Invest KOREA

In March 2024, Korea's industrial production moderated after four consecutive months of growth across industries, with the first quarter as a whole showing a sound recovery.

In March, production in the mining and manufacturing industries turned negative as production in many sectors, including semiconductors and automotive, declined (Feb. 2024: +2.9 → Mar. 2024: △3.2 percent). Service industry production was slightly reduced (Feb. 2024: +0.5 → Mar. 2024: △0.8 percent) with transportation and warehousing sectors growing (+1.4 percent) and other face-to-face sectors, such as accommodation and food services (△4.4 percent) and leisure and hospitality (△1.7 percent), declining. Despite a decrease in the semi-durable goods sector (△2.7 percent), retail sales turned positive (Feb'24: △3.0 percent → Mar'24: +1.6 percent), driven by an increase in durable goods (3.0 percent) and non-durable goods (2.4 percent). After a strong improvement in the previous month, capital investment shrank (Feb. 24: +9.6 percent → Mar. 24: -6.6 percent) as transportation equipment (-2.9 percent) and machinery (-7.8 percent) declined together. Construction completed declined (Feb'24: +1.0 → Mar'24: -8.7 percent) in both building (-9.5 percent) and civil engineering (-6.0 percent), reflecting a base effect after a strong increase at the beginning of the year. The cyclical change in the coincident index turned negative for the first time in three months due to a decline in domestic consumption, exports and manufacturing and mining production. The cyclical change in the leading index turned negative due to declines in construction orders and machinery domestic consumption and shipments.

he Korean economy is showing clear signs of a balanced recovery, with an export-led recovery and signs of domestic consumption picking up. However, upside and downside risks coexist. On the production side, the outlook for a soft landing in the global economy, along with expectations of an improvement in the IT industry and global manufacturing, are positive contributors. On the downside, geopolitical unrest, supply chain risks, and monetary policy uncertainty are weighing on the economy. On the spending side (consumption and investment), expectations of growing overseas arrivals, the Family Month in May, and the extended expiration of the National Strategic Technology Tax Credit are upside factors, while household debt, real estate PF risks and weak construction orders are downside factors.

‘Domestic demand in February Fell Year-on-Year due to Fewer Working Days and Lower Supply’
→ Exports in March decreased by 5.5 percent year-on-year, affected by fewer working days and the previous year’s base effect. Domestic consumption in February fell by 21.4 percent year-on-year due to fewer working days and lower supply. Production in February decreased year-on-year due to some plant shutdowns and fewer working days.

‘Exports Grew for 8th Consecutive Month Amid Continued Decline in Production, Shipments, and Capacity Utilization Rate’
→ February production and shipments decreased by 16.6 percent and 19.5 percent year-on-year, respectively, due to the previous month’s base effect. Exports increased by 64.3 percent in March to continue growing for eight straight months, as high-end ships such as container ships and LNG carriers and offshore plants were cleared. Despite increased imports of ships, ship engines and parts, imports declined by 0.4 percent in February, offset by a one-time import of offshore structures in the same month of the previous year. In February, Korea's ship orders ranked first in the world, accounting for 47.8 percent (2.11 million CGT) of the world's total ship orders, driven by large orders for LNG carriers.

‘Production and Exports Turned Negative’
→ February production fell by 8.6 percent year-on-year with domestic consumption and exports slowing down together. While exports to the United States and Latin America showed strong performance and those to India and the Middle East started growing, March exports decreased by 10.0 percent year-on-year to decline for the first time in eleven months, due to a decline in exports to China and the EU. Imports fell by 5.5 percent from a year ago in February as Korean companies’ demand and exports slowed down.

‘Exports Continued to be Affected by Falling Unit Prices, and Production Started Falling on Weak Domestic Consumption’
→ February production decreased by 4.2 percent year-on-year as the slowdown in the construction industry led to reduced production of bar steel, while production of major sheet products such as medium and thick plates and galvanized steel continued to increase. Despite increased exports to North America, which is Korea’s largest export market, March exports decreased by 7.8 percent year-on-year, weighed by weak unit prices and sluggish exports to major countries such as Japan, India, and ASEAN. Imports decreased 15.7 percent year-on-year in February as sluggish domestic consumption led to slow import from major countries and falling unit prices.

‘Exports Increased by 3.1 percent Year-on-Year, Led by Increased Volume’
→ February production increased by 6.8 percent from a year ago, supported by growing domestic consumption and higher capacity utilization of refining facilities. March exports increased by 3.1 percent year-on-year due to expanding volumes, while unit prices declined slightly from a year ago.

‘Exports Grew by 5.5 percent After Declining Since 2022’
→March exports saw an increase of 5.5 percent year-on-year, as smartphone exports fell by 7.6 percent but smartphone parts exports grew by 12.2 percent. Production in February fell by 21.5 percent year-on-year and shipments were down slightly by 7.4 percent from a year ago, due to a slump in parts exports that continued up to the beginning of 2024. Imports in February fell by 16.6 percent year-on-year, led by a significant decline in smartphone imports.

‘Semiconductor Exports Increased for Five Straight Months’
→ March exports totaled USD 11.671 billion to grow by 35.7 percent year-on-year and record the second-best March on record after 2022. The semiconductor production index for February continued strong growth to increase by 65.3 percent year-on-year and reaching 141.5.

‘Diversification of OLED Products Helped Increase Production’