In February, industrial production, facility investment, and construction investment increased, while retail sales remained flat. In March, the number of employed persons rose, and consumer prices rose at a faster pace. In February, production in the industrial sector (up 5.4% m-o-m and down 2.2% y-o-y) , construction sector (up 19.5% m-o-m and up 1.2% y-o-y), and services sector (up 0.5% m-o-m and up 2.1% y-o-y) rose, leading to an increase in total industrial production (up 2.5% m-o-m and up 0.5% y-o-y). In February, the cyclical indicator of the coincident composite index went up by 0.8 points and the cyclical indicator of the leading composite index increased by 0.6 points. In February, facility investment moved up (up 13.5% m-o-m and up 5.3% y-o-y) while retail sales remained unchanged (0.0% m-o-m and up 4.7%). In March, the Consumer Sentiment Index (CSI) went down by 5.1 points month-on-month to 107.0. The Composite Business Sentiment Index (CBSI) decreased by 0.1 point to 94.1 and the CBSI outlook for April fell by 4.5 points to 93.1. In March, exports climbed by 49.2 percent year-on-year, supported by expanded exports of semiconductors, computers, and wireless communication devices. The daily average exports rose by 42.7 percent compared to the same month of last year. In March, the number of employed persons grew by 206,000 year-on-year and the unemployment rate fell by 0.1 percent point to 3.0 percent. In March, the Consumer Price Index (CPI) climbed by 2.2 percent year-on-year, up from 2.0 percent in February. The CPI excluding food and energy rose by 2.2 percent, and the index excluding agricultural products and petroleum and the index for living necessities increased by 2.3 percent, respecitvely. In March, both housing prices (up 0.15% m-o-m) and Jeonse (lump-sum deposits with no monthly payments) prices (up 0.28% m-o-m) rose. In March, Korean equity prices declined, yields for Korean Treasury Bond rose, and the Korean Won weakened against the dollar. Recently, the Korean economy has faced increased downside risks due to heightened geopolitical risks stemming from the Middle East conflict. Exports, led by semiconductors, have remained robust, and domestic demand, including consumption, has continued to improve. However, the Middle East conflict has weighed on consumer and business sentiment, raising concerns about higher inflation driven by rising global oil prices and increasing burdens on households. Globally, financial markets and energy prices have become more volatile amid ongoing geopolitical tensions and a worsening trade environment driven by tariff measures in major economies, heightening risks of a slowdown in trade and growth. To minimize the impact of the Middle East conflict, the government will maintain an emergency economic response framework, closely monitor developments and sector-specific impacts, and swiftly implement the supplementary budget while actively addressing difficulties faced by businesses on the ground.

Addressing the Demographic Decline in South Korea / DANIEL CARROLL, SEWON HUR, SELAHATTIN IMROHOROGLU, AND BRADEN STRACKMAN In this paper, we use an overlapping-generations standard-incomplete markets model to quantitatively investigate the long-run implications of Korea’s demographic changes and policy reforms. Importantly, our quantitative model endogenizes the retirement decision and matches the elasticity of retirement to wealth. We use the model calibrated to Korea’s economy and demography as a quantitative laboratory to investigate two policy scenarios: increasing taxes or decreasing benefits. While decreasing benefits leads to greater long run activity, it comes at the cost of lower average welfare, particularly for retirees. Can Healthy Aging Boost the Labor Supply? Evidence from Korea / BERTRAND GRUSS, ERIC HUANG, ANDRESA LAGERBORG, DIAA NOURELDIN, AND GALIP KEMAL OZHAN This paper examines the role of ‘healthy aging’ in boosting labor supply in Korea. First, we use microdata from surveys to assess whether there is evidence that the physical abilities of individuals aged 50 years and above have been improving over successive cohorts. Second, we investigate whether health improvements among older workers influence their labor market outcomes, such as the decision to supply labor or to retire. We use an instrumental variable approach to enable causal inference, proxying exogenous variations in health with the incidence of certain chronic diseases. Our findings reveal that (i) physical health indicators have improved on average across birth cohorts, providing evidence in favor of ‘healthy aging’ in Korea, and (ii) better health increases the probability of participating in the labor force and postponing retirement. Overall, our results suggest that healthy aging increased the labor supply of older individuals in Korea by around 1.9 percentage points per year during the period 2006-20. The results for Korea are qualitatively comparable but quantitatively somewhat stronger than those for comparator Asian countries. Marriage and Child Penalties: Evidence from South Korea / MINSUB KIM This paper documents marriage and child penalties in Korea, where the female labor supply remains constrained by marriage and childbirth despite the urgent need to promote the female labor supply in the face of the world’s most rapidly aging population. Using an event-study approach and nationally representative panel data, I find substantial marriage and child penalties in Korea. Unlike developed countries, Korea exhibits a significant marriage penalty that cannot be explained by childbirth-related factors. While marriage penalties declined during the 2010s, child penalties have prevailed despite the expansion of various family policies over the same period. The persistence of child penalties is discussed in relation to prevailing social norms and rigid labor market structures that limit mothers’ labor supply. Recent Socioeconomic Differentials in Marriage Rates in Korea and China: A Comparative Study / MINHEE CHAE This paper explores the relationship between socioeconomic status (SES) and the recent rapid decline in marriage rates in China and South Korea, using nationally representative longitudinal data. The analysis shows that recently rising never-married rates (NVMR) are increasingly concentrated among lower-SES individuals, especially in highly urbanised areas in both countries, highlighting the growing significance of financial barriers to family formation in recent years. Furthermore, income has become a stronger predictor of marriage entry by men in both nations. The overall rise in the NVMR reflects delayed marriage among the Chinese population and Korean women, but more persistent singlehood among lower-SES Korean men aged over 35. Notably, the faster growth of the NVMR among lower-SES groups has narrowed overall SES differences in marriage rates, eroding the historical pattern in which lower-SES individuals married earlier and more universally. In other words, marriage differentials based on SES are disappearing on absolute levels. This suggests that while financial constraints remain a key influence, broader structural and cultural shifts ― such as evolving gender norms and rising opportunity costs ― are also critical for understanding recent marriage declines in East Asia. Population Aging and Living Arrangements: Implications on Inequality / SANG-HYOP LEE, ANDREW MASON, AND HYUN KYUNG KIM Many previous studies conclude that population aging leads to an increase in consumption or income inequality. The results are based on a conventional model that analyzes compositional effects given interage differences in the means and variances of income. These issues are addressed in this paper by (1) developing a new empirical strategy for estimating the effects of population aging, income, and other socioeconomic variables on living arrangements; (2) extending the standard model of income inequality to incorporate responses in relation to one aspect of the familial support system ？ the formation of multigenerational households (or extended households); and (3) applying the models to South Korea, where familial support has been important source of consumption for older people. In particular, this paper complements previous studies by incorporating the responses of familial support systems to changes in the age distribution of the population. Our model and empirical results suggest that (1) population aging could have led to a greater increase in the proportion living in extended households, but improvements in survival have had a weaker effect than the fertility decline on the proportion of people living in extended households, (2) higher incomes of workers in Korea could have led to more of a shift away from extended households, and (3) an increase in both the proportion of the family cohort and the proportion of pensioners living in extended households reduces the variance in income. These results support the argument that co-residence and population aging may reduce income inequality.

The year 2024 marked a pivotal moment in North Korea’s economic trajectory, defined by significant internal and external shifts. Domestically, the regime intensified its consolidation of control over economic governance, placing renewed emphasis on the Cabinet-centered system. This shift signaled a strategic departure from the semi-decentralized and informal mechanisms that had previously supported macroeconomic stability during the early years of Kim Jong Un’s leadership. Externally, North Korea’s growing military and economic cooperation with Russia opened new channels for sanctioned trade―particularly in the defense sector―while its economic engagement with China showed signs of stagnation, suggesting a potential recalibration of longstanding external dependencies.

April issue examines what the global security shifts triggered by the Iran War imply for the Korean Peninsula, while offering a multidimensional assessment of North Korea’s “Regional Development 20×10 Policy.” The Special Interview diagnoses the weakening of the international order, seen in the limits of the NPT regime and strains in traditional alliances, and stresses the need for South Korea to reinforce norms-based solidarity as North Korea advances operational nuclear delivery capabilities, including SLBMs. The Trends and Analysis and Economic Data sections place the 20×10 Policy, now in its second year, within North Korea’s regional economic policy since the 1950s. They note short-term gains in expanding the light-industry base, but also raise sustainability concerns over cost burdens shifted to residents, fiscal and sanctions-related constraints, and inefficiencies from small-scale, duplicative local investment. A text-mining analysis of *Rodong Sinmun* further shows a sharp propaganda shift from “agriculture” to “regional development.” Overall, the issue illuminates North Korea’s pursuit of regime stability through self-reliance amid external security pressures and domestic economic strain, drawing mid- to long-term implications for inter-Korean relations and foreign policy.