Corée du Sud

Korea - Economic Forecasts

The second biannual Economic Forecasts event of 2012 was held on 8th November by the French-Korean Chamber of Commerce and Industry with the support of Daegu-Gyeongbuk Free Economic Zone (DGFEZ). The two speakers gave the main trends of second half of 2012 as well as insights for the Korean economy in 2013.

Two speakers for this Economic Forecasts : Mr. Benoît Gauthier, Economic and Trade Counselor, French Embassy and Mr. Jae Hoon Yoo, Standing Commissioner, Financial Services Commission of Korea.
Both Mr. Gauthier and Mr. Yoo, under the overview of Mr. Stanislas Roussin, Business Development Manager, SERIC Seoul, gave the main trends of second half of 2012 as well as insights for the Korean economy in 2013.

Economics Uncertainties Linger
The growth rate has been in constant decline in 2012 in quarterly bases since last year. The last revised growth outlook for 2012 from the International Monetary Fund (IMF) stands at 2.7%, which is a readjusted value from 3.5% at the beginning of the year. An improvement is predicted for the growth rate in 2013 at a value of 3.6%. However, the pace of recovery is expected to be only modest thus the certainty of the Gross Domestic Product (GDP) value remains to be seen.

Domestic Consumption under Threat
Korean domestic consumption is under threat. Household consumptions are affected by vulnerabilities and private demands have seen positive contributor to growth since 2010. The central Bank of Korea (BOK) is proactive to maintain low interest rates and filling liquidities in the market to sustain household consumptions in credit expansions. Fortunately, the increase in employment rate and wages has led to a growth in purchasing power. This will lead to an increase in private consumption, but the progress is expected at only a limited level. Korea has the highest household debt to disposable income ratio in all Organization for Economic Co-operation and Development (OECD) countries, higher than the United Kingdom (UK) and the United States (US).

Slowing Trade Growth in the Global Market
Exports count for 60% of the growth contribution in Korea. Of these, 30% come from China, the biggest trading partner, followed by the European Union (EU), Japan, the US and others. In 2012, exports showed a 29% increase, with an even higher 32% increase in imports. Main importations were in energy, raw materials and food products sectors.

However, the trading demands are slowing from the traditional partners, with Japan and the EU showing a decrease in the growth rate this year, reaching -1% and -13% respectively. Japan is no longer the biggest export competitor in the technology sector, and as a consequence its importance as a trading partner is on the decline. The Eurozone is facing persistent insecurity over its shaky financial and export channels. Even the export market in China is waning due to its slowing economy and China increasingly looks more inwards into its domestic demands.

The two main negative trade terms include the rising import prices as the market reopens up, along with the export prices becoming under threat with increased competition in electronics, communication devices, and automobiles.

The summer of 2012 had been especially hard hit in all industries in the Korean trade market, but is now showing signs of improvement, especially as the Korean authorities and banks have mobilized support with measures such as lowered base interest rates, from 3.25% to 2.75%.
 


In brief

  • Growth downturn adjusted to 2.4% in 2012, but expected to show a modest recovery in 2013
  • Increasing household debt and domestic consumption
  • Export market on a decline due to continued external factors uncertainties
  • Inflation expected to come under control
  • High dependency on foreign investors
  • Korean government and banks working proactively to deal with the ongoing financial crisis

 


Main figures

  • GPD: +3.6 % in 2011
  • Exports 2011: 555 billion USD
  • Inflation growth +4% in 2011
  • Estimation GPD 2012: +2.4%


Contact
French Korean Chamber of Commerce and Industry
Yoojin LEE
PR & Events Director
Tél. : (82) 2 2268 9532
www.fkcci.com 
@ : y.lee(@)fkcci.com 

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