Countercyclical measures helped reverse the slowing trend in the economy at the beginning of the year, although persistently weak external demand is constraining the recovery. Fiscal stimulus has been stepped up with a W17.3 trillion ($15.3 billion) supplemental budget. Low inflation and the prospects for prolonged sluggish growth at home and abroad prompted the central bank in early May to cut the policy rate by 25 basis points to 2.5%. An easing in tensions on the Korean Peninsula has also helped assuage renewed investor concerns about geopolitical risk, while the large swing in the financial markets and capital flows generated by the prospective withdrawal of quantitative easing in the U.S. appears to have had only a modest impact on the economy.
- The 12-month increase in consumer prices rose to 0.9% in November from 0.7% in October and 0.8% in September, and has been below the central bank's target range of 2.5-3.5% for 2013-15 for 18 consecutive months.
- Merchandise exports fell by 2.7% in September from a year earlier after expanding by almost 8% in August and 4% in July.
- Despite the weak export recovery, a contraction in imports raised the current account surplus to almost $49 billion in the first nine months of 2013 from $28 billion in the same period last year.
- Official foreign exchange reserves were $338 billion in October after the purchase earlier in the year of $1 billion of gold, which raised official gold holdings to around $5 billion at current market prices.
August 19, 2013
Domestic long-term interest rates bottomed out in early May and have steadily moved up with the global trend initiated by the prospective withdrawal of quantitative easing in the U.S., renewed uncertainty over policy in Japan, and mounting concerns about economic and financial conditions in China.Read More
July 10, 2013
Diminished sensitivity of the banking system to changes in global liquidity conditions has helped limit the impact of the latest bout of global financial market turmoil on the economy. Nevertheless, the real economy remains linked to its major trading partners, which are still struggling to revive growth.Read More
May 23, 2013
Slow growth, low inflation and weak external demand finally prompted the central bank to cut the policy rate after a seven-month hiatus. The latest monetary action is likely to be too little and too late to revive the economy.Read More
April 11, 2013
Last year’s ratings upgrades and favorable returns have attracted large foreign investments in domestic bonds. Fiscal sustainability and low public debt have also generated interest, while investors have taken rising tensions on the Korean Peninsula in stride.Read More
March 12, 2013
The honeymoon most newly-elected candidates enjoy on first taking office has eluded President Park Geun-hye. Financial markets are taking the latest developments in stride, but the current impasse in the National Assembly and renewed tensions on the Korean Peninsula threaten to hamper the government’s plan to revive the moribund economy.Read More
February 04, 2013
The domestic stock market is distinguished from the rest of the region and most of the world by its poor performance so far this year. The fundamentals reaffirm investor apprehension about the near-term outlook and lingering doubts about when the economy will regain momentum.Read More
December 14, 2012
The presidential election that will be held on December 19 will set the course of economic policy for the next five years. The centerpiece of the campaign is “economic democratization,” which calls for redressing the wealth gap and controlling the market power and influence of the large family-owned companies.Read More