Economic condition in Korea for the second half of 2008 would be characterized by weak growth rate in real GDP and high inflationary pressure induced by high oil price. Real GDP growth in this period is expected to record 3.2% percent, which is 1.1% point lower than the NABO's forecast in October, 2007. The main reasons of this projection would be summarized as it follows: First, net-expert’s contribution to economic growth is expected to decrease because of the slowdown in the world economy. Second, reduction in GNI due to deterioration in terms of trade will cut off household spending. Third, high inflationary pressure caused by oil price hike will also pull up interest rates in market and financial cost of household necessarily.

Based on this projection, we come up with a forecast of 4.2 percent real GDP growth in 2008, which is 0.8% point lower than 5% in 2007. Private consumption in the second half will contract to 3.0% because of escalating consumer price, stagnant employment, and rising household debt. Fixed investment will also get into a slump due to surging prices of oil and raw materials and is expected to grow by only 4.3%, most of it ascribed to the base effect. Exports will drop to 10.2% increase due to contraction in industrialized countries, and imports will increase by 16.8%.