The economy grew at a faster pace in Q1 2017 than three months earlier, due to increased construction investment and exports, according to central bank data. Gross fixed capital formation contributed the most to growth, increasing 4% sequentially. Within such capital formation, construction grew 5.3 % while private consumption was up 0.4% as residents bolstered overseas consumption.
Expenditure on non-durable goods and services dropped. Exports grew 1.9% sequentially and imports increased 4.3%, after boosts in machinery and equipment and precision instruments. On a year-on-year basis, South Korea’s real GDP grew 2.7% in the March quarter compared with 2.4% growth recorded in Q4 2016. This was above the forecast of 2.6% growth. Private consumption was up 2%, with government consumption rising 2.7%. Construction increased 9.7% year on year. Exports grew 3.7% year on year and imports were up 9.4%. The central bank revised its 2017 GDP growth forecast and now expects the economy to increase 2.6% in 2017, higher than its previous 2.5% forecast. As part of newly elected president Jae-In Moon’s efforts to deal positively with the fourth industrial revolution, plans to emphasize healthcare industry growth have been set in motion. This move can be seen in efforts to enhance pharmaceuticals, biotechnology, and medical devices, and improve the drug pricing system to expedite the global advance of new medicines developed locally.
In the “Promotion of Pharmaceutical, Biotechnology and Medical Device Industries” section of the “Generation of Future Growth Engines” part of his presidential pledge, President Moon suggested a number of strategies to promote the three industries. The strategies included: preparation of rational standards that met international regulations; creation of comprehensive mid and long- term plans to increase predictability of policies; improvement in the decision-making structure of health insurance benefits for Korean- developed drugs to enter the global market; creation of a new drug development ecosystem by establishing a cooperative system among industries, universities and institutes; and promotion of Korean medicine and dentistry as a national strategic industry.
In addition, the Korea Pharmaceutical and Bio-Pharma Manufacturers Association has revised several industry policies:
• There is now a heavier punishment for the provision of rebate, extended from less than two years to three years in jail. The provision was brought in at the beginning of December 2016. The punishment of a fine was kept at KRW30 million (approximately US$26,700).
• The drug price cut cycle will be adjusted from one year to two years.
• Pharmaceutical companies wanting to renew products before the enforcement of the Product Approval Renewal System on January 1, 2018, had to complete renewal procedures six months before enforcement, thus before the end of June 2017.
• The revised pharmaceutical affairs law requires drug suppliers to write an expenditure report to record any financial profit. This was introduced in June but will only come into effect in 2018
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Views from the region - KO - Q1 2017