Ministry of Economy and Finance Reports November Edition of Economic Trends (Green Book)
“Mild Economic Recovery with Uncertainties”
“Concerns Over AI Profitability Slowdown Lead to KOSPI↓, Exchange Rate↑”,
The government has assessed that uncertainties in the Korean economy are increasing, anticipating changes in trade conditions with the election of former President Donald Trump. On the 15th, the Ministry of Economy and Finance released the November issue of the “Recent Economic Trends (Green Book),” stating, “Our economy is experiencing a mild recovery amidst expanding price stability, but uncertainties due to changes in internal and external conditions exist.”
In the October edition, the Ministry noted the continued recovery centered on exports and manufacturing. However, with Trump’s presidential election, the term “uncertainty” was added to the report. The term “economic recovery trend” was adjusted to “mild economic recovery” due to a 0.1% growth in the third quarter’s real GDP.
In September, major indices of industrial activity indicated growth in facility investment, while construction production decreased, and mining and manufacturing production adjusted after a significant increase in the previous month. Public administration saw a 2.6% month-on-month increase, while mining (-0.2%), services (-0.7%), and construction (-0.1%) sectors declined, resulting in an overall 0.3% decrease in industrial production. Facility investment rose by 8.4% compared to the previous month, but retail sales (-0.4%) and construction investment (-0.1%) decreased.
In October, the Consumer Sentiment Index (CSI) rose by 1.7 points to 101.7. The Business Sentiment Index (BSI), reflecting business sentiment across industries, increased by 0.9 points to 92.1, while the outlook BSI fell by 2.8 points to 89.8. The Coincident Composite Index (cyclical component) for September decreased by 0.1 points compared to the previous month, while the Leading Composite Index remained steady.
The employment increase in October was limited to 83,000 compared to the same month last year, with an unemployment rate of 2.3%, a 0.2% increase from the previous year. October’s consumer prices increased by 1.3% compared to the previous year, with core inflation excluding food and energy at 1.8%, agricultural and petroleum stripped inflation at 1.7%, and life-related goods inflation at 1.2%, maintaining stable trends.
In the KOSPI market for October, concerns over AI sector profitability slowdown and underperformance of secondary battery companies led to a decline. The won-dollar exchange rate decreased by 5.2 won, settling at 1,379.9 won compared to the end of the previous month.
Kim Gwi-bum, director of economic analysis at the Ministry, explained, “The impact on our economy depends on the likelihood of the new U.S. government’s pledges being realized. Although there are crisis factors, there are also opportunities.” He added, “The impact on the domestic market could be positive or negative, with a wide range (of potential outcomes), and thus research institutions are conducting wide-ranging analyses given the current conditions.”