NABO Economic Trends & Issue (Issue No.2)

1. Economic Outlook for 2010

2010 Korean economy is expected to grow by 3.8%, entering a full-fledged recovery phase in the first half of the year 2010. The real GDP growth in the first half of 2010 will be higher than that in the second half, which is partly due to the effect of government's stimulus package such as supplementary budget spending and expansionary monetary policy, and partly due to the base effect of negative growth in 2009. However, the speed of the rebound in the second half is expected to be slow down owing to implementation of an exit strategy from stimulus policy and appreciation of the won.

2. Economic Recovery without Job Creation

Despite the fact that the Korean economy has continued its recovery since bottoming out in the first quarter of 2009, there is sluggish employment situation and no sign of significant improvement in the near future. On account of the global financial crisis, construction and manufacturing sectors were damaged significantly and many of those who were laid off were absorbed by the public sector as a part of government stimulus package. But as for exit strategy taken in the second half of the 2010, it is likely to enter the jobless recovery phase. Additionally, restructure of self-employed business underway would be worsen.