Invest KOREA

In May 2024, Korea’s total industrial production was adjusted after improving in the previous month, but the recovery trend continued.

Mining and manufacturing production turned negative in May as more semiconductors were produced, but other industries, such as automobiles, were adjusted down after gaining significantly in the previous month (Apr. 2024: 2.4 → May: △1.2 percent). Despite increases in wholesale and retail trade (1.9 percent) and leisure (5.1 percent), the service sector was adjusted (Apr. 2024: 0.7 → May: △0.5 percent) by declines in finance and insurance (△2.5 percent) and information and communication (△1.6 percent). Retail sales stayed flat (Apr. 2024: △0.8 → May: △0.2 percent) as increases in durable goods (0.1 percent) and non-durable goods (0.7 percent) were offset by a decline in semi-durable goods (△2.9 percent). Capex fell (Apr. 2024: △0.3 percent → May: △4.1 percent), affected by delays in the introduction of transportation equipment such as aircraft and ships (+12.3 percent) and machinery (+1.0 percent). Construction completed decreased (Apr 2024: 4.2 → May: △4.6 percent), with both building (△5.7 percent) and civil engineering (△1.1 percent) declining. The cyclical change in the coincident index fell due to decreases in construction completed and domestic shipments, while the cyclical change in the leading index started decreasing alongside falling construction orders and domestic machinery shipments.

The Korean economy in general continues to show signs of recovery despite adjustments in industrial activities in May, but there are upside and downside risks on the path ahead. On the production side, positive contributors include an improvement in the IT industry and global manufacturing, as well as the prospect of a soft landing in the global economy. On the other hand, supply chain and freight risks, as well as difficulties for small businesses, are weighing on the outlook. On the spending side (consumption and investment), the recent slowdown in inflation, the beginning of the peak holiday season, and the full-scale introduction of equipment in the second half of the year by major companies are positive factors, while household debt and real estate PF risks and sluggish construction orders are negative factors.

‘Exports Continued Growing in May, Led by Expanding Hybrid Vehicle Exports’
→ Exports rose by 2.4 percent year-on-year in May, led by expanding global demand for hybrid vehicles. Domestic consumption fell by 7 percent year-on-year in April on the back of weaker consumer sentiment and the base effect of higher sales volumes in the previous month. Production in April ended a two-month decline and turned positive on stronger exports.

‘Imports and Exports both up Sharply amid Improving Production Indices’
→ Production indices improved in April, as production turned positive and shipments fell slightly. Exports increased by 108 percent in May, as ships ordered at high prices were delivered. Imports increased by 314.1 percent in April, as a large influx of ships was received. Korea's cumulative orders up to April continued to be strong, up by 27.8 percent year-on-year to 5.4 million CGT, with a cumulative order of 39.1 million CGT.

‘Production Started Growing, Exports Turned Negative’
→ April production increased by 4.6 percent year-on-year, supported by higher domestic sales and exports. May exports fell by 1.5 percent year-on-year as exports to China and the EU remained slow and exports to the US turned negative. Imports turned positive (+7.7 percent) in April as Korean manufacturers performed well and the economic outlook improved, leading to recovery in demand.

‘Production Continued Falling, Exports Fell Further due to Lower Unit Prices’
→ Production in April decreased by 4.6 percent year-on-year as falling domestic consumption caused sales to shrink and the third renovation of blast furnace no. 4 at Pohang Steelworks begun. Exports in May decreased by 11.9 percent from a year ago as sluggish demand in Japan and China slowed exports and weak raw material prices caused export unit prices to fall. Despite a significant increase in import volume from China, April imports fell by 2.2 percent from a year ago due to sliding unit prices.

‘Exports Rose by 8.4 percent YoY on Higher Unit Prices’
→April production increased by 1.9 percent year-on-year as domestic consumption and exports grew together. Exports gained for the third consecutive month in May amid sustained high oil prices and growing exports in the Asian region.

‘ICT Devices Growth in Full Swing, May Exports up by 9.4 percent YoY’
→ Exports grew for three straight months, as exports of smartphone parts surged by 18.2 percent while those of smartphones fell by 7.7 percent year-on-year. Production decreased by 1.9 percent year-on-year in April, but growing exports helped slow the fall, and shipments grew by 2.2 percent. Imports increased by 14 percent year-on-year in April, mostly in smartphone parts.

‘ Semiconductor Exports Remained Strong’
→ May exports grew by 54.5 percent year-over-year and reached USD 11.4 billion to record the second highest for the month of May, after the record high May in 2022. The April semiconductor production index was 138.6, up by 22.3 percent year-over-year, continuing the strong growth, but down by 4.4 percent from the previous month.

→ April production increased by 12.4 percent year-on-year, driven by growing demand for display panels used in IT devices. The recovery in demand for IT devices helped May display exports gain by 15.8 percent year-on-year and enabled display exports to grow for the tenth consecutive month. LCD imports continued growing due to the closure of domestic production facilities.