The Economic Information and Education Center (EIEC) of KDI published the monthly periodical “Republic of Korea Economic Bulletin, April 2024” to promote a greater understanding of the Korean economy by providing readers with information on the latest economic trends and policy issues as well as relevant news and current events. 

The April publication provides the updated information related to the overall Korea’s economy including Korea’s GDP in 2023, G20 meeting and bilateral talks, Korea-Vietnam DPM’s dialogue, Fitch’s rating on Korea, Korea-Japan finance deputies’ dialogue, external debt in 2023, and Korean OFDI in 2023. Main content is as follows: 

[Economic Bulletin, April 2024]

[Current Economic Trends] 

1. Economic activity

2. Financial markets

3. Public finance

[Economic News Briefing]

1. Korean economy grew by 1.4% in 2023

2. Outcome for G20 Meetings and Bilateral Talks

3. Korea’s Deputy Prime Minister meets with Vietnam’s Finance Minister 

4. Fitch maintains Korea’s sovereign credit rating at “AA-” with a “stable” outlook

5. The Second Korea-Japan Finance Deputies’ Dialogue

6. Korea’s External Debt decreases to US $663.6 billion in 2023

7. Korean OFDI totals US $63.38 billion in 2023

Overview

In January, services production, retail sales, and construction investment increased while industrial production and facilities investment dropped. In February, job growth improved while consumer prices rose at a faster pace.

In January, total production grew (up 0.4% month-on-month and up 7.3% y-o-y) driven by increases in services production (up 0.1% m-o-m and up 4.4% y-o-y) and construction production (up 12.4% m-o-m and up 17.6% y-o-y) despite a decline in industrial production (down 1.3% m-o-m and up 12.9% y-o-y).

In January, retail sales increased 0.8% m-o-m and 3.4% y-o-y and construction investment increased 12.4% m-o-m and 17.6% y-o-y. Facility investment decreased 5.6% m-o-m and 4.1% y-o-y.

In February, exports increased by 4.8 percent from a year ago, driven by increased exports of semiconductors and ships. The daily average of exports increased by 12.5 percent from a year ago.

In February, the Consumer Sentiment Index (CSI) rose by 0.3 points from the previous month to 101.9. The Business Survey Index (BSI) decreased 1 point to 68 and the BSI outlook for March increased by 3 points to 72.

In January, the cyclical indicator of the coincident composite index increased by 0.1 points from the previous month, and the cyclical indicator of the leading composite index remained steady.

In February, the economy added 329,000 jobs compared to the previous year and the unemployment rate rose by 0.1 percentage point from a year ago to 3.2 percent.

In January, the Consumer Price Index (CPI) rose at a faster pace, increasing by 3.1 percent from the previous year. The index excluding food and energy prices increased by 2.5 percent, and the index excluding agricultural and petroleum products increased by 2.6 percent. The CPI for basic necessities rose by 3.7 percent.

In February, Korean Treasury Bond yields rose owing to the weakening expectation for an early interest rate cut by the US Fed. The Korean equity market was up for the month due to the anticipation for a rebound in the IT industry and corporate value enhancement.

In February, housing prices continued to decline (down 0.14% m-o-m), while Jeonse (lump-sum deposits with no monthly payments) prices rose (up 0.03% m-o-m)

Recently, inflation slowdown has been moderated, while the Korean economy’s recovery continued to gain traction mainly driven by increases in manufacturing production and exports, and job growth remains strong. However, the pace of recovery differs across economic sectors amid weak private consumption and sluggish construction investment.

Internationally, the prospects of a soft landing for the global economy continue along with expectations of growth in the global IT industry. At the same time, the risk of instability stemming from geopolitical events and the global supply chain linger amid conflicts in the Middle East and Russia-Ukraine.

Along with a concerted effort to achieve the firm anchoring of price stability, the government will focus on restoring a balanced recovery by expanding economic recovery momentum into vulnerable areas in people’s lives and domestic consumption. In addition, strengthened endeavors will be made to promptly carry out follow-up measures on key policy tasks that were voiced in town hall meetings. Policy focus will also be placed on meticulously managing potential risks and enhancing the dynamism of the Korean economy.

If you have any inquiries, please feel free to contact us.

(KDI Economic Bulletin, +82-44-550-4170, sjung@kdi.re.kr)