The Economic Information and Education Center (EIEC) of KDI published the monthly periodical “Republic of Korea Economic Bulletin, March 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 March publication provides the updated information related to the overall Korea’s economy including Investor Relations meeting in London, expert roundtable on social mobility, ministerial meeting on international economic affairs, carbon free energy initiative roundtable. Main content is as follows: 

[Economic Bulletin, March 2024]

[Current Economic Trends] 

1. Economic activity

2. Financial markets

3. Public finance

[Economic News Briefing]

1. Investor Relations meeting in London

2. First Ministerial Meeting on International Economic Affairs

3. Expert roundtable on social mobility for promoting dynamic economy 

4. Carbon Free Energy Initiative Roundtable Meeting in the IEA Ministerial Meeting

Overview

In December, industrial production, services production and facility investment increased while retail sales and construction investment decreased. In January, job growth expanded and inflation slowed down.

In December, total production grew (up 0.3% month-on-month and up 1.1% y-o-y) driven by increases in both increased industrial production (up 0.6% m-o-m and up 6.2% y-o-y) and services production (up 0.3% m-o-m and up 0.2% y-o-y).

In December, retail sales decreased 0.8% m-o-m and 2.2% y-o-y and construction investment decreased 2.7% m-o-m and 1.2% y-o-y. Facility investment increased 5.5% m-o-m but still decreased 5.9% y-o-y.

In January, exports increased by 18.0 percent from a year ago, driven by increased exports of automobiles, ships and semiconductors. The daily average of exports increased by 5.7 percent from a year ago.

In January, the Consumer Sentiment Index (CSI) rose by 1.9 points from the previous month to 101.6. The Business Survey Index (BSI) decreased 1 point to 69 and the BSI outlook for January increased by 1 point to 69.

In December, the cyclical indicator of the coincident composite index decreased by 0.3 points from the previous month, while the cyclical indicator of the leading composite index increased by 0.1 point.

In January, the economy added 380,000 jobs compared to the previous year and the unemployment rate rose by 0.1 percentage point from a year ago to 3.7 percent.

In January, the Consumer Price Index (CPI) rose at a slower pace, increasing by 2.8 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 3.4 percent.

In January, the Korean equity market declined for the month while treasury bond yields rose and the Won weaken as expectations for an early interest rate cut by the US Fed seemed less likely. 

In January, housing prices continued to decline (from down 0.10% to down 0.14% m-o-m), while Jeonse (lump-sum deposits with no monthly payments) prices rose (from up 0.12% to up 0.05% m-o-m).

Recently, inflation has shown signs of moderating, while the Korean economy’s recovery continues to gain traction mainly driven by increases in manufacturing production and exports. However, the pace of recovery differs across economic sectors, amid weak private consumption and visible signs of a slowdown in construction investment.

Internationally, the prospects of a soft landing for the global economy are rising 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 remain heightened amid conflict in the Middle East and Russia-Ukraine.

While prioritizing price stability and the Korean economy’s recovery through the promotion of domestic consumption and support of vulnerable sectors, the government will focus on key policy tasks that were voiced in town hall meetings and impact people’s everyday lives. Policy focus will also be placed on managing potential risks and enhancing the dynamism of the Korean economy.

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