1. Current Economic Trend

Considering the fourth quarter of 2010 GDP and the mining and manufacturing production index in December 2010, the Korean economy seems to make an upward curve, whereas speed of recovery was deteriorated.

  The GDP growth rate in the fourth quarter last year also recorded 0.5 percent on quarter-on-quarter basis. This indicator has been slow down since it marked 2.1 percent in the first quarter and 1.4 percent in the second quarter, 0.7 percent in the third quarter. The mining and manufacturing production growth index stood at 9.8 percent with year-on-year increase, implying that upward trajectory seems to be continued. When taking a closer look into figures, by sector, semiconductor and machinery recorded relatively higher growth rate of 19.6 percent and 20.3 percent respectively.

  The CPI in January 2011 advanced 4.1 percent from a year ago due to soaring price of services and industrial products. Amid price of agricultural, livestock and marine products continuously on the rise, industrial products also presented high price. Price in the service sector that had been stable also marked up from the previous month. The core inflation recorded 2.6 percent, up from the previous month (2.0 percent).

2. The Closing of Revenue and Expenditure 2010, Disposal of Budget 2. Surplus

Tax revenue in 2010 reached 177.7 trillion won, an 8.0 percent rise in comparison with the previous year. It also increased 4.3 percent from the 2010 budget revenue, bolstered by surged Value Added Tax (VAT) and transportation energy environment tax. In 2011, more consumption, income and investment are expected on the back of solid economic growth, and so tax revenue is expected to increase more.

Expenditure of 2010 was implemented in order to revitalize the economy and stabilize the living of working class. In particular, 43 percent of annual expenditure is allocated in fourth quarter so as to overcome the global financial crisis as early as possible. Actual size of 2010 expenditure budget amounted to 259.1 trillion won, besides 96.0 percent (248.7 trillion won) of it was already implemented. 96.0 percent is the lowest figure for the past 5 years.

  Budget surplus of 2010 amounts to 7.8 trillion won, which has increased 1.3 trillion won (20 percent) from the last years. According to the National Finance Act, only small amount of it goes to pay off the national debt. And then, the rest of budget surplus is used to implement supplementary budget. However, for the fiscal soundness, it is desirable for budget surplus to refund the national debt.