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SERI Economic Forecasts

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Outlook for Korean Economy in 2011

Outlook for Korean Economy in 2011

Dec. 24, 2010

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The Korean economy continued its recovery in the third quarter of 2010 with real GDP growing 4.5% year-on-year. Consumption improved gradually as continued strong exports and investment created more jobs in the manufacturing sector. Financial markets also showed the stable trend. The KOSPI surged to the 1,900-level and hovered around there with increased foreign capital inflows. Also, the won/dollar exchange rate maintained a downward bias. It entered into the 1,100-plus level and moves within a narrow range though concerns over regulations to control so-called foreign "hot money" precipitated some volatility.

Nevertheless, uncertainties continue to loom over the future of the Korean economy. On the international front, flagging economic conditions are probable with a US double-dip recession risk and fiscal restraint by major countries. On the domestic front, tepid consumer and business sentiments and sluggishness in the housing market are still lingering.

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