News
Despite the continued uncertainty in global financial markets, the Korean economy appears to continue on an expansionary trend with improvement in the employment market. The mining & manufacturing and services industries in May showed a continued growth pace. The mining & manufacturing production growth rate registered 21.5%, slightly up from the previous month. The service industry production index seems to maintain an overall upward trend, despite the decreased month-on-month growth rate. The average capacity utilization rate in manufacturing recorded a high rate of 82.8%. The production-inventory cycle signaled a continuing economic expansion with a continued growth pace in production. During May, consumption-related economic indicators appear to maintain the upward trend, although the growth rate has decreased compared with the previous month.
In May, equipment investment-related indicators continued to maintain a high upward trend, along with construction-related indicators improving slightly. The equipment investment index recorded a 22.3% growth rate (25.5% in April), due to the continued increase in investment in machinery, such as semiconductor equipment. The trade account in June recorded a surplus of $7.47 billion, sharply up from the previous month ($4.13 billion), as ship exports increased significantly. Exports recorded $42.65 billion, up from the previous month ($39.1billion), due to a sharp rise in ship exports and the increased days of operation. Balance of Payments in May 2010 Current account recorded a surplus of $3.83 billion, a sharp rise from the month earlier ($1.42 billion), influenced by the turnaround in income account into a surplus and the reduced deficit of service account. The labor market-related indicators in May showed a continued recovery in employment led by the private sector. The number of employed recorded a rise of 586,000 (2.5%), while the labor force participation rate recorded 61.9%, up by 0.3%p. During June, foreign exchange rates and stock prices rose, as the risks of global financial markets are moderated. Interest rates increased compared with the previous month due to the concerns over inflation and a likelihood of rise in interest rates. The KRW/USD exchange rate recorded a rise, compared with the previous month, due to the news of stricter regulations on banks’ forward exchange position.
The KOSPI index rose by 57.0p to close at 1698.3p as of end-June, influenced by continuing recovery of the domestic economy and the improved investment sentiment due to the rise in global stock markets.