Ministry of Economy and Finance: "Korean Economy Uncertainty Rated in Greenbook for 8 Consecutive Months... 'Sustained → Expanded → Sustained'"

Recent Economic Trends in January 2021

Increase in Total Industrial Production · Decrease in Retail Sales
Larger Decline in Employment
"Will Strengthen Comprehensive Policy Responses for Livelihood and Employment Stability"

Myeongdong Street, Jung-gu, Seoul. (File photo)

[Sejong=Asia Economy Reporter Joo Sang-don] On the 15th, the Ministry of Economy and Finance recently evaluated the Korean economy as a situation where "uncertainty in the real economy continues." It diagnosed that the Korean real economy has been facing uncertainty for eight consecutive months from June last year to January this year.

On the 15th, the Ministry of Economy and Finance announced the "Recent Economic Trends (Green Book) for January 2021," which contains this content.

The Green Book comprehensively evaluated, "Recently, our economy has seen an expansion in export recovery, but due to the third wave of COVID-19 and strengthened social distancing measures, domestic demand has contracted and employment indicators have slowed, resulting in continued uncertainty in the real economy."

The term "uncertainty" began to appear in the Green Book after the spread of COVID-19 starting in March last year. In March, it was evaluated that "uncertainty in the real economy and financial markets is expanding," followed by a diagnosis in April that "export uncertainty is increasing." In May, instead of the term uncertainty, it was described as "expansion of downside risks in the real economy," and from June onward, it was diagnosed that "uncertainty continues." Since then, expressions such as "continuing" and "expanding" have been repeatedly used regarding the uncertainty of our economy. In December, it was viewed as expanding, but in January this year, it was again evaluated as continuing.

The main reason the Ministry of Economy and Finance recently evaluated that uncertainty in the Korean economy continues is that industrial activity indicators increased, but retail sales decreased, and the decline in employment widened significantly. In fact, in November last year, production in mining and manufacturing and service industries increased by 0.3% and 0.7% respectively from the previous month, resulting in a 0.7% increase in total industrial production. Exports in December also rose 12.6% year-on-year, thanks to improvements in information and communication technology (IT) exports and an increase in working days (+1 day). However, retail sales in November decreased by 1.4% year-on-year, and employment in December dropped by 628,000 people, significantly expanding the decline.

As of December, the Consumer Sentiment Index (CSI) was 89.8, down 8.1 points from the previous month, and the Business Survey Index (BSI) for manufacturing performance was 82, down 3 points. The January outlook also fell 4 points to 77.

On the other hand, the rate of increase in housing sale prices and jeonse (long-term lease) prices expanded in December last year. Sale prices rose from 0.54% in November to 0.90% in December, and jeonse prices increased from 0.66% to 0.97% during the same period.

A Ministry of Economy and Finance official said, "Externally, the improvement in real indicators has somewhat weakened due to the continued spread of COVID-19 in major countries and strengthened lockdown measures, but expectations for economic recovery are also spreading due to recent vaccinations and the possibility of strengthened policy responses in major countries." He added, "We will promptly implement tailored damage support measures in response to the third wave of COVID-19 and strengthen comprehensive policy responses for livelihood and employment stability."

This content was produced with the assistance of AI translation services.