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Issue Report

Collection of full-length papers and in-depth analysis of economic and management issues.

Korea Economy in 2000: Prospects for the Macroeconomy, Financial Markets, and Industries

Korea Economy in 2000: Prospects for the Macroeconomy, Financial Markets, and Industries

Samsung Economic Research Institute

Oct. 1, 1999

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Abstract

The Korean economy has staged a much more rapid recovery from the currency crisis in late 1997 than many economists had anticipated. Consumption began its rebound in the spring of 1999, and since early in the third quarter, it has been followed by increases in export and facilities investment. It is now expected that the GDP growth rate will be as high as 9% for the second half of 1999 against the 7.3% registered during the first six months.

Meanwhile, this year has seen a continuation of the nation’s current account surplus, helped by greater stability in the global economy. The Korean won has also held steady against the U.S. dollar. Considering that a current account surplus of USD 13.6 billion was accumulated during the first half of the year, the government’s target of a USD 20 billion surplus for the year as a whole seems within its grasp. Looking more closely at the account balance, the current dynamism of IT sectors such as semiconductors and TFT LCDs (Thin Film Transistor Liquid Crystal Display) is helping to maintain the current account in the black, offsetting the effects of higher oil prices. Under these circumstances, Korea’s sovereign credit rating has been steadily rebuilt. Moody’s, for example, announced on August 22 that it would consider raising again Korea’s sovereign rating soon, citing the improvement in foreign currency liquidity. The agency already upgraded the nation’s credit rating on February 12 of this year.

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