MoEF "8 Consecutive Months of Korean Economy Uncertainty Assessed in Greenbook... 'Sustained → Expanded → Sustained'" (Update)

Recent Economic Trends in January 2021

Increase in Total Industrial Production · Decrease in Retail Sales
Widening Decline in Employment
"Expanded uncertainties continue... We will strengthen comprehensive policy responses for public 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 evaluated the recent Korean economy as a situation where "uncertainties in the real economy continue." It diagnosed that the Korean real economy has been facing uncertainties 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 assessed, "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 uncertainties 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 "uncertainties in the real economy and financial markets are expanding," followed by a diagnosis in April that "export uncertainties are increasing." In May, instead of the term uncertainty, it was described as "increased downside risks in the real economy," and from June onward, it was diagnosed that "uncertainties continue." Since then, expressions such as "continuing" and "expanding" have been repeatedly used regarding uncertainties in our economy. In December, it was viewed as expanding, but in January this year, it was again assessed as continuing.

Kim Young-hoon, head of the Economic Analysis Division at the Ministry of Economy and Finance, explained, "Currently, the spread of COVID-19 and strengthened social distancing measures have been ongoing for over a month," adding, "It was judged that the expanded uncertainties from last month (December 2020) are still continuing."

The main reason the Ministry of Economy and Finance recently evaluated that uncertainties in the Korean economy continue 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 the manufacturing and service sectors increased by 0.3% and 0.7% respectively compared to 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 Sentiment Index (BSI) for manufacturing performance was 82, down 3 points. The January outlook also fell 4 points to 77.

On the other hand, in December last year, the rate of increase in housing sale prices and jeonse prices expanded. 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.

Mr. Kim said, "Externally, the continued spread of COVID-19 in major countries and strengthened lockdown measures have somewhat weakened the improvement in real indicators, but expectations for economic recovery are also spreading due to recent vaccinations and the possibility of strengthened policy responses in major countries," adding, "We will swiftly implement tailored damage support measures in response to the third wave of COVID-19 and strengthen comprehensive policy responses for public livelihood and employment stability."

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