Update on the Economy of South Korea

South Korea’s industrial output grew for the 14th consecutive month in August, an indication that the economy is moving forward after being rocked by the recent global economic slump, a government report showed Thursday.

According to the report by Statistics Korea, production in the mining and manufacturing sectors expanded a solid 17.1 percent last month from the same month a year earlier.

“There was output contraction in the autos and transportation equipment sectors, but overall figures were propped up by strong showing in the semiconductors and machinery equipment sectors,” said Yun Myoung-joon, head of the statistical office’s industrial trend division.

Semiconductors and electronics parts production rose 26.0 percent on-year, and machinery equipment output surged 62.6 percent.

He added that the 1.0 percent dip in production vis-a-vis the previous month can be attributed to many workers taking time off for summer vacation and companies upgrading their assembly lines. The monthly decline is the first contraction since Oct. 2009.

The report comes amid a government forecast that South Korea’s economy may grow around 5.8 percent this year, compared with a mere 0.2 percent gain in 2009. South Korea’s economy expanded 7.6 percent on-year in the first half.

The report, however, showed the leading economic composite index dipping 0.8 percentage points from a month earlier, marking the eighth straight month of contraction. The index is used to predict economic performance eight to 15 months ahead.

It added that the country’s factory operating rate stood at an average of 81.8 percent of capacity, down 3 percentage points from July when the figure rose to the highest level since Seoul started record keeping in January 1980.

The decrease reflects weak automobile production numbers last month, and faster inventory increase compared to shipments that could compel companies to adjust output. Shipments increased 16.6 percent on-year, but inventory rose by 19.2 percent.

According to the report, retail sales contracted 0.7 percent in August from a month earlier but expanded 9.3 percent from a year ago, as people bought more durable goods such as electronic appliances and non-durable goods like gasoline.

Facility investment increased 39.8 percent on-year, driven by more spending on machinery purchases, and grew 6.2 percent vis-a-vis July.

Output in the service sector grew 4.2 percent on-year in the cited month as people spent more on education and transportation outlays, although it fell 0.2 percent on-month.

The statistical office, meanwhile, said that while the leading economic composite index continued to fall off, such developments do not automatically signify that the economy will cool in the near future. (PNA/Yonhap)

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