External risks continue to threaten the global economy but Korea’s economic growth will likely improve in the second half of 2011 and free trade agreements are poised to increase expansion substantially. Those were among the points made at the Korean Economic Forum, co-hosted by Samsung Economic Research Institute and the Korea JoongAng Daily at the Hotel Shilla on May 25. Among the many distinguished guests were ambassadors, CEOs and foreign correspondents.

1. Economic Outlook for Second Half 2011 Samsung Economic Research Institute SHIN Changmock May 25, 2011

2. Table of Contents II. Outlook for Second Half 2011 III. Implications I. Current State of the Korean Economy Economic Outlook for Second Half 2011

3. Current State of the Korean Economy Current State of the Korean Economy I. I.

8. Outlook for Second Half 2011 Outlook for Second Half 2011 II. II.

15. 2011 Korean Economic Outlook (Year-on-Year, %) Unit 2010 2011 1H 2H Annual Average Economic Growth (Half-on-Half) % 6.2 3.7 (1.1) 4.7 (1.5) 4.3 Private Consumption % 4.1 3.6 3.9 3.7 Facilities Investment % 25.0 9.3 7.2 8.2 Construction Investment % -1.4 -3.4 2.9 -0.1 Consumer Prices % 2.9 4.5 3.7 4.1 Unemployment Rate % 3.7 3.8 3.4 3.6 Current Account US$100 million 282 92 84 176 Exports US$100 million 4,664 2,711 2,756 5,467 Imports US$100 million 4,252 2,544 2,619 5,163 Won/Dollar Exchange Rate Won 1,156 1,095 1,025 1,060 Corporate Bond Yield % 4.7 4.7 5.8 5.3

16. Implications Implications III. III.

20. The Impact of the KORUS & Korea-EU FTAs and the Future of Korea May 25, 2011 Samsung Economic Research Institute KWAK Soo-Jong

21. Contents II. KORUS & Korea-EU FTAs III. Conclusions: The Future of Korea’s FTAs I. Introduction The Impact of the KORUS & Korea-EU FTAs and the Future of Korea II.1 KORUS FTA II.2 Korea-EU FTA

22. Introduction Introduction I. I.

23. FTA Status Map of Korea Concluded Concluded Chile Singapore EFTA ASEAN India EU Effective in 2004 Effective in 2006 Effective in 2006 Effective in 2007 Effective in 2010 Effective from July 2011 US Peru Canada Mexico GCC Australia New Zealand Columbia Turkey Under Negotiation

26. KORUS FTA KORUS FTA II.1 II.1

31. Economic Impact of the KORUS FTA on Korea’s Economy Productivity effect = 0 Positive productivity effect Dynamic model 0.42% Real GDP 1.99%  7.75%  Short-term static Welfare 0.61% Short-term static 1.73%  6.99%  85,000 Employment Short-term static 104,000  551,000 

33. Korea-EU FTA Korea-EU FTA II.2 II.2

34. Korea-EU FTA Session Date Location Details of the Negotiations 1st 5/7-11/2007 Seoul Consists of four areas: Goods, services/investment, other (intellectual property rights, government procurement, competition), settlement of disputes 2nd 7/16-20/2007 Brussels Discussion and planning of exchange for goods, service, and government procurement 3 rd 9/17-20 2007 Brussels Commencement of initial offers 4th 10/15-19/2007 Seoul Consolidated agreements by each section and initial offer for goods 5th 11/19-23/2007 Brussels Four issues major issues were discussed (initial offer for goods, standardization for automotive technology, criteria for origination, open service market) 6th 1/28-2.1 2008 Seoul Advances in other issues but the four Session Term Talk 3/2008 Paris Chief delegate meeting 7th 5/12-15/2008. Brussels Agreement on settlement within the year. Pushed forward all but the major issues Session Term Talk 6/2008-3/ 2009 Brussels Seoul Trade minister meeting 8th 3/23-24/2009 Seoul Tentative agreement on criteria for origination and refund of tariffs Minister Meeting 4/2/2009 London Failure of the final agreement on the issue of refund of tariffs Summit Meeting 5/25/2009 Seoul Urge on finalization of the Korea-EU FTA by the summit meeting Minister Meeting 6/26/2009 Paris Arrival at conclusion regarding the remaining issues Summit Meeting 7/13/2009 Stockholm Declaration of settlement for the Korea-EU FTA

38. Economic Impact of the Korea-EU FTA on Korea’s Economy Productivity effect = 0 Positive productivity effect Dynamic model 0.10% Real GDP 0.64%  5.62%  Short-term static Welfare 0.18% Short-term static 0.47%  3.84%  29,900 Employment Short-term static 47,800  253,100 

40. Conclusions: The Future of Korea’s FTAs Conclusions: The Future of Korea’s FTAs III. III.

44. Revisiting Korea’s FTA Road Map to the Future GDP: $bn