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Title NABO Industry Trends and Issues (No. 10)

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NABO Industry Trends and Issues (No. 10)

I. Industry, Trade, Industrial Loans, Energy Trends
  (Production and Exports) Production in the manufacturing sector in May increased by 1.2%  MoM and 0.8% YoY. Compared to the same month in the previous year, production of goods such as general machinery, steel and shipbuilding decreased, whereas production increased for semi-conductors, chemicals, petroleum and wireless telecom devices. In June, total exports and the exports of the top 11 industries respectively dropped to -0.1% and -2.3%, YoY. Although exports of semi-conductors, chemicals and petroleum increased, exports of automobiles and shipbuilding decreased, resulting in an overall decrease in exports.
  (Industrial Loans) The volume of industrial loans in the first quarter of 2018 was 1,070 trillion won, 6.8% higher than the same period of the previous year. Industrial loans increased by 3.4% for manufacturing, 9.1% for services, 3.1% for construction and 5.5% for others, YoY. However, the main contributors to the increase of industrial loans (6.8%) are deemed to be the manufacturing sector (1.12%p) and the services sector (5.26%p).
  (Energy) The final energy consumption volume of the first quarter of 2018 increased by 2.4% from the previous year, mainly due to increased consumption by households and the commercial sector by 7.9%. 57.5% of the final energy consumption was used by the industrial sector, 16.3% by the transportation sector and 23.2% by households and the commercial sector. The power generation output from March to May 2018 increased by 2.0% YoY.


Ⅱ. Status Analysis of the Emissions Trading Scheme Phase 1 (2015~2017)
  The Emissions Trading Scheme (ETS) involves 39 countries worldwide, and is being positively acknowledged in many countries. In Korea, the ETS trades about 80% of the total greenhouse gas (GHG) emitted domestically, and has been pursuing a soft-landing of the system by commencing enforcement of ETS Phase 1 in 2015 (from 2015 to 2017). However, 20 court cases have been brought over the past 3 years regarding the allocation of Phase 1 emissions rights, incurring administrative expenses from the private and public sectors, and the announcement of the emissions rights allocation plan for Phase 2 has been delayed by almost 6 months, suggesting that plans to utilize the profits gained from benchmark allocation in the long term have not been fully developed. Therefore, authorities must seek ways to enhance transparency and fairness regarding the allocation of emissions rights, minimize policy uncertainty and utilize profits gained from benchmark allocation in a sustainable manner. The analysis also revealed that measures must be pursued towards the realization of a robust market function such as by developing a trading system to register and use foreign emissions rights as well as launching a special committee for the certification of emissions rights granted overseas.
 Ⅲ. Analysis of the Characteristics of People Choosing an Early Termination of Housing Pensions
   Although Korea has become an aged society (a society in which at least 14% of the population is at least 65 years old) as of 2018, the average income replacement rate of the pension allowance (39.3%) is lower than the OECD average (58.2%). While the housing pension scheme, which ensures housing security as well as a fixed monthly allowance, is gaining interest as an alternative for the aged population in preparing for life after retirement, there is a rising trend of early termination of the housing pensions. Upon analyzing the reasons for early termination, those with lower monthly allowances, wider gaps in home prices between regions and a lower loan balance are more likely to opt to an early termination of their housing pension. In order for the housing pension scheme to support the post-retirement income of elders and support lifestyle stability, efforts must be made to mitigate the causes of early termination.

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