Korea’s 2014 GDP growth is projected at 3.4%

Korea’s economic growth for 2014 is projected to be higher than that of 2013 with gradual improvement in global conditions, but is expected to fall short of the potential growth level (approx. 3.5%). This is attributable to a slower recovery of the global economy as well as to a heap of risk factors such as uncertainties surrounding the US Fed’s tapering, Japan’s “Abenomics” and China’s economic reform, the fall of USD/KRW, and deepening of trade competition, all of which will drag down the pace of Korea’s export recovery. Domestically, beginning of household “deleveraging” (debt reduction) and legislation related to economic will continue to dampen private spending and investment sentiment.

Consumer price grows at 2.2%, USD/KRW to show a gradual fall

Consumer prices in 2014 are projected to slightly increase comparable to the average rate at 1.2% in 2013 due to the upward pressure of public utility charges and base effect. However the rise is expected to be slowing at a lower end of the 2 % range, attributable to steady but slow recovery, fall of USD/KRW and the stabilizing trend of the international prices of raw materials. Despite a short fall due to reversal of services account into deficit, Korea’s current surpluses are expected to sustain a surplus level of US$60 billion next year. USD/KRW is expected to show a gentle descend as strong-won factors, such as current account surpluses are offset by strongdollar factors following the US Fed’s QE tapering.

Restructuring wage system is urgent in order to ease the tension following institutional shift in the labor markets

Restructuring wage system is urgently needed in order to mitigate adverse impacts on employment and investment, instigated by recent passage of labor-related bills such as extension of retirement age, expansion of the scope of base salary, spread of part-time employment. The platform of wage system restructuring should include policies targeted for improving job opportunities and income expansion for low-income households, overcoming a dichotomy in the labor market that centers on large businesses, regularized workers and labor union, duty-, performance-, competency- and responsibility-based workplace, overcoming institutional rigidity and overcoming tensions between the management and regular worker-centered labor union.

(아래 표지를 누르시면 원문으로 이동합니다.)