Expectations for an economic recovery are rising, as the International Monetary Fund (IMF) and others have upgraded their forecast for Korea’s economic growth this year. On the afternoon of the 26th, Seoul’s Myeongdong street is reviving its vitality, unlike the busy atmosphere until the beginning of this year. Reporter Kim Beom-jun [email protected]
The overall economy, including exports and domestic demand, is clearly showing a recovery trend. As the global economy is revived, centered on the US, which has a large-scale stimulus package, the Korean economy, which has a large external weight, is also recovering rapidly. However, some point out that some economic lagging indicators, such as employment, have not yet been on track.
◆Excellent exports amid global economic recovery
Until the 20th of this month, the export amount (preliminary value based on customs clearance) was $3.37 billion, an increase of 12.5% from the same period last year. The daily average export value (2.190 billion dollars), taking into account the number of working days, increased 16.1%. Average daily exports have been on the rise since October last year, and total exports have been on a continuous increase since November.
The recent strong exports are led by semiconductors and passenger cars. According to statistics that did not take into account the number of working days, semiconductor exports increased 13.6% on the 1st to 20th of this month. Passenger cars increased by 13.0%. Export growth is expected to continue throughout the year. This is because there is a base effect of a sharp decline in exports due to the blockade last year, and the global economy is recovering rapidly.
In particular, the recovery in the United States is remarkable. It is the impact of the massive stimulus package of the Joe Biden administration. The US economic growth rate in the fourth quarter of last year was 4.3%, 0.2 percentage points higher than expected. Last week, the number of claims for unemployment benefits fell to 600,000 for the first time since the Corona 19 pandemic to 684,000. When all national vaccinations are completed in April and May, the pace of economic recovery is expected to accelerate further. The US government estimates the US growth rate this year at 6%, but the US Central Bank (Fed) estimates that it will be able to reach 6.5% and some investment banks up to 7%.
◆The recovery of domestic demand is also clear… Employment is still
The recovery of domestic demand is also clear. Sales are growing significantly, mainly in the distribution industry. According to the Ministry of Industry, retail sales in the last month increased by 10.0% compared to the same month last year. It was only two years and one month after January 2019 (10.6%) that retail sales increased by more than 10%.
Online sales increased only 5.5%, but offline store sales increased 14.3%. As the consumer sentiment index exceeds 100 points this month, the tendency of domestic consumers to’consume retaliatory’ is expected to become stronger. For this reason, some are raising concerns about inflation. The International Monetary Fund (IMF) predicted the inflation rate of Korea this year at 1.2% in its annual consultation report released that day. It increased 0.3 percentage points from the 0.9% forecast in October last year. Kim Yong-beom, the first vice minister of the Ministry of Strategy and Finance, said at the Vice Minister’s Meeting on Price Relations that day, “the price of processed foods such as instant rice has risen due to the increase in international grain prices since the second half of last year.” I will try,” he said.
There is still a cold wind blowing in the job market. Since employment is a lagging indicator, it is believed that the warmth of economic recovery has not yet reached. According to the employment trend for February released by the National Statistical Office, the number of employed people last month was 26365,000, a decrease of 473,000 from the same month last year. Since March of last year, the early days of Corona 19, it has declined for 12 consecutive months. However, the decline was reduced compared to the previous month. In January, the worst employment disaster in history, the number of employed fell 980,000 from the same month last year.
Reporter Kang Jin-kyu [email protected]
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