Invest KOREA

Korea's industrial activities rebounded in April 2024, with overall output improving across major production sectors, suggesting a continuation of the recovery in the second quarter.

Mining and manufacturing production turned positive in April (Mar 2024: -3.0 → Apr 2024: 2.2 percent), with production in a number of industries (22 out of 28), including automotive, increasing despite adjustments in the semiconductor sector. Services production improved, driven by gains in most sectors, including wholesale and retail sales (+1.7 percent), transportation and warehousing (+1.3 percent), and education (+0.9 percent) (Mar 2024: +1.1 → Apr 2024: 0.3 percent). Retail sales increased in semi-durable goods (0.5 percent) and non-durable goods (0.4 percent), but declined in durable goods such as passenger cars and computers (△5.8 percent) (Mar 2024: 1.1 → Apr 2024: △1.2 percent). Capital investment was slightly flat month-on-month (Mar 2024: △6.3 → Apr: △0.2), as an increase in transportation equipment (0.3 percent) was offset by a decrease in machinery (△0.4 percent). Construction completed rebounded sharply, with both building (6.1 percent) and civil engineering sectors (1.7 percent) improving on the back of stronger performance at large-scale projects and better execution of public works projects (Mar 2024: △10.2→April 2024: 5.0 percent). The cyclical change in the coincident index declined for the second consecutive month due to a decline in construction completed and retail sales. The cyclical change in the leading indexes turned upward due to increases in inventories, economic sentiment index, and KOSPI.

The Korean economy continues to show signs of recovery, with April's industrial activities suggesting a favorable start of the second quarter, but there are upside and downside risks to the recovery path ahead. On the production side, expectations of an improvement in the IT industry and global manufacturing, as well as the prospect of a soft landing in the global economy, are positive factors. On the other hand, geopolitical unrest and subsequent supply chain risks are weighing on the economy. On the spending side (consumption and investment), positive weather conditions, an increase in overseas arrivals, and the resumption of construction at major semiconductor sites are upside factors, while household debt, real estate PF risks and weak construction orders are downside factors.

‘Exports Turned Positive in April, Led by Record-High Exports to the US’
→ Despite falling exports of electric vehicles, April exports increased by 8.5 percent year-on-year thanks to strong exports to the United States. March domestic consumption fell by 15.2 percent from a year ago due to a base effect and fewer business days. March production decreased year-on-year as both domestic consumption and exports fell together.

‘Significant Increase in Imports amid Sluggish Production Index’
→ In March, production and shipments decreased by 6.6 percent and 15.6 percent, respectively, and the capacity utilization rate fell by 14.6 percent. Exports increased by 5.6 percent in April to grow for the ninth consecutive month. Imports increased by 207.3 percent in March, driven by a large influx of cargo ships. By March, Korea's cumulative orders amounted to 4.57 million CGT, accounting for 39.1 percent of the world's ship orders, and the cumulative backlog stood at 38.89 million CGT, indicating abundant work.

‘Production Declined for Two Straight Months, Exports Started Growing’
→ In March, production decreased by 6.4 percent year-on-year due to a contraction in the domestic market. Despite continued sluggishness in exports to China and the EU, April exports increased by 1.5 percent year-on-year due to strong exports to the US, Latin America, and India. In March, imports fell by 5.8 percent year-on-year to decline for ten months in a row, as demand from domestic companies continued to shrink due to the prolonged slowdown in the manufacturing industry.

‘ Production and Exports Fell Together ’
→ Production in March decreased by 6.8 percent year-on-year as the sluggish construction industry weakened demands for related steel products and the base effect of strong plate production in the previous year. Despite an increase in exports to major export destinations such as Japan and China, exports in April decreased by 5.7 percent from a year ago due to weak exports to the EU and the Middle East and falling unit prices. Imports in March decreased by 13.6 percent year-on-year due to a decrease in import volume from China due to a base effect and a decline in unit prices of major import items.

‘Exports Grew by 19.0 percent Year-on-Year Backed by Volume Expansion ’
→ In March, production decreased by 1.6 percent year-on-year due to the sluggish domestic consumption. In April, exports continued to increase, supported by higher international oil prices and growing exports to the Asian region.

‘ Recovery in ICT Manufacturing is Visible, Exports up 11.4 percent Year-on-Year in April ’
→ Exports of smartphones fell by 18.2 percent year-on-year, but exports of parts increased by 30.3 percent, leading the increase in exports of wireless communication devices. In March, production decreased by 4.3 percent year-on-year, while shipments increased slightly by 1.9 percent, and inventories fell by 8.7 percent due to the exhaustion of existing volumes. In March, imports increased slightly by 0.1 percent from a year ago, driven by growth in smartphones and parts. In February 2024, the number of mobile phone subscribers increased slightly by 0.03 percent year-on-year, while the number of wearable device lines increased by 1.4 percent.

‘Semiconductor Exports Increased for Six Straight Months’
→ Exports in April reached USD 9.955 billion, up 56.1 percent year-on-year. The amount is the second-largest for the month of March following March 2022. The semiconductor production index for March was 159.9, up 30.3 percent year-on-year, continuing the trend of strong growth, but down 0.7 percent month-on-month.

‘Production Increased due to Diversification of Products Made with OLEDs’