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In the September edition of the Green Book, a report on Korean economic trends by the Ministry of Strategy and Finance (MOSF), the MOSF noted that the Korean economy showed gradual improvement despite automobile industry strikes.
It is one step forward from the analysis in the August edition that the Korean economy is showing signs of recovery.
The number of hired workers increased by 367,000 in July year-on-year, showing growth of more than 300,000 workers for two straight months. Industrial production also rose by 0.3 percent from last month and construction investment grew by 0.8 percent due to increased demand for civil engineering.
However, mining and manufacturing production dropped by 0.1 percent from last month due to the automobile business’ strikes. The index on capital investment was also reduced by 2.5 percent.
Lee Hyung-il, an official from the Economic Policy Bureau of MOSF noted that capital investment is unlikely to improve due to low corporate investor sentiment and uncertainties in the global economy.
Domestic demand continued to show growth following increased retail sales in June and July.
According to the MOSF, department store sales (7.0 percent) and domestic credit card use (7.6 percent) increased year-on-year, and discount store sales dropped less than they did last month (-4.9 percent). This was due to increased consumption of household appliances due to the hot weather.
With the summer vacation season, gasoline sales increased by 11.4 percent. Domestic sales of Korean automobiles grew by 23.9 percent year-on-year due to last year’s strikes.
Lee said the production increase with the end of GM Korea strikes in July is larger than the decrease in automobile production because of Hyundai and Kia Motors’ strikes in August, adding that strikes will not have a negative nor positive impact on domestic automobile sales in August.
The MOSF also forecast that the global economy will show gradual recovery.
However it also expressed concerns for the economic slowdown of emerging countries due to the United States’ reduced quantitative easing and increased volatility in the financial market. Talks over a debt limit in the United States and Syria raids are also possible risks.
Europe’s real gross domestic product in the second quarter grew by 0.3 percent from the last quarter to escape a slowdown for the first time in seven quarters. However, a high unemployment rate remains.
Source: Yonhap News (Sep. 10, 2013)
** This article was translated from the Korean.