OECD predicts Korean 2011-2017 RGDP 3rd among OECD members
apologies for the light lack of posting…I’ve been out of town. SERI puts out a weekly wrap-up of major economic and business trends I thought would be beneficial to this forum.
I also highly recommend their site: http://www.seriworld.org
Monday, June 29
- In its latest edition of the Economic Outlook, the OECD forecast the average growth of Korea’s real GDP from 2011 to 2017 to be 4.9%, the third highest among the OECD member countries. Yet, the OECD expected Korea to post 2.0% inflation in 2010 and 3.0% in 2017, the second highest among OECD members. The unemployment rate of Korea was projected to fall to 3.5% in 2017 from an OECD low of 3.9% in 2010.
- A Korea Chamber of Commerce and Industry survey revealed that domestic companies will increase their facilities investment by about 3.0% in the second half compared to the first. The companies pointed out new products and technology development investment (24.0%) as the biggest reason for investment growth in the second half of this year. By industry, companies in the electric power and gas sector accounted for the largest portion (11.1%) of those that answered that they would raise their investments.
Tuesday, June 30
- The Bank of Korea (BOK) said the business survey index (BSI) on expected business conditions for domestic manufacturing companies rose two points from June to 78 in July, a sixth consecutive rise. However, the index on expected corporate profitability fell to 83 from 85 of June, suggesting that companies feel price pressure when importing raw materials as international oil prices have edged up over expectations of an economic recovery. Meanwhile, the BSI forecast, announced by the Federation of Korean Industries (FKI), recorded its first decline in three months to 98.7 in July.
Wednesday, July 1
- According to the Korea National Statistical Office, consumer prices in June rose 2.0% from a year earlier and fell 0.1% from May. An official from the Ministry of Strategy and Finance (MSF) said, “Amid overall stability in oil and commodity prices and foreign exchange rates, the prices of agricultural/stockbreeding/fishery products tumbled 4.8% from May.” As a result, the contribution to price rise made by agricultural/stockbreeding/fishery products reached -0.42 percentage point. This offset the 1% rise in the prices of industrial products.
- The FKI stated that the nation’s 30 major conglomerates will invest a total of 72.67 trillion won (provisional data) in 2009, down 10.7% from 2008 (81.36 trillion won). Yet, the R&D investment in future economic growth engines will edge up 1.7% to 16.92 trillion won. New employment is expected to shrink 29.4% to 59,286.
- At the International Policy Forum on Budgeting hosted by the MSF, Thomas Byrne, senior vice president for Moody’s in Singapore said, “There is no possibility of Korea’s sovereign credit rating being lowered both in 2009 and 2010.” He also said that Korea is a typical “A2″ class country with its national debt, capacity to repay debt and government capacity in controlling debt much more favorable compared to other countries in the similar class.
Thursday, July 2
- At the third government-civilian meeting chaired by President Lee Myung-Bak and attended by CEOs of large and small/medium-sized companies, the government decided to create a facilities investment fund worth five trillion won together with state-run banks and pension funds to vitalize investment. In addition, the government will provide R&D tax cuts of as much as 25% on R&D spending for large companies and 35% for small- and medium-sized companies.
- The BOK announced that the foreign currency reserve stood at US$231.73 billion as of the end of June, the largest level since the end of September 2008 (US$239.67 billion) and swelling US$4.96 billion from May. During the first half, the reserve rose by US$30.51 billion, a record high in terms of half-year growth. The central bank forecast the foreign currency reserve to continue to increase for the time being. The ratio of foreign debt due within a year to foreign currency reserve also declined below 90% at the end of June.
Friday, July 3
- The MSF stated in its current economic trend report that “While the economy is on the path to recovery, the private sector’s ability to recover is still weak.” The finance ministry also added, “The indicators of the real economy such as production, consumption and investment showed improvement amid continuous stability in the financial market, but the overall economy remains stagnant.” Thus, the ministry reaffirmed maintaining its expansionary macroeconomic policy. In addition, the ministry viewed financial markets to remain stable in June but had lingering uncertainties such as a possible reappearance of concerns in international financial markets and threats from North Korea.
