. 1 2006. 1 2007. 1 2008. 1 2009. 1 2010. 1 2011. 1 2012. 1 2013. 1

Contribution to consumer price infation

Source: Statistics Korea (consumer price trend)

5

4

3

2

1

0

-1

(%p)

2003

Agricultural, livestock &

fishery products

Public servicesHousing rents

Public utilities

Manufactured products

Personal services

2004 2005 2006 2007 2008 2009 2010 2011 2012


39/79

38 | The Green Book

Domestic oil product prices continued to increase due to rising exchange rates,

staying over 1,900 won per liter.

Gasoline prices(won/liter)1,896.5 (1st week June)[ 1,898.0 (2nd week)[ 1,901.7 (3rd week)[ 1,908.4 (4th week)

Exchange rate(won/$)1,123.9 (1st week June)[ 1,126.9 (2nd week)[ 1,132.7 (3rd week)[ 1,155.0 (4th week)

Dubai crude prices and import prices


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 Dec Jan Feb Mar Apr May Jun

Dubai crude 78.1 105.9 109.0 106.4 107.9 111.1 105.6 101.7 100.3 100.2

Brent crude 79.7 111.0 111.7 109.2 112.7 116.2 109.0 102.8 102.8 103.1WTI crude 79.5 95.1 93.8 88.2 94.8 95.3 92.9 92.0 94.7 95.8


(won/liter, period average)

2010 2011 2012 2013

Annual Annual Annual Dec Jan Feb Mar Apr May Jun

Gasoline prices 1,710.4 1,929.3 1,985.8 1,935.6 1,924.6 1,952.5 1,986.5 1,949.4 1,899.9 1,902.0

Diesel prices 1,502.8 1,745.7 1,806.3 1,760.0 1,749.6 1,766.7 1,786.0 1,745.2 1,699.4 1,701.0Source: Korea National Oil Corporation


40/79

39The Green Book |

Te prices o international grain rose in June as the total stock o grain harvested in2012 dropped, while nonerrous metal prices ell, due to concerns over economicslowdown in China.

International grain prices were high as the planting o soybean was delayed inthe US and inventories o 2012 harvests dropped, but the price increase slowedtowards the end o June due to avorable weather conditions and concerns over areduction o quantitative easing in the US.

World grain supply outlook or 2013-14(US Department o Agriculture, June, m-o-m)Production (-0.4%), demand (-0.1%), stocks-to-use ratio (-0.3%p)

International grain prices in June(m-o-m, %)Corn (1.7), soybean (6.0), wheat (-2.1)

Te prices o most nonerrous metal prices ell due to concerns over a credit crunchand economic slowdown in China, the largest market.

Nonerrous metal prices in June(m-o-m, %)in (-2.4), lead (3.3), nickel (-5.0), copper (-3.5), zinc (-1.2), aluminum (-2.4)

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 Nov Dec Jan Feb Mar Apr May Jun

2,553 3,062 3,006 3,067 3,037 2,996 2,990 2,947 2,880 2,828 2,756

* A weighted average index o 17 major commoditiesSource: KOREA PDS


41/79

40 | The Green Book

12.1 Housing market

Nationwide apartment sales prices rose 0.1 percent month-on-month in June.

Apartment sales price growth turned negative in the Seoul metropolitan area

(down 0.1%, m-o-m), including Seoul (down 0.2%, m-o-m).

Apartment sales price growth slowed in areas excluding the Seoul metropolitan

area (up 0.2%, m-o-m), in particular Busan (unchanged) and Sejong (up 0.2%,

m-o-m). Apartment prices in the ve metropolitan cities and the eight provinces

excluding Gyeonggi Province rose 0.3 percent and 0.1 percent, respectively.

12.Real estate

market

Apartment sales prices by region

Source: Kookmin Bank

5

4

3

2

1

0

-1

-2

(m-o-m, %)

2009. 1 7 7 7 7

Nationwide Seoul metropolitan area

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

Areas excluding the Seoul metropolitan area


2010 2011 2012 2013Annual Annual Annual Q2 Q3 Q4 Jan-Jun Q1 Q2 Apr May Jun Jun 31 Jun 101 Jun 171 Jun 241

Nationwide 1.9 8.2 -2.1 -0.5 -1.2 -0.8 -0.1 -0.7 0.5 0.2 0.3 0.1 0.02 0.02 0.01 0.02

Seoul -2.9 0.3 -5.8 -1.4 -2.1 -0.7 -1.1 -1.3 0.2 0.1 0.2 -0.1 -0.01 -0.02 -0.04 -0.05

Gangnam2 -2.1 -0.4 -6.7 -1.9 -2.2 -1.8 -1.0 -1.1 0.2 0.1 0.2 -0.2 -0.08 -0.08 -0.10 -0.12

Gangbuk3 -1.7 -0.5 -8.0 -2.2 -3.0 -1.9 -0.5 -1.0 0.5 0.5 0.4 -0.3 -0.08 -0.10 -0.14 -0.14

Seoul metropolitan area -2.6 -0.2 -5.0 -1.5 -1.3 -1.6 -1.6 -1.2 -0.3 -0.3 0.0 -0.1 -0.07 -0.06 -0.05 -0.10

5 metropolitan cities 7.9 18.3 1.7 0.3 -0.2 0.2 0.9 0.1 0.8 0.8 0.3 0.2 0.05 0.06 0.07 0.09

1. Weekly trends

2. Upscale area o Southern Seoul

3. Northern Seoul

Source: Korea Appraisal Board


42/79

41The Green Book |

Apartment sales transactions in May increased 16.4 percent rom the previousmonths 55,442 to 64,538, and were up 41.1 percent rom a year earlier (45,641).

Apartment rental prices by region

Source: Kookmin Bank

5

4

3

2

1

0

-1

-2

(m-o-m, %)

2009. 1 7 7 7 7

Nationwide Seoul metropolitan area

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

Areas excluding the Seoul metropolitan area

Nationwide apartment rental prices continued to rise in June (up 0.3%, m-o-m).

Rental prices in the Seoul metropolitan area and regions excluding the Seoul

metropolitan area rose 0.3 percent and 0.4 percent each.

Apartment rental price increase in major districts in Seoul(m-o-m, %)

Gangnam (-0.3), Seocho (-0.2), Songpa (-0.1), Gangdong (-0.3), Gwangjin (0.6)


2010 2011 2012 2013

Annual Annual Annual Q2 Q3 Q4 Jan-Jun Q1 Q2 Apr May Jun Jun31 Jun 101 Jun 171 Jun 241

Nationwide 8.5 15.4 1.9 0.1 0.0 1.1 2.5 1.0 1.4 0.7 0.4 0.3 0.07 0.08 0.08 0.09

Seoul 7.1 13.3 0.3 -0.7 -0.2 1.1 2.4 1.1 1.3 0.7 0.3 0.3 0.06 0.07 0.07 0.08

Gangnam2 7.3 13.0 0.0 -1.2 -0.2 1.7 2.4 1.7 0.7 0.4 0.2 0.1 0.01 0.02 0.08 0.08

Gangbuk3 8.8 11.7 0.2 -1.4 -0.2 2.2 2.1 1.6 1.1 0.2 0.1 0.1 0.01 0.00 0.10 0.10

Seoul metropolitan area 5.5 14.6 -0.2 -1.1 -0.2 1.2 2.7 1.7 0.3 0.6 0.4 0.2 0.01 0.04 0.06 0.07

5 metropolitan cities 10.2 17.9 3.6 0.8 0.2 1.1 2.6 1.0 1.5 0.7 0.5 0.4 0.08 0.09 0.09 0.09

1. Weekly trends

2. Upscale area o Southern Seoul

3. Northern Seoul



43/79

42 | The Green Book

12.2 Land market

Nationwide land prices in May rose 0.13 percent month-on-month, which is about

the same pace as in the previous month.

Land prices in the Seoul metropolitan area (up 0.14%, m-o-m) continued to rise,

led by Seoul (up 0.15%, m-o-m) and Gyeonggi Province (up 0.13%, m-o-m).

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

-0.02 (Sep 2012)[ 0.03 (Oct)[ 0.04 (Nov)[ 0.06 (Dec)[ -0.01 (Jan 2013)[ 0.05 (Feb)[

0.10 (Mar)[ 0.13 (Apr)[ 0.14 (May)

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

0.11%, m-o-m), with Sejong (up 0.50%, m-o-m) posting the highest growth rate in

the nation or the 15th straight month in May.

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

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

(Mar)[ 0.13 (Apr)[ 0.11 (May)

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

Nationwide 53 48 59 42 47 45 46 37 38 31 26 45 50 81 17 34 47 55 65

1. Monthly averageSource: Ministry o Land, Transport and Maritime Aairs


44/79

43The Green Book |

Nationwide land transactions in May were 216,000 land lots, up 5.1 percent rom

the previous month and 16.6 percent rom 185,000 a year earlier.

Monthly land transactions rose in Seoul (up 11.1%, m-o-m), Daejeon (up 10.9%,

m-o-m), Ulsan (up 88.3%, m-o-m) and Jeju Province (up 18.5%, m-o-m).

ransactions o vacant land decreased 2.8 percent month-on-month to 84,000 lots,

making up 38.6 percent o the total amount o transactions, and were down 0.7

percent rom a year earlier.

Land prices by region

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

15

12

9

6

3

0

-3

-6

-9

-12

-15

-18

(%)

1994

Metropolitan area City County

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20122011

National average


2009 2010 2011 2012 2013

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

Nationwide 0.96 1.05 1.17 0.30 0.29 0.29 0.87 0.30 0.33 0.12 0.21 0.47 0.21 0.07 0.11 0.13 0.13

Seoul 1.40 0.53 0.97 0.28 0.17 0.12 0.33 0.17 0.26 -0.14 0.09 0.41 0.10 0.06 0.11 0.16 0.15

Gyeonggi 1.22 1.49 1.47 0.38 0.43 0.39 0.97 0.34 0.34 0.17 1.32 0.41 0.17 0.03 0.10 0.11 0.13

Incheon 1.99 1.43 0.66 0.18 0.15 0.15 0.36 0.21 0.16 -0.03 0.13 0.46 0.21 0.08 0.12 0.14 0.12



45/79

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 ination Consumer price ination

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

Nationwide 203 187 208 170 182 186 163 167 150 133 172 185 224 141 142 181 206 216

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

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

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

1. Monthly average

Source: Korea Land & Housing Corporation


46/79

45The Green Book |

Industrial output in May decreased 0.7 percent month-on-month but increased

1.1 percent year-on-year. Output in service (up 0.2%, m-o-m) rose, while output in

mining & manuacturing (down 0.4%, m-o-m), construction (down 4.3%, m-o-m)

and public administration (down 5.0%, m-o-m) ell.

Te cyclical indicator o the coincident composite index ell 0.2 points in May.

Mining & manuacturing production, domestic shipment and service activity

decreased while our components, such as the value o construction completed

and imports, increased.

Components o the coincident composite index in May(m-o-m)value o construction completed (0.8%), imports (0.4%), nonarm payroll employment (0.3%),

retail sales (0.3%), mining & manuacturing production (-0.8%), domestic shipment (-0.8%),

service activity (-0.2%)

Te cyclical indicator o the leading composite index increased 0.3 points rom the

previous month.

Four components, including the ratio o job openings to job seekers and ratio o

export to import prices, were higher compared to the previous month while our

other components, such the value o construction orders received and international

commodity prices, were lower.

Components o the leading composite index in May(m-o-m)

ratio o job openings to job seekers (0.5%p), indicator o inventory cycle (0.2%p), ratio o exportto import prices (0.9%), consumer expectations index (1.0p), value o construction orders

received (-4.1%), domestic shipment o machinery (-0.2%), international commodity prices

(-0.5%), KOSPI (-0.1%), spreads between long & short term interest rates (0.0%p)

13.Composite

indices o

business cycle

indicators

2012 2013

Oct Nov Dec Jan Feb Mar1 Apr1 May1

Industrial output (m-o-m, %) -0.4 1.1 1.0 -0.9 1.1 -2.0 1.7 -0.7

(y-o-y, %) -1.0 1.4 -0.2 3.2 -1.9 -0.8 3.6 1.1

Coincident composite index (m-o-m, %) -0.1 0.6 0.5 0.4 0.4 0.0 0.6 0.2

Cyclical indicator o coincident composite index 98.9 99.1 99.2 99.2 99.3 98.9 99.0 98.8

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

Leading composite index (m-o-m, %) 0.3 0.7 0.7 0.2 0.3 0.3 0.5 0.7

Cyclical indicator o leading composite index 99.3 99.6 100.0 99.8 99.6 99.5 99.6 99.9

(m-o-m, p) -0.1 0.3 0.4 -0.2 -0.2 -0.1 0.1 0.3

1. Preliminary


47/79

46 | The Green Book

Industrial output


Cyclical indicator of coincident composite index


Cyclical indicator o leading composite index


20

15

10

5

0

-5

-10

-15

(%)

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

Industrial output (m-o-m) Industrial output (y-o-y)

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

110

105

100

95

90

(points)

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

110

105

100

95

90

(points)

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


48/79

47Featured Issue |

Featured IssuePursuing Realistic Visions or the Financial Industry(Interview with Financial Services Commission Chairman Shin Je-Yoon)

How do you see the current state o the global nancial sector?

Te tapering o quantitative easing in the US and slowing growth in China have emerged

as the main destabilizing actors in the global economy and nancial sector. However,

the situation in the US is actually part o the normalization process o the nations

monetary policy. In other words, the exit strategy reects the act that the US economy

is recovering. Likewise, Chinas economic slowdown is a transitional phenomenon that

comes as the Chinese economy is shiing rom export- and investment-led growth to

qualitative growth. A slowdown in Chinas economy is expected to have direct eects on

Koreas real economy, since China accounts or 25 percent o Koreas total exports.

How is the Korean government coping with the recent developments in the US and China?

Te government is closely monitoring the risks that may arise as the two nations undergo

changes. Despite the act that a gradual withdrawal rom the quantitative easing program

in the US and economic slowdown in China are part o a normalization process, the huge

size o the two economies requires us to pay close attention to the eect they may have on

Koreas real economy and its nancial markets. Also, taking into consideration the act

that the emerging markets may be aected as well, we will prepare or the possibility that

any economic instability in emerging markets spread to Korea.


49/79

48 | Featured Issue

Corporate governance problems have emerged as risk actors in the nancial system.

Since the 2008 subprime crisis, nancial rm corporate governance has become a global

Documents

Economic Bulletin (Vol. 35 No. 7)