Signals of Economic Recovery
The economy is showing signs of recovery from long-lasting recession. Following upward signs in exports, key domestic indicators in consumption, employment, real estate, and financial markets are all showing positive signs. Furthermore, positive trends in the global manufacturing economy are raising hopes for better export activities.
According to a government release on September 11, physical and financial economic indicators are all displaying positive trends.
First, upward trends in physical indicators are clear.
In 2H 2013, increases in exports began to speed up. Retail sales, which is a key domestic indicator, also showed positive signs. Department store sales recorded 8% growth last month. Sales in the first ten days of September were led by Chuseok gift set purchases by wealthy consumers. Each department store saw approximately 22%-33% increases in sales over last year. Last month, credit card authorization volume, another consumption indicator, also increased by 7.6% over the same period last year. Gasoline sales jumped by 11.4%.
Most importantly, real estate transactions that have been stagnant for a long time are showing signs of recovery. “[In September, housing[ markets are showing signs of recovery, especially in the metropolitan area,” said Hyun Oh-seok, Deputy Prime Minister for the Economy, who concurrently serves as the Minister of Strategy and Finance, at an Economic Ministerial Meeting. “The housing market is in the final steps to get out of L-shaped stagnation,” evaluated Joo-an Kwon, researcher at Korea Housing Institute.
Recovery in the domestic markets is leading to employment. According to the Statistics Korea report titled “Hiring Trends”, the number of new employees in August increased by 430,000, breaking past 400,000 for the first time in eleven months.
Upward trends in real indicators are continuing into the financial market. The KOSPI closed at 2,003.85, 9.79 points higher than the previous day. This is the first time that the KOSPI closed above 2,000 since May 31. Upward movements in the KOSPI were led by foreign investors, who recorded over 5 trillion won (US$4.62 billion) of net buys since August 23.
“The economy itself is showing upward trends, but business equipment investments are still below expectations. Regular wages, cuts in work hours, and the Act on Registration and Evaluation of Chemical Substances are variables that stand against business investment sentiment and need to be removed,” said a high-ranking government official.