Korean economy has grown by 5.3 percent during the first quarter of 2004 compared to the same period of last year, mainly propelled by bullish exports of automobiles and electronic products. However, much expected private consumption has retreated, showing a negative growth of -1.4 percent. Subsequently, export manufacturing sector showed a brilliant performances, whereas services sector's performances are much less than expected.

Moreover, construction industry, that led the economic growth last year, has grown less than the average, casting a cloud over the consumer spending in the future as well, now that the industrical sector has much more than any others to do with the livelihood of the people in general.

The worse is the private consumption, which shows no sign of recovery, apparently due to heavy household debts and credit card delinquency problems. The consequences are that wholesales and retail sales remain sluggish. This is why the government has lowered excise tax on the automobile purchase starting from the first of April.

The Korean government, which is targeting growth of more than 5 percent this year, is currently discussing ways to stimulate the economy further. Amont the options are fisical stimulus through a supplementary through a supplementary government budget.

The policymakers envisage that the growth-oriented policies will remain in pace unless inflationary force, led by higher price push, emerges.

Korean Economy in the First Quarter  
(%, year on year)