Tips for this week¡¯s economic issues

The main elements foreign investors are concerned with in relation to the Korean economy are the current account balance and the exchange rate. The current account balance is the barometer measuring the nation`s economic health while the exchange rate, though influenced by the current account, is an important factor affecting investment gains.

Certainly, there are other variables, but these two are the most influential elements.

Firstly, the current account balance. The current account balance, which has improved significantly since the foreign currency crisis, has started to edge downward. The current account surplus volume is shrinking at a rapid pace. Moreover, the steep rise in international oil prices and raw materials from overseas shows no signs of abating. Considerable attention needs to be paid to the July international account balance figures to be announced.

In relation to the exchange rate, the circumstances are much more complex and intricate. Notably, the foreign exchange market is in a state of paralysis. With the exchange rate remaining at the 1,114~1,115 range through the government`s influence, foreign exchange dealers have in fact suspended transactions. However, as external factors can come into play that will suddenly affect the exchange rate, one should closely follow the rate`s movement.

To add, the possibility of an economic slump and warnings of a hard landing are looming, showing the economy is slowing down rapidly. The greatest problem at this point is the resuscitation of the Kosdaq market, which is threatening to plunge to below the 100 point level. Last week, the Kosdaq committee announced that many plans have been discussed and there are expectations that effective measures will be put in place. However, one should remember the greater the anticipation, the harder the fall. At the economic policy coordination meeting to be held on the 1st, many economic issues are to be dealt with, including the Kosdaq market matter. In view of the time wasted on resolving the Hyundai crisis, economic policy authorities will have to expeditiously address issues related to the changing economic environment.

In addition, the lawsuit by Housing and Commercial Bank in relation to the disposition of Samsung Motors, the announcement of the results of the probe into Daewoo`s window-dressing settlement, Internet inspections following the Ministry of Information and Communication homepage hacking, the resignation of Hyundai Securities CEO Lee Ik-Chi, loose quarantines on imported fisheries products and the dispute over the IMT-2000 standard are other major issues to be monitored closely.