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KDI - Korea Development Institute

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KDI News The economic outlook is bleak: ‘Flexibility’ is the key to resolving the situation

On the 17th October, Dongchul Cho, the president of the Korea Development Institute, delivered a presentation titled “Korean Economic Outlook and Reform Tasks” at the ‘Kukmin Future Forum 2023’ organized by Kukmin-Ilbo.

November 14, 2023
KDI News The 2023 APN Conference successfully ended

The 2023 Asia-Pacific PPP Practitioners’ Network (APN) was held in Seoul, Korea, at the Global Knowledge Exchange and Development Center (GKEDC), from October 31 to November 2.

November 14, 2023
KDI FOCUS Assessing Old-Age Poverty with Income and Assets: Generational Insights and Policy Directions

Korea’s old-age poverty rate, based solely on income, ranks among the highest in the OECD.

November 13, 2023
Other Research KOR North Korean Economy, October 2023

The increasing marketization in North Korea has heightened the importance of market price data.

October 31, 2023
Monthly Economic Trends KDI Monthly Economic Trends 2023. 10

The Korean economy is showing a gradual easing of the slowdown, although external uncertainties linger.

October 11, 2023
News KDI President discussed with Nobel Prize Winner Paul Romer

On September 12, KDI President Dongchul Cho met with Nobel Prize winner Paul Romer at the World Knowledge Forum convened by Maeil Business Newspaper. During the session, President Cho and Professor Romer discussed various topics, including the Korean economy and Korea’s strategic options in the context of the U.S.-China conflict.？

September 20, 2023
KDI FOCUS Approaches to Enhance the Market Functionality of the K-ETS

South Korea has set ambitious greenhouse gas (GHG) emission reduction targets. However, the country currently confronts a decline in the price of emission permits.

July 18, 2203
KDI News The 2022 Knowledge Sharing Program (KSP) Annual Report

We are delighted to announce the release of the 2022 Knowledge Sharing Program (KSP) Annual Report!

August 09, 2023
KDI News [MOU & Expert Seminar] CIER from Taiwan

On August 10, the Korea Development Institute (KDI) formalized a Memorandum of Understanding (MOU) with Taiwan's Chung-Hua Institution for Economic Research (CIER) and hosted an expert seminar focused on the 'Net-Zero Transition'

August 17, 2023
KDI News [Expert Meeting] African Development Bank (AfDB)

A delegation from the African Development Bank (AfDB), including Kevin Urama, Vice President; Edmond Wega, Director; Eric Ogunleye, Division Manager of Policy Management; and Ji Young Jang , Knowledge Dissemination and Event Assistant, visited KDI on July 13th.

August 04, 2023
KDI News 2023 KSP Dissemination Conference ended with a great success

On September 11, 2023, at The Westin Josun Seoul, the "2023 Knowledge Sharing Program (KSP) Dissemination Conference" was held under the theme "Redesigning Knowledge Sharing: A Platform for Economic Connectivity and Stability." The event was hosted by the Ministry of Economy and Finance (MOEF) and co-organized by the Korea Development Institute (KDI), the Export-Import Bank of Korea (KEXIM), and the Korea Trade-Investment Promotion Agency (KOTRA).

September 21, 2023
Other Research INNOVATIVE KOREA: Leveraging Innovation and Technology for Development

The Republic of Korea is one of the few low-income economies that has successfully developed into a high-income economy in recent history, making it a valuable case study.

September 20, 2023
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Summary

Monthly Economic Trends KDI Monthly Economic Trends 2023. 11
■ The Korean economy is showing signs of a moderated economic deceleration, led by the semiconductor industry, although external uncertainties persist.
　 　 　
　 ○ Services production is maintaining a steady increase, and the slowdown in manufacturing production and exports is beginning to ease, driven by the semiconductor industry.
　 　 　
　 - Bolstered by the expansion of travel demand, related service industries are seeing sustained growth in production. The construction sector is maintaining robust growth, and employment figures in related industries have rebounded.
　 　 　
　 - Exports have displayed moderate sluggishness across most items, including semiconductors.
　 　 　
　 - High-interest rates have kept goods consumption and equipment investment subdued.
　 　 　
　 ○ However, rising interest rates in the US and escalating tensions in the Middle East are contributing to lingering external uncertainties.
　 　 　
　 - The rise in US market interest rates is likely to influence domestic market rates, potentially hampering domestic demand.
　 　 　
　 - Furthermore, intensifying geopolitical tensions are driving up the volatility of global oil prices.

Summary

Monthly Economic Trends KDI Monthly Economic Trends 2023. 10
■  The Korean economy is showing a gradual easing of the slowdown, although external uncertainties linger.
     
  ○ The Korean economy is showing a gradual easing of the slowdown, although external uncertainties linger.
     
  - The manufacturing industry is witnessing a marked deceleration in production decline and an increase in the average capacity utilization rate, indicating emerging signs of moderating sluggishness.
     
  - Moreover, the value of construction completed continued high growth, led by escalating construction costs and the resumption of halted projects.
     
  ○ However, external uncertainties persists, evidenced by the consistent monetary tightening stance in the US and growing inflationary pressure driven by rising oil prices.
     
  - With the growing anticipation of an extended phase of monetary tightening in the US, domestic market interest rates also ascended, imposing a strain on the economy.
     
  - Influenced by climbing oil prices, headline inflation has intensified, potentially curtailing consumer spending power.

Summary

Monthly Economic Trends KDI Monthly Economic Trends 2023. 9
■ The Korean economy is experiencing a slight easing in export contraction, yet external uncertainties, such as economic instability in China, are intensifying.

○ The slowdown in manufacturing production is gradually easing, largely fueled by the semiconductor sector, while services production continues on a modest growth path.

- The decrease in semiconductor exports is decelerating, and other categories are also exhibiting signs of better export performance.

- Simultaneously, the expansion in services production has marginally slowed, attributable to temporary factors like the base effect and deteriorating weather conditions; nonetheless, a modest growth trend persists.

○ Domestic and international economic uncertainties are escalating, underscored by heightened concerns over China’s economic instability and increasing inflationary pressures due to rising international oil prices.

- The Chinese economy faces growing downside risks, such as financial instability in real estate firms and sluggish real estate investment.

- Furthermore, the increase in consumer prices, driven by rising international oil prices, could partially hinder the alleviation of economic downturns.

Summary

Monthly Economic Trends KDI Monthly Economic Trends 2023. 8
■ The contraction in the Korean economy is gradually moderating.

○ Services production continues on a modest upward trajectory, and the sluggishness in manufacturing production is showing signs of moderation, led by semiconductors.

- The service industry continued a robust trend in employment, while the manufacturing industry witnessed a reduced decline in production and a decrease in inventory.

- In particular, semiconductors, a significant factor contributing to the slowdown, exhibited signs of easing with a substantial increase in export volumes.

- Furthermore, both the CCSI and the BSI for manufacturing and non-manufacturing sectors recorded modest increases.

○ However, strong downside risks persist for the global economy, including rising commodity prices and a delayed resurgence in China’s economy.

- Concerns over a surge in grain prices have been heightened due to geopolitical factors such as Russia’s invasion of Ukraine and poor weather conditions, in addition to recent oil price hikes.

- Amid the ongoing sluggishness of global manufacturing, China seems to be experiencing increased downside risks, primarily centered around its real estate market.

Summary

Monthly Economic Trends KDI Monthly Economic Trends 2023. 7
■ The Korean economy appears to be navigating its economic trough, with a partial easing in the downturn of the manufacturing industry.

○ The manufacturing industry shows signs of moderating contraction, as evidenced by a slower decrease in production and exports, notably in semiconductors.

- The downturn in semiconductor production has been tapering off steadily since March, while export volume has taken a turn towards growth.

- Moreover, automobiles maintained robust growth, and there are indications of improvement in the previously underperforming chemical and electronic parts.

○ The service industry persists with moderate growth, with employment conditions remaining favorable.

- The non-manufacturing BSI and composite consumer sentiment indicators sustained their upward movement, staying above long-term averages.

- Simultaneously, consumer price inflation nosedived as the pressures from supply-side inflation receded.

○ However, uncertainty persists, amplified by the continuing monetary tightening in major economies and potential setbacks in China’s economic recovery.

Summary

Monthly Economic Trends KDI Monthly Economic Trends 2023. 6
■ The Korean economy remains in a weakened state, driven by underperformance in the manufacturing industry, although there are increasing signs of having passed the economic downturn’s nadir.

○ The manufacturing industry continues to lag, characterized by a steady drop in production, a low average capacity utilization rate, and an increase in inventories.

- Despite a slower decline in production, the semiconductor industry continued to stagnate as a result of a significant rise in inventories.

- With the partial slowing of both value and volume declines in semiconductors, the reduction in exports to China is gradually narrowing, suggesting a lessening in the export slump.

○ The service industry maintained positive momentum, primarily supported by face-to-face businesses, and indices related to consumer sentiment show signs of recovery.

- The number of employed persons continued to rise, especially in services, and the CCSI has shown a modest upward trend since March.

- Conversely, construction sustained strong growth due to the increase in projects reaching their final stages. However, this growth is unlikely to continue given the ongoing slump in the housing market.

○ Meanwhile, consumer price inflation continued its slowdown as supply-side inflationary pressures lessened.

- While rates for electricity and gas were increased, the CPI has begun to stabilize due to falling import prices and the base effect.

- Core inflation (excluding food and energy), which represents the underlying trend in inflation, remained elevated, hovering around 4%.