Invest KOREA

In April 2023, the production of all industries in Korea fell by 1.4 percent. The first quarter’s recovery appears to have experienced a modest adjustment.

In April, production in the mining and manufacturing industries decreased by 1.2 percent from the previous month, led by declines of 8.0 percent and 6.9 percent in pharmaceuticals and machinery, respectively, against a 13.4 percent increase in communications and broadcasting equipment. Service industry production fell by 0.3 percent with finance up by 2.0 percent and wholesale and retail sales and real estate down by 3.1 percent and 1.9 percent, respectively. Retail sales saw a decrease of 2.3 percent month-on-month, with the sales of durable goods, semi-durable goods, and non-durable goods falling by 1.7 percent, 6.3 percent, and 1.2 percent, respectively. Equipment investment rose by 0.9 percent, led by a 5.9 percent surge in transportation equipment such as aircraft. Construction investment grew by 1.2 percent from the previous month, driven by a 2.4 percent increase in construction projects including a progress in the construction of a semiconductor factory. The cyclical change in the coincident index rose by 0.2 percentage points supported by increases in the production index for mining and manufacturing and service industries and the retail sales index. The cyclical change in the leading index saw a decrease of 0.2 percentage points due to a decline in the inventory cycle index and construction orders. As the real economy continues to worsen since the second half of 2022, upside and downside factors coexist for the economy moving forward. On the production side, there are positive factors such as the rebound of the IT industry in the second half, expectations over the resumption of China’s economic activities, and the normalization of face-to-face activities. At the same time, the economy may be burdened by factors such as continued global economic uncertainties and high levels of semiconductor inventory. In the case of consumption and investment, there are positive factors such as the implementation of the amendment to the Act on Restriction of Special Taxation, measures to boost domestic consumption, slowing inflation, and improving consumer and business sentiment. However, there are risk factors such as short-term investment adjustments caused by semiconductor production cuts, declines in construction projects and reduced new orders caused by uncertainties in the construction industry, and household debt burdens.

‘'Production gains continued, supported by improvements in parts supply disruptions and solid global demand for new vehicles'’
→ In March, production continued to grow, supported by improved production conditions and solid global demand. Domestic consumption in April rose by 4.6 percent year-on-year, but the increase was moderated by weakened demands dampened by the continuation of high interest rates. As more eco-friendly cars and used cars were exported in April, exports increased by 27.5 percent year-on-year to sustain double-digit increases for three straight months. Exports of finished cars grew by 40.3 percent to surpass USD 6 billion for the second month, as more eco-friendly cars with a high export unit price were exported.

‘'Production index continued recovery, exports turned to growth'’
→ As environmental regulations imposed by the International Maritime Organization (IMO) triggered the replacement of ships, major shipbuilders selectively took orders based on their abundant backlogs to raise the Newbuilding Price Index to 168.1, the highest since 2009. Imports decreased by 30.1 percent in March, led by decreases in imports of ships and ship parts by 45.2 percent and 26.0 percent, respectively, alongside a minor decline in ship engine imports. Exports saw an increase of 59.2 percent in April, thanks to the delivery of numerous high value-added vessels such as container ships, supertankers, and gas carriers and the export of some vessels ordered during the high price period.

‘'Production growth continued, exports started growing based on strong exports to developed economies'’
→ In March, production grew by 5.2 percent year-on-year due to the base effect of slow production in the same period of the previous year (-5.9 percent). Both domestic consumption and exports fell by 0.9 percent year-on-year to bring down production by 1.8 percent year-on-year, but the reverse base effect of weak production in the same period of the previous year (-5.9 percent) resulted in a year-on-year production growth of 5.2 percent. Imports in March fell by 2.1 percent year-on-year to USD 2.817 billion. Despite sluggish exports to China, exports in April increased by 8.1 percent from a year ago, supported by sound performance of exports to developed economies such as the US and Europe.

‘'Production started recording a year-on-year growth, exports continued to decrease due to falling export unit prices'’
→ In March, steel production increased by 1.1 percent year-on-year and turned to growth as the industry entered the high season and the shipbuilding industry started recovering. Imports in March saw a decrease of 12.4 percent year-on-year due to falling import unit prices and reduced imports from major trade partners such as Japan, the US, and Vietnam. In April, exports fell by 10.7 percent from a year ago due to the base effect of lower export unit prices compared to the previous year and sluggish exports to China and ASEAN.

‘'Exports fell for two straight months due to declining export volume and unit prices'’
→ Production in March increased by 1.6 percent year-on-year, driven by increases in domestic consumption and exports. In April, exports decreased by 27.3 percent from a year ago to USD 3.76 billion. The value of exports plunged year-on-year as export volume and unit prices fell together. Export volume saw an increase of 2.3 percent year-on-year as more aviation fuel and lubricants were exported.

‘'ICT industry continued to be sluggish in Q2, April exports fell by 34.3 percent’’
→ In March, production fell by 14.9 percent year-on-year and shipments saw a decrease of 15.7 percent from a year ago as well, resulting in a 31.8 percent increase in inventories and a 20.5 percent fall in capacity utilization rate. March imports declined by 36.5 percent year-on-year, mainly due to slow imports of mobile phones. After posting a 17.7 percent year-on-year increase in January, exports plummeted for two straight months by 42.4 percent in March and 34.3 percent in April, respectively, compared to the same period of the previous year. Exports to China were down by 42.3 percent year-on-year, while exports to the EU plunged by 47.3 percent year-on-year and exports to the ASEAN region also saw a decrease of 22.8 percent year-on-year.

‘'Recession of the semiconductor industry continued'’
→ In March, semiconductor production fell by 26.8 percent year-on-year, and shipments also decreased by 18.3 percent from a year ago while the decline slowed. Production continued to fall year-on-year due to base effects, but the decline slowed. Compared to the previous quarter, however, performance improved by 35.1 percent and appears to be stabilizing. April exports decreased by 41.0 percent year-on-year to USD 6.38 billion to fall for the ninth consecutive month after ending a long-term rally.div>