This report focuses on Abenomics and its impact on the Korean economy and the current status of local savings and loans banking markets.
    Abenomics is likely to prolong the depreciation of the Japanese yen against the US dollar, though in a more modest curve. Therefore, Korea’s export competitiveness regarding destinations in Japan is likely to diminish due to the falling yen-won exchange rate. In terms of region, the slowdown in exports to Japan and the US is expected to be more noticeable. In terms of industry, exports in machinery, automobiles, and steel are estimated to slacken compared to other industries. It is anticipated that Korea’s domestic business recovery will remain visibly sluggish throughout the second half of 2013, with exports making less-than-usual contributions to economic growth due to the feeble export recovery. 
    The increase in loans by deposit money banks has continued to show a substantial downward spiral throughout the 2000s since the global financial crisis. The annual average increase stood at 11.4% from 2001 to 2012, but it dropped to 4.7% during the period from 2009 to 2012. Amid this trend, loans at deposit money banks continue to rise in capital areas (Seoul, Incheon, and Gyeonggi). The percentage of loans made in capital areas increased to 70.1% at the end of 2010 from 64.7% at the end of 2001 and slightly declined to 68.3% by the end of 2012. Such an increase in loans made in capital areas is mainly triggered by the relatively higher economic growth recorded by capital areas than rural areas.
    Deposits made at deposit money banks in the above-mentioned capital areas also rose to 71% at the end of 2012 from 68.3% at the end of 2001, indicating that banking capital mainly flowed into these three areas. On the contrary, the percentage of deposits made in the seven non-capital areas (Gwangju, Ulsan, Gangwon, Chungbuk, Chungnam, Jeonbuk, and Jeonnam) at the end of 2012 stood within a mere 1% range.
    A closer look into the loan-to-deposit ratio (loan/deposit) of each region testifies to the position of Seoul as the source of capital. The loan-to-deposit ratios of Incheon and Gyeonggi stand at 2.04 and 2.72 respectively, while that of Seoul remains the lowest at 0.85. It can be conjectured that capital formed in Seoul is being supplied to Incheon, Gyeonggi, and other provinces.
    As for the financial interrelation ratio (loan/GRDP), which illustrates the utilization of financial services in economic activities, Seoul recorded the highest at 1.842, followed by the other metropolitan cities of Daegu (1.199), Busan (1.190), and Incheon (1.079), excluding Ulsan (0.329). Among the provinces, Gyeonggi was fairly high at 0.957, but the rest, including Jeju (0.637) and Gyeongnam (0.615), were relatively low.
     
Won Dongah