The Korean economy grew 1.4 percent in the second quarter from the previous quarter as construction spending declined and exports slowed, the central bank said yesterday as it revised downward an earlier estimate of 1.5 percent growth for the April-June period.
However, gross domestic product expanded 7.2 percent from a year earlier, the Bank of Korea (BOK) said.
“The Korean economy maintained upward momentum, but in terms of real income, people could not feel the effect of the improving economic recovery,” said Jung Yung-taek, head of the BOK’s national accounts office.
Jung said the economy will likely record growth of 5.9 percent for the full year, unchanged from its earlier forecast. There are concerns, however, that slowing growth in the U.S. and China could affect Korea’s economic performance.
The International Monetary Fund on Thursday revised upward its 2010 growth outlook for Korea to 6.1 percent from 5.75 percent.
The slowdown in second-quarter growth was due to a 3.6 percent fall in construction spending caused by a sluggish property market. Manufacturing, however, continued to perform well as it rose 5.2 percent due to robust exports that increased by 7 percent from the first quarter. Private spending expanded 0.8 percent. Capital investments jumped climbed 9.1 percent.
The gross national income (GNI), which measures purchasing power, rose 0.5 percent from the first quarter. The GNI in the first quarter rose 2.8 percent. The reason for the slowing GNI was that import prices are rising higher than export prices.
“Import prices jumped around 6 percent during the second quarter, but export prices went up by only 4 percent, slowing the rate of real GNI growth,” said Shin Chang-sik of the Bank of Korea’s national income department.
“It looks as if real GNI figures will not improve in the third quarter either, as semiconductors, one of our core exports, are fetching weak prices at the moment while the price of raw materials still remains high,” he added.
The BOK said that economic recovery will likely cause the inflation rate to rise above 3 percent in the fourth quarter, which has led analysts to suggest a further rate hike this month.
Korea’s state-run gas corporation is seeking to acquire a stake in an Indonesian liquefied natural gas project, a company official said yesterday.
The official at the Korea Gas Corp. said talks are underway with Japan’s Mitsubishi Corp., which manages the development of the Donggi-Senoro gas field, on possible participation in the project.
“No details on the stake purchase have been reached at present,” the official said.
Mitsubishi owns 51 percent of the Donggi-Senoro gas field, located on Sulawesi Island, with Indonesia’s state-run oil company PT Pertamina and PT Medco Energi Internasional owning 29 percent and 20 percent stakes, respectively.
Korea and China will hold preliminary talks on a free trade agreement between the two countries late this month in Beijing, government officials said yesterday.
The Korean Embassy in Beijing said the two sides have agreed to start talks on Sept. 28 on the sensitive issues regarding the trade deal, before they launch formal free trade negotiations.
The agreement was made last week when Lee Tae-ho, director of the FTA policy bureau of Korea’s Foreign Ministry, met in Tokyo with Yu Jianhua, director general of international trade and economic affairs of the Chinese commerce ministry.
In May, the two countries completed a nearly four-year joint feasibility study on an FTA and reached an agreement to exchange views on sensitive issues about it.
China is the largest buyer of South Korean-made goods and has contributed to Seoul’s sizable trade surplus in recent years, while Korea is China’s third-largest trading partner after the United States and Japan.
Korea urgently needs to increase and revitalize its service sector as it slips behind other advanced economies, according to a report.
The report by the Korea International Trade Association (KITA) says that the number of people employed in Korea’s service sector is ranked 23rd among the 30 Organization for Economic Cooperation and Development (OECD) member countries.
Also, Korea’s international trade in services - exports of services or technology instead of actual products - dropped to 19th place in 2009 from 12th in 2000.
In contrast, the manufacturing industry has gone up the ladder, from 9th place in 2009 to 7th in the first half of this year.
In fact, KITA said, Korea showed the largest gap between manufacturing and services among the top ten OECD manufacturing export countries.
In Korea, only 67.3 percent of the economically active population is involved in the service sector. This is lower than the OECD average of 70.5 percent as Korea’s service sector struggles, except for its logistics and finance industries.
Other industries within the service sector, including business services and tourism, record a loss in terms of balance of payments. Logistics, tourism and business services account for 85.1 percent of the total trade in services.
“Trade in services contributes greatly to a country’s employment rate and current account balance, but it’s been neglected because of Korea’s strategy of focusing on manufacturing industries,” said Choi Yong-min, a researcher at KITA.
“The growing popularity of Korean content in large, nearby markets such as Japan and China shows the great potential in Korea’s trade in services.”
Choi added that efforts should be made to support the service sector in finance and in tax policy the way the manufacturing sector is helped.
Also, other factors such as creating a tariff-free environment through FTA talks and strengthening overseas marketing and foreign direct investments should be made.
Korea’s 2010 per capita gross domestic product (GDP) is expected to surpass the $20,000 mark for the first time in three years thanks to solid economic gains, a report by the International Monetary Fund (IMF) said yesterday.
The report by the Washington-based organization said the country’s per capita GDP could reach $20,566, fueled by annual economic growth that may top 6.1 percent this year, up from $17,071 in 2009, when the economy posted growth of just 0.2 percent.
The country’s per capita GDP hit $21,651 in 2007, but contracted in the wake of the global economic downturn that began in 2008.
The IMF said that while economic growth may dip to 4.5 percent in 2011, Korea’s per capita GDP should reach $22,173 next year and grow to $28,486 in 2015. The growth estimate, however, falls short of the per capita $30,000 that Seoul sees as the threshold for the country to become a fully developed economy. The IMF said Korean consumer prices will likely grow 3.1 percent on-year this year, with its nominal GDP to be 1,154 trillion won ($985.4 billion) from 1,063 trillion won last year.
Koreans are gulping down more canned beverages as they lean toward convenience and portability in their purchasing habits, research suggested yesterday.
According to the Korea Market Information Digest, an annual report on consumer goods sales released by the Neilsen Company, ready-to-drink coffee marked the biggest growth in on-year revenue among consumer goods in 2009, with a 37 percent jump.
The runner-up was ready-to-cook pre-mixes with 26.2 percent revenue growth. Marinating sauce followed closely at 24 percent revenue growth, while bottled water, wet wipes and kitchen towels ranked high with 19.5 percent, 17.7 percent and 17 percent on-year growth, respectively.
Experts noted that these are all products that are convenient to use and easy to carry.
“Taking a look at consumers’ purchasing patterns for the last three years, demand for canned coffee, ready-to-drink tea, pre-mixes, marinating sauce, bottled water, wet wipes and kitchen towels show a steady climb,” said Shin Eun-hee, CEO of Neilsen Company Korea.
“For example, in the past families made their own marinating sauce at home,” said Shin. “However, the recent introduction of easy-to-use marinating sauce for meats has satisfied consumers’ need for convenience.”
The report explained that kitchen towels and bottled water saw a wealth of new products launched last year to meet latent demand, while canned coffee also saw heated competition with franchises entering the fray.
“Korean consumers seem to have contributed to the high growth rates of coffee and tea by aligning their consumption with the height of current trends,” Shin remarked.
Meanwhile, Oriental Brewery reported yesterday their highest monthly sales of canned beer ever for July.
Canned beer, sold mostly for consumption at home, sold 2.7 million cases in July, compared to just 1.11 million in January. Canned beer now takes up 29.3 percent of total sales.
“As the lives of domestic consumers become prosperous, so has beer consumption, becoming more Westernized,” said Song Hyun-suk, director of marketing at Oriental Brewery. Korea’s beer consumption is oriented more toward bottles and pitchers for drinking in groups, rather than alone.
Office of Commercial Affairs, Royal Thai Embassy in Korea
Source : http://www.depthai.go.th