KDI 경제전망, 2013 하반기 - KDI 한국개발연구원 - 연구 - 경제전망

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KDI 경제전망, 2013 하반기
2013.11.19

년도 선택

□	우리 경제는 2014년에 수출과 내수가 모두 완만한 회복세를 지속하면서 3.7%의 성장률을 기록할 전망

우리 경제는 세계경제가 선진국을 중심으로 완만히 회복함에 따라 수출 증가세가 확대되고, 내수도 민간소비를 중심으로 개선되면서 2012년 이후 지속된 부진으로부터 점차 회복될 것으로 예상
소비자물가는 경기회복으로 인해 물가상승세가 점차 확대되겠으나, 내년에도 여전히 물가안정목표를 하회하는 2.0% 내외의 상승률을 기록할 전망
경상수지는 내수 개선, 교역조건 악화 및 원화가치 상승 등에 주로 기인하여 금년보다 축소된 510억달러 내외의 흑자를 기록할 것으로 예상

□	The Korean economy is projected to grow at 3.7% with both exports and domestic demand continuing a moderate recovery in 2014.

Korea is expected to recover moderately from the continued slowdown since 2012, as exports grow higher led by the gradually recovering global economy, mainly advanced economies, and domestic demand improves led by private consumption.
CPI inflation is expected to rise gradually led by the economic recovery but to hover around 2.0% in 2014, still below the inflation target.
Current account is expected to run a surplus of around $51.0 billion, down from 2013, mainly attributable to improved domestic demand, aggravating terms of trade, and the won’s appreciation.

Ⅰ. Current Economic Conditions

□	The Korea economy appears to be entering a moderate recovery.

Its GDP posted a second straight quarterly increase at around 1% level (annual 4% level), meaning that its year-on-year growth recovered to 3.3% in the third quarter from 1.5% in the first quarter.
The cyclical component of coincident composite index remained below the baseline, but that of leading composite index reached above the baseline, pointing to a possibility that the economy will continue a moderate recovery.

□	As private consumption and equipment investment showed less contraction, construction investment stayed on a recovery trajectory according to its indicators.

Private consumption grew at a relatively high rate (1.1% quarter -on- quarter) in the third quarter, pointing to a slightly slower contraction.
With equipment investment slowing down at a slightly lower rate, construction Investment continued a high growth influenced by the decline in relevant prices (deflators).

□	Exports appear to improve gradually, and are expected to continue a relatively steady momentum along with the recovery of the global economy afterwards.

As advanced economies entered the recovery phase in the second half of 2013, Korea’s exports per workday are on a rise led by exports to the US.
There are still some concerns lingering in the global economy, but it is expected that a continuing moderate recovery of advanced economies will likely to contribute to a gradual recovery of Korea’s exports.
Meanwhile, current account is forecast to grow up to 6% of GDP (approximately the upper range of $60 billion) on an annual basis, much higher than initially anticipated, mainly led by slower growth in domestic demand and improvement in terms of trade.

□	Headline CPI grew at a low rate of around 1%, as overall domestic demand remained tepid and import prices dropped rather sharply.

□	Labor market appears to be in relatively favorable conditions with the number of employed, mainly regular workers, continuing the increase of around 400,000, while employment and labor force participation rates increased slightly.

□	Domestic financial market stayed stable with declining short-term debt ratio and the won appreciating despite the recent liquidity crisis involving Tongyang Group.

The fact that no significant changes are witnessed in a credit spread after the Tongyang crisis can be interpreted to mean that the market expects credit crunch will only be limited.

□

In this condition, the Korean economy is forecast to improve at a gradual pace in terms of short-term and cyclical aspects, but a few remaining structural problems, such as corporate profitability falling and household debts mounting, could pose an obstacle to sustaining a stable, medium-and long-term growth.

For the past several years, the corporate sector, excluding a few large enterprises, has witnessed overall decline in its profitability, which has consequently increased the proportion of loans given to potentially under-performing listed companies whose interest coverage ratio is smaller than 100%-meaning that their operating profits are not enough to pay interest rates.
The pace of increase appears to be slightly slower of late, but household debts still stayed much above a disposable income level.

□	In this regard, it is necessary that macroeconomic policies should continue its counter-cyclical stance with simultaneous efforts to manage structural risk factors across the economy.

The Korean economy is recently on a moderate recovery, but considering continued weakness in domestic demand and lingering external uncertainties, fiscal and monetary policies need to maintain a counter-cyclical stance for a while to come.
Additionally, concerted efforts should be put in to sustain a stable growth by managing structural risks of overall economy at this current time of looming economic recovery.

Ⅱ. Domestic Economic Outlook for 2014

1. Major Assumptions

□	The global economy is projected to register a growth rate of 3.6% in 2014, expanding at a gradually faster pace than 2013 (2.9%).

□	Oil prices (import unit price) are projected to be around $100 per barrel (on an annual average) in 2014, a decrease of 5% from 2013.

□	The value of the Korean won, in terms of real effective exchange rate, is projected to rise by 6% on an annual average in 2014.

2. Domestic Economic Outlook for 2014

□	The Korean economy is forecast to recover at a 3.7% growth rate in 2014 with improvements in both exports and domestic demand.

On a year-on-year basis, the Korean economy is expected to grow at 3.9% in the first half, but 3.5% in the second half due to the base effect, while on a seasonally adjusted quarter-on-quarter basis, it is expected to grow at a similar pace with 0.9% in the first half and 0.8% in the second half.
Accordingly, the contribution of domestic demand to economic growth is expected to expand in 2014 (3.6%p), up from 2013 (2.1%p), whereas that of net exports is expected to contract in 2014 (0.1%p), down from 2013 (0.7%p) due to the import increase led by the recovering domestic demand.
The private consumption is expected to grow at 3.6% in 2014 as the income rises led by economic recovery and the won’s appreciation improves real purchasing power.
The equipment investment is expected to grow at 8.4% in 2014, as severe contraction since 2012 subsides slightly led by improving economic conditions at home and abroad and diminishing uncertainties.
The construction investment is expected to find it difficult to continue its steady growth of late considering recent decline in the construction orders received, and hence to record a 2.9% growth rate in 2014, down from 7.1% in 2013.
Exports are expected to grow at a higher rate of around 6.6% in 2014 than in 2013 due to improving export conditions brought by the global economic recovery, while imports are expected to grow at around 6.9% in 2014, up from 3.2% in 2013, attributable to the recovery of domestic demand.

□	The current account is expected to run a relatively high surplus of around $51.0 billion in 2014, although a gradual decrease from 2013 due to the recovering domestic demand and the won’s appreciation.

The goods account is expected to record a reduced surplus of $45.8 billion in 2014, compared to $61.1 billion in 2013, as the increase in goods exports (4.2%) led by the global economic recovery is exceeded by that in goods imports (7.7%) led by the recovering domestic demand.
The accounts of services and primary⋅secondary income are expected to register a surplus of $5.2 billion in 2014, although smaller than the surplus of $7.9 billion in 2013.

□	CPI inflation is expected to rise gradually led by the economic recovery but to hover around 2.0% in 2014, still below the inflation target.

□	The unemployment rate is expected to remain at a relatively low rate of 3.1%, and the increase in the number of employed is expected to record around 400,000 in 2014, up from around 350,000 in 2013.

3. Risk Factors to the Outlook

□	Now that the US witnesses a continued delay in reaching political consensus on its fiscal matters, a stronger-than-anticipated negative impact from QE reduction could slower the pace of a modest global economic recovery.

If the QE tapering by the US leads to financial instability in the euro area facing fiscal difficulties and some emerging market economies, the global economy is likely to recover at a slower pace.
If the euro area, still facing high unemployment rate, drags on its restructuring process led by a decrease in the public’s acceptance of fiscal austerity that has continued for several years now, it is likely to witness another economic slump and financial instability starting with those suffering severe fiscal difficulties.

Ⅲ. Policy Recommendations

1. Fiscal Policy

□	The fiscal policy for 2014 needs to maintain a counter-cyclical stance for a while to come, but to gradually move towards a stronger fiscal prudence reflecting the pace of economic recovery.

The basic direction in the budget bill for 2014 appears to focus on sustaining the recovery pace, and considering that the Korean economy still faces downside risks both internally and externally, the policy direction towards stimulating the economy is in part inevitable.
If the Korean economy is able to sustain the recovery pace as expected in 2014, it would be appropriate to gradually move the direction of its fiscal policy towards improvement in fiscal prudence.

□	Additionally, consistent efforts to improve fiscal structure need to be followed to expand the tax base and adjust the structure of fiscal expenditure in order to achieve a fiscal balance and secure fiscal sustainability.

To expand the tax base, it is necessary to put a priority on identifying accurate information on sole proprietors’ incomes through imposing stricter tax administration, while also broadening the tax nets by diminishing the tax exemption and reduction.
To adjust the structure of fiscal expenditure, it is necessary to be prepared for or responsive to the increase in demand for welfare expenditure by gradually reducing the proportion embarked for economic sectors as well as adjusting the priority of national agendas.
Along with them, it is necessary to consider strengthening the fiscal rules which disciplines the aggregate fiscal stance.

2. Monetary Policy

□	The monetary policy is recommended to manage the policy rate at around the current level (2.5%) for a while considering recent economic conditions, unless a sudden, unexpected shock occurs.

Considering that CPI inflation has been far below the inflation target continuously since the second half of 2012, and that inflationary pressures for 2014 is expected to low as well, there seems no imminent need for a change in the current stance of a moderate monetary policy.
- Meanwhile, the Korean economy is considered to enter a moderate recovery, but is expected to witness its aggregate demand pressure stay negative in 2014-meaning real GDP hovering below potential GDP, and therefore the easing monetary stance of today needs to be maintained.
Taking a long-term perspective, the policy needs to be careful as not to tolerate a wide gap between actual and target inflations to persist as today.
- The monetary authority needs to induce actual inflation not to deviate widely from the target range for long so that economic agents would have more confidence in the authority and the possibility of distorting the allocation of resources could be reduced.
- To that end, it is also necessary to beware of the possibility that low inflation of late might persist for long and to consider preparing to revise down the current inflation target in the medium and long run.

3. Financial Policy

□	The financial policy needs to enhance the structural prudence of house mortgage loans in order to diminish potential risks involving household debts.

To manage potential risks related to the structural vulnerability of household debts, it is necessary to improve the financial supervisory system by reflecting systemic risks of house mortgage loans.
- House mortgage loans with short-term, flexible interest rates, and lump-sum repayment types have inherent systemic risks, but they are not properly reflected in the interest rates of relevant loan products.
- In this regard, it is necessary to consider ways to improve the current financial supervision-which imposes risk weight on respective borrowers-and supervisory system towards applying differentiated weight to respective financial products according to their systemic risks or strengthening loan loss reserve requirements.

□	Financial consumer protection standards need to be improved in order to remedy the problem of conflicts of interest involving financial product sellers which came to the fore recently after the liquidity crisis involving Tongyang Group and its brokerage affiliate, Tongyang Securities.

Considerable discussions have been undertaken so far to diminish conflicts of interest problems that were witnessed in the Tongyang Group crisis, but it is also important that the standards for financial consumer protection need to be more systemized towards no regulatory void and arbitrage in financial sectors.
- The Korean government has recently adopted restrictions on transactions between affiliates in order to avoid conflicts of interest problems that could be triggered by excessive transactions between financial institutions and affiliates.
- However, with the current system regulating each financial sector respectively, it is highly likely that there will be a case of regulatory void and arbitrage and therefore the system needs to shift towards regulating respective financial products and sales activities so that the rights of financial consumers will be better guaranteed.

요 약

제 1 부 경제전망 및 정책방향
　Ⅰ. 현 경제상황에 대한 인식
　Ⅱ. 2014년 국내경제 전망
　　1. 대외여건에 대한 주요 전제
　　2. 2014년 국내경제 전망
　　3. 전망의 위험요인
　Ⅲ. 정책방향
　　1. 재정정책
　　2. 통화정책
　　3. 금융정책

제 2 부 경제현안 분석
　Ⅰ. 민간소비 수준에 대한 평가: 소득과의 관계를 중심으로
　Ⅱ. 최근 경상수지 흑자 확대의 요인 분석
　Ⅲ. 최근 물가상승률에 대한 평가 및 향후 전망

제 3 부 국내외 경제동향
　Ⅰ. 국내경제 동향
　　1. 국내총생산
　　2. 경 기
　　3. 소 비
　　4. 설비투자
　　5. 건설투자
　　6. 수출입 및 국제수지
　　7. 노동시장
　　8. 물 가
　　9. 금융시장
　　10. 재 정
　Ⅱ. 세계경제 동향
　　1. 개 괄
　　2. 주요 국가별 경제상황
　　3. 환율 및 금리
　　4. 원자재 가격

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