The possibility of South Korea financing a program of investment and rehabilitation out of the proceeds of exports is not worth considering in detail. Although South Korea is primarily agricultural, it is unlikely that it will be able to export foodstuff, even under the most favorable circumstances. Deterioration of agriculture, due to accumulated soil deficiencies and erosion, and an increase of population from 15 to 20 million since 1940 indicate that no export surplus of food can be expected in the next several years. The only exports which may be derived from South Korea are small amounts of such minerals as tungsten, gold and copper, some ginseng root, and marine products such as agar-agar. The most optimistic estimate is $10 million worth of exports by 1950. Much more than $10 million earned by Korean exports will be needed to finance essential raw material imports, and there is no prospect of any capital development out of current production. _Inflation_ The Korean inflation is not as serious as the Chinese inflation in rate of price increase, but its causes are less susceptible to control by measures taken within Korea. Price increases have been due to physical inability to produce goods, and not to unrestrained issuance of paper currency. Prices of consumers’ goods in various categories have risen 200 to 700 times over the 1937 level. The official rise price, however, has risen only 70 times, and about 80 per cent of the calorie requirement for the urban population is available at the official price. A runaway inflation has not yet occurred in South Korea, because (_a_) the Military Government has restrained the issuance of currency by keeping governmental expenditures and local occupation costs at reasonable levels, and (_b_) because cannibalization and the use of Japanese stocks have kept some industry going, and (_c_) the forcible collection of rice at harvest time has brought in sufficient food to maintain, with “disease an unrest” imports, an adequate official ration in the cities without the use of large inflationary payments to the farmers. Highly inflationary factors such as the exhaustion of raw material stocks, cumulative breakdowns in public services and transportation, and the cutting of power supply from the North, might occur simultaneously. The Korean economic outlook is, therefore, more grave than in China or Japan, where governmental fiscal policies as well as low production, are the main causes of inflation. Korea, lacking raw materials and skilled labor, is not in a position to be saved from a disastrous and chaotic hyper-inflation by the efforts of its own people combined with correct policy decisions. A breakdown could be forestalled only by external provision of large amounts of consumers’ goods and transportation equipment. _Agriculture and Fisheries_