to leave a comment.
"Burden on people's livelihoods due to inflation pressure from high oil prices...Chuseok stabilization measures to be promoted"
With oil prices at $100, "annual inflation rate of 2.7% achievable due to price cap system"
Ministry of Economy and Finance publishes September Green Book
The government continued its positive diagnosis of the current South Korean economy, stating that "a solid economic recovery trend is continuing."
However, it expressed concern that uncertainty related to the Middle East war and US tariff measures has expanded compared to last month.
The Ministry of Economy and Finance assessed in its September issue of 'Recent Economic Trends' (Green Book), released on the 11th, that "our economy recently shows a solid economic recovery trend, with exports increasing significantly and domestic demand, including consumption, showing improvement."
This slightly revised the August issue's judgment, which stated, "the economic recovery trend is strengthening."
An official from the Ministry of Economy and Finance explained, "Our economy is taking a step up with fast and strong growth momentum and settling to some extent," adding, "We revised the assessment because there is a high possibility that a robust growth trend will continue until next year in that state, unless external variables go to the worst."
Total industrial production in July was at the same level as the previous month.
It decreased in services (month-on-month -1.3%, year-on-year 3.5%) and construction (month-on-month -1.1%, year-on-year -3.2%), but increased in mining and manufacturing (month-on-month 0.2%, year-on-year 3.6%).
Looking at the rapid indicators for services in August, online sales increased by 12.9% compared to a year ago.
However, the average daily stock trading volume was 31.8 trillion won, lower than July (43 trillion won). Vehicle fuel sales also decreased by 14.3%, the largest drop since April (-22.0%).
Looking at the expenditure sector, retail sales (month-on-month -2.4%, year-on-year -0.8%) decreased, but facility investment (month-on-month 7.5%, year-on-year 24.9%) increased.
Looking at the rapid indicators for retail sales in August, domestic card approvals increased by 4.9% compared to a year ago. The growth rate expanded from July (3.7%).
However, domestic sales of Korean passenger cars decreased by 28.3%. This is the largest decrease since -33.3% in September 2021.
An official from the Ministry of Economy and Finance said, "Monthly production decreased by 30,000 to 40,000 units due to strikes in July-August, but since the strikes have ended, it will recover immediately from September," adding, "Monthly indicators fluctuate greatly due to fires or strikes, so it is better to judge the economy by looking at the trend."
Exports in August increased by 68.7% compared to a year ago, driven by expanded exports of semiconductors, computers, and cosmetics.
The consumer sentiment index in August recorded 104.5, a decrease of 2.3 points (p) from the previous month.
The number of employed people in August increased by 184,000, and the increase rate expanded.
The consumer price index in the same month rose by 3.1%, a larger increase than in July (2.8%).
In the August financial market, stock prices rose, the won/dollar exchange rate fell, and government bond yields rose.
The housing market in July was on the rise. Sale prices rose by 0.35% month-on-month, a larger increase than in June (0.33%). Jeonse (lump-sum deposit) prices rose by 0.38%, showing the same increase rate as in June.
Regarding external conditions, the government judged that "the global economy continues a moderate growth trend, but uncertainty related to the Middle East war and US tariff measures has slightly expanded." This raised the level of vigilance for external risks compared to the August issue, which stated 'uncertainty persists'.
The government further noted that "the burden on people's livelihoods continues due to inflation pressure from high oil prices and difficult employment conditions for vulnerable groups and sectors."
It also announced, "To minimize the impact of the Middle East war, we will thoroughly manage the supply and demand of key items and seamlessly implement major policy tasks of the Chuseok livelihood stabilization measures, such as stabilizing prices of seasonal goods."
Regarding mid-to-long-term responses, it stated, "We will swiftly promote the economic growth strategy for the second half of 2026 to address structural issues such as post-Middle East war strategy, rebound in potential growth rate, and polarization."
An official from the Ministry of Economy and Finance said, "With all three types of international oil prices hitting $100, global inflation pressure, international oil prices, and the expansion of volatility in international financial markets have recently increased a bit more," adding, "We evaluate the external sector as a factor that needs to be watched with more vigilance."
He continued, "Since there is a price cap system for petroleum products, the primary shock will not be significant," and predicted, "Barring any major unforeseen events, we expect to achieve an annual consumer price inflation rate of 2.7%."
Newsletter
Get key news delivered to your email every morning
to leave a comment.