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Issue Report

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

Industries in Korea from 1998 to 1999

Industries in Korea from 1998 to 1999

Samsung Economic Research Institute

June 1, 1999

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Abstract

In 1998, the overall activities of the Korean industry contracted considerably. After production recorded minus growth at the beginning of the year for the first time since the Oil Shock in the 1970s, it decreased 12.5% in the second quarter. Throughout the year of 1998, production decreased 7.5% from the previous year. The capacity utilization rate, which had maintained a level of 80% since the 1980s, fell to the 65%~75% level.

The drastic decrease in production mainly resulted from chilled domestic demand due to the currency crisis. Since the currency crisis made people feel uncertain about the future, consumer sentiment contracted significantly. The public’s purchasing power decreased due to factors such as shrunken income and the reduced value of real estate. Merchandise shipment for domestic demand, which had incessantly been expanded until 1997, started to downturn in November 1997. The decrease rate marked between 20%~30%, which was an even more drastic decrease than during the first and second Oil Shocks. Even though the trend of decrease in merchandise shipment has been alleviated since November 1998, it only seems to be a statistical rebound due to the drastic decline during the previous period.

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