Spring of the Domestic Economy Is Right Around the Corner

The recovery of the domestic economy is getting more affirmative. The economy is skyrocketing, even showing overheating in some fields such as real estate and the domestic consumption.

Under the influence of the upturning of the U.S. market, the export in the second quarter of this year is expected to turn upward.

However, it is very difficult to anticipate the progress of the U.S. anti-terrorism war and the influence of the Japan`s financial crisis and the elements of the uncertainties such as the insolvent household economy by the rapid increase of the household debt may still affect the future of the market.

According to the data released by Korea Chamber of Commerce and Industry, BSI of 1483 manufacturing companies for the second quarter of this year was 133, which is 80 points higher than the first quarter.

This BSI is very close to 138 of second quarter of 2000, the highest BSI since the foreign exchange crisis, implying majority of the businesses are anticipating that the economy will be getting better.

In case of the sales of the department stores, the typical index for the domestic consumption, the sales of Lotte, Hyundai, and Shinsegae recorded about 20 percent increase since the end of last year.

The real estate market, which is worried about overheating economy, the investment rush in the Capital city area has been expanding nationwide, and the targets of the investors have been varying from apartments and officetels to the commercial offices and auctions.

The export is recovering too. The export by months has decreased for 12 consecutive months but the average export per day in February has increased by 17 percent to 540 million dollars.

In addition, since the prices of D RAM and semiconductors, the staple export items of Korea, are recovering and the U.S. economy, which took part of 20 percent export of Korea, is improving, the export in the second quarter is expected to increase.

Park Chul, the vice governor of the Bank of Korea, said that “we do not have clear evidence that the economy is recovered but it seems OK to see that the economy is improving.” The economic indexes released by the Korea National Statistical Office show positive for 5 consecutive months except for December when Daewoo Motors stopped its operation and the strikes of Hyundai Motors occurred. Kim Min-Kyung, director of the economic statistics bureau, said that “it is expected that the index shows a technical slowdown in February because of the holidays for the Lunar New Year`s Day. But the current rise of the index continues on for a few months, you could say that the economy is recovered.”

However, the uncertainties of the economy are still in effective since it is very difficult to anticipate the next step of the U.S. war on terrorism and the financial crisis in Japan. If the rates of interest hike, domestic factors such as household bankruptcy and the sudden freezing of the real estate market may affect negatively to the recovery of domestic economy.

Rae-Jeong Park ecopark@donga.com · Dong-Won Kim daviskim@donga.com