NABO Economic Trends & Issues May Edition (Issue No. 79)
Published on 17 May 2018
Published by Macro-Economic Analysis Division of the Economic Analysis Bureau
I. Economic Trends
The Korean economy has witnessed a temporary production rebound, but an overall recession persists as the cyclical variations of the leading and coincident composite index as well as exports continue to fall. Although production, consumption and investments exhibited a temporary rebound due to the base effect of the sudden drop the previous month, production and investments continue to decline YoY.
Ⅱ. Analysis of the Relation between Industry/Employment Condition-specific Employment Trends and Macro-Variables
Jobs in Korea have been evolving uniquely between different industry sectors, according to the changing conditions of the real economy and labor market as the percentage of wage-workers continues to increase. It was suggested that the major macroeconomic variables that affect labor supply and demand such as real economic growth, working age population as well as input costs exhibit different relationships with employment trends related to distinct employment conditions in different industries. An estimation of the relationship between macro-variables and workers broken down into wage and non-wage workers proved the existence of a meaningful relationship not only regarding real growth but also with respect to the population of those of working age between 15 and 64 as well as real rages. The size and direction of the coefficient values were also differently calculated. If an analysis is conducted by expanding the model to incorporate micro factors that affect industry-specific and working condition trends such as the attributes of each age group and educational background of employees in different industries as well as their industry structure, we could draw more fruitful implications and a policy consensus.
Ⅲ. Analyses of Factors that Determine Korea’s Short & Long Term Yield Spread, and their Correlation with the Economic Cycle
While the Korean long-term and short-term yield spreads have recently been narrowing, the spread for some maturity instruments have witnessed an inversion. An empirical analysis revealed that the economic growth rate and short/long-term yield spread time lagged variable statistically create a meaningful positive (+) relationship. This suggests that the Korean economy may improve (deteriorate) after a widening (contraction) of the long-term or short-term yield spread, indicating the power of economic projections based on short/long-term yield spreads. Considering that the Korean short/long-term yield spread may continue to narrow, measures are needed to counter concerns about an economic recession and credit crunch in the market.