The Economic Information and Education Center (EIEC) of KDI published the monthly periodical “Republic of Korea Economic Bulletin, February 2022” in English to provide information on Korea’s current economic trends, policy issue, various economic news and key economic indicators to foreign countries.

The February publication provides the updated information related to the overall Korea’s economy including 2022 work report, Korea’s GDP in 2021, 2022 supplementary budget proposal, inbound FDI in 2021 and Korea-India CEPA. Main content is as follows:

[Current Economic Trends]
1. Economic activity
2. Financial markets
3. Public finance

[Policy Issue]
2022 work report

[Economic News Briefing]
1. Korea grows 4.0% in 2021
2. Supplementary budget worth 14 trillion won proposed for microbusinesses and prolonged quarantine
3. Inbound FDI posts US $29.5 billion in 2021
4. Government to upgrade CEPA with India

[Overview]

Mining & manufacturing and services rose in November, as well as facility and construction investment while retail sales declined. Employment continued to improve in December, consumer price inflation going up at a slower pace.

Industrial production rose 3.2 percent month-on-month in November as both mining & manufacturing (up 5.1%, m-o-m and up 5.9%, y-o-y) and services (up 2.0%, m-o-m and up 5.3%, y-o-y) went up. Industrial production improved 5.3 percent year-on-year.

Retail sales (down 1.9%, m-o-m and up 4.6%, y-o-y) fell in November, and facility investment (up 10.9%, m-o-m and up 9.2%, y-o-y) increased, as well as construction investment (up 2.4%, m-o-m and down 5.6%, y-o-y).

Exports rose 18.3 percent year-on-year in December due to strong semiconductors, petrochemicals and other major exports. Average daily exports, an indicator calculated according to the days worked, rose 15.9 percent year-on-year (US $2.14 billion, December 2020 → US $2.48 billion, December 2021).

The consumer sentiment index (CSI) dropped 3.7 points in December to 103.9. The business sentiment index (BSI) for the manufacturing sector rose 5 points to 95, and the BSI outlook for January 2022 improved by 4 points to 92.

The cyclical indicator of the coincident composite index for November went up by 0.4 points, and the cyclical indicator of the leading composite index fell 0.4 points.

The economy added 773,000 jobs year-on-year in December and the unemployment rate fell 0.6 percentage points year-on-year to 3.5 percent.

Consumer prices rose 3.7 percent year-on-year in December due to high prices of personal services. Core prices rose 2.7 percent.

Stock prices went up in December with better prospects for semiconductors. The won weakened and Korea Treasury yields rose as the Fed’s tapering accelerates.

Housing price growth eased in December (up 0.63% → up 0.29%, m-o-m), as well as growth in Jeonse (lump-sum deposits with no monthly payments) prices (up 0.46% → up 0.25%, m-o-m).

Despite strong exports and steadily improving job data, there are concerns that strengthened quarantine measures such as social distancing would negatively affect domestic demand including close-contact services.

Although the global economy has been on a recovery track, worries linger over growing inflation pressures and supply chain disruptions, and uncertainties remain due to the spread of the omicron variant and shifting monetary policy in major countries.

The government will work hard, with thorough quarantine measures, to provide full support for economic recovery and for those who struggle amid the pandemic, and at the same time will focus on properly dealing with inflation risks and improving livelihoods.