The Economic Information and Education Center (EIEC) of KDI published the monthly periodical “Republic of Korea Economic Bulletin, May 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 May publication provides the updated information related to the overall Korea’s economy including Korea’s GDP in Q1 2022, 2021 Government Financial Statement, Inbound FDI in Q1 2022, CPTPP Entry Plan Approved, G20 Finance Ministers Meeting, Indo-Pacific Economic Framework (IPEF), and Korea-Sweden Industrial Cooperation Committee. Main content is as follows:

[Economic Bulletin, May 2022]

[Current Economic Trends]

1. Economic activity

2. Financial markets

3. Public finance

[Economic News Briefing]

1. Korea grows 3.1% in Q1 2022

2. Consolidated fiscal balance posts 30.4 trillion won deficit in 2021

3. Inbound FDI up 14.9% in Q1 2022

4. Korean government approves CPTPP entry plan

5. DPM Hong attends G20 Finance Ministers and IMFC meeting

6. Korea and US discuss IPEF

7. Government to boost industry ties with Sweden

Overview

Mining & manufacturing and retail sales rose in February while services, facility investment and construction investment declined. Employment continued to increase in March and consumer prices rose at a faster pace.

Industrial production fell 0.2 percent month-on-month in February as services (down 0.3%, m-o-m and up 3.8%, y-o-y) went down. Mining & manufacturing grew (up 0.6%, m-o-m and up 6.5%, y-o-y).

Retail sales (up 0.1%, m-o-m and up 1.6%, y-o-y) increased in February. Facility investment (down 5.7%, m-o-m and up 2.1%, y-o-y) and construction investment (down 8.5%, m-o-m and down 4.7%, y-o-y) decreased.

Exports rose 18.2 percent year-on-year in March due to strong semiconductors and petrochemicals. Average daily exports went up 23.4 percent year-on-year (US $2.24 billion, March 2021 → US $2.76 billion, March 2022).

The consumer sentiment index (CSI) grew 0.1 points month-on-month in March to 103.2. The business survey index (BSI) for the manufacturing sector dropped 7 points to 84, and the BSI outlook for April dropped 8 points to 85.

The cyclical indicator of the coincident composite index for February went up by 0.2 points, and the cyclical indicator of the leading composite index dropped by 0.3 points.

The economy added 831,000 jobs year-on-year in March and the unemployment rate fell 1.3 percentage points year-on-year to 3.0 percent.

Consumer prices rose 4.1 percent year-on-year in March due to an oil prices hike. Core prices rose 3.3 percent.

Stock prices went up in March thanks to strong employment gains in the U.S. The won weakened and Korea Treasury yields picked up out of concerns about inflation and Russia’s war against Ukraine.

Housing price growth eased in March (up 0.03% → up 0.02%, m-o-m), and prices of Jeonse (lumpsum deposits with no monthly payments) declined (up 0.00% → down 0.02%, m-o-m).

Despite strong exports and continuously improving employment data, there are concerns that the rapidly spreading omicron variant and longer-than-expected Russia-Ukraine war could undermine domestic demand recovery and spur higher inflation.

Internationally, uncertainties in the global economic recovery are rising with COVID-19 lockdown measures in several major cities in China and the possibility of major economies making a swift transition of monetary policies amid higher inflationary pressure and supply chain disruptions caused by Russia’s invasion of Ukraine.

The government will do its utmost effort to support economic recovery and rapidly respond to the spread of the omicron variant. The government will also work hard to improve people’s livelihoods by proactively managing inflation while closely watching potential economic risks at home and abroad.

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(KDI Economic Bulletin, +82-44-550-4621, hs.hwang@kdi.re.kr)