[Economic Outlook] Announcement of Next Year's Economic Policy Direction... Focus on Price System Reform

Interest in Whether Producer Prices Hit Record High for 8 Consecutive Months

Citizens walking along the streets of Myeongdong, Seoul. / Photo by Mun Ho-nam munonam@

[Sejong=Asia Economy Reporter Moon Chaeseok] This week, the government will announce next year's economic policy direction and the results of the consumer price index revision. There is also interest in whether the producer price index will record its highest level for eight consecutive months.

The government will announce next year's economic policy direction on the 20th. After forecasting next year's growth rate, employment, and inflation, it will establish the policy framework. Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki recently stated at a meeting with heads of research institutes and investment bank experts, "Next year should be the starting line for our economy to enter a complete economic recovery and an upgraded new growth trajectory." He also identified immediate challenges as ▲ the increase in confirmed cases including the Omicron variant ▲ difficulties faced by vulnerable groups such as small business owners due to prolonged quarantine measures ▲ livelihood issues such as living costs, household debt, and the real estate market ▲ alleviation of post-COVID new polarization and strengthening of future growth engines.

Statistics Korea will announce the results of the 2020-based consumer price index revision on the 22nd. Based on household trend surveys of consumer expenditure, the weights (importance) of items will be recalculated, and the survey method will be changed to reflect purchasing patterns and changes in consumer goods, aiming to improve the accuracy of price statistics.

The Bank of Korea will release the 'November Producer Price Index' on the 21st. Previously, the provisional October producer price index was 112.21 (2015 level 100), marking the highest level for seven consecutive months since April. This is 8.9% higher than a year earlier. However, since the rise in oil prices somewhat eased in November, the increase in producer prices may also slow down.

The Bank of Korea will also publish the Financial Stability Report (as of December) on the 23rd. This report, published twice a year, contains the status and characteristics of credit (debt) in the private sector, including households and businesses. On the 24th, the 'Monetary and Credit Policy Operation Direction' will be announced. It is expected to mention content that will indicate the Bank of Korea's monetary policy stance for the coming year.

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