One Year After the IMF Bailout

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One Year After the IMF Bailout

The statistical indicators that show Korea's economic situation, have plunged sharply since last year's IMF bailout. The government expects that the Gross National Product (GNP) per capita for 1998 will drop to the level of 1990 to 1991.
The GNP per capita broke the 10,000 dollar barrier in 1995 but sunk again to 9,511 dollars in 1997. However, it is predicted to fall to somewhere between 6,900 to 7,000 dollars in 1998, which is similar to the level of 1992 (6,988 dollars), due to the negative growth which the country is experiencing.
The weak won is the main culprit for the declining numbers. The won against the U.S. dollar had maintained an average 949 won level during 1997 but increased to 1,611 won in the first quarter of this year. The authorities forecasted that the exchange rates will settle somewhere between 1,350 to 1,400 won to the dollar during 1998. Thus, the value of the Korean won decreased by 30% during the year.
As the value of the won plunged, importing prices soared to a maximum 57.7% increase at the beginning of 1998, whereas the price of imports increased 9.7% in 1997. The consumer price index also increased by 7.2% compared to 4.5% in 1997.
All kinds of economic indices maintained record highs. The interest rate for company issued bonds soared to 24% (13.39% in 1997) and maintained levels of 17 to 18% during the first half of this year. These exorbitant rates froze any potential market growth during this period. The unemployment rate increased rapidly to 7.3% as of September (2.6% in 1997). The number of jobless grew by one million in a single year.
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