In April 2025, Korea’s total industrial production fell for the first time in three months (down 0.8 percent month-on-month and down 0.4 percent year-on-year), as both mining and manufacturing (down 0.9 percent month-on-month and up 4.9 percent year-on-year) and services (down 0.1 percent month-on-month and up 0.7 percent year-on-year) production shrank due to the base effect of two consecutive months of sharp increases.

In April, mining and manufacturing declined, affected by the impact of US tariffs on automobiles and the base effect of a sharp increase in semiconductor production in the previous month. The service industry saw an increase in production in the wholesale and retail trade and accommodation and food services sectors, but decreased in the finance and insurance, and professional, scientific, and technical services sectors, primarily due to a decline in stock trading and architectural design orders. Retail sales shrank as sales of durable goods (communication devices and computers), semi-durable goods (clothing), and non-durable goods (pharmaceuticals and books) all declined. Capital investment decreased fell slightly even as more investment was made in transportation equipment such as automobiles and aircraft, due to sluggish investment in machinery such as semiconductor manufacturing machinery. Construction completed fell slightly as civil engineering increased and building construction decreased. Despite a decrease in construction completed, the cyclical change in the coincident index rose, driven by increases in the number of employed persons and mining and manufacturing production. Even as stock prices fell, the cyclical change in the leading index increased thanks to increases in domestic shipments of machinery and cycle inventory.

In April, Korea’s industrial activities adjusted from the base effect of seeing sharp increases for two consecutive months, while domestic demand remained sluggish in areas such as consumption and construction. The government will make every effort to respond to trade risks and revitalize domestic demand.

‘Domestic Sales Started Growing as Rapid Approval of EV Subsidies Drove the Sales of EVs’
→ Despite increased demand for domestically produced vehicles, particularly hybrids, exports remained flat in March as a slowdown in overseas production of finished vehicles dampened demand for parts. In February, domestic sales increased by 12.9 percent year-on-year as swift approval of EV subsidies pushed the sales of EVs. Production in February grew by 14.6 percent year-on-year as domestic sales and exports all turned to growth.

‘Production Indices Saw a Big Jump’
→ Production in February fell by 3.7 percent month-on-month, but increased sharply by 44.6 percent year-on-year. Exports in March increased by 51.6 percent year-on-year to approximately USD 3.2 billion as more high-value-added ships such as LNG carriers and large container ships were delivered. February imports increased by 2.2 percent year-on-year due to expanded imports of ship parts and shipbuilding materials. Global ship orders for the first two months of 2025 decreased by 65.4 percent year-on-year across most ship types, including tankers, bulk carriers, and gas carriers, while only the container ship segment saw a 44.2 percent increase.

‘Production Started Falling as Both Domestic and Export Markets Remained Weak’
→ In February, production increased by 4.4 percent year-on-year, driven by strong domestic demand and capital investment. In March, exports fell by 3.5 percent year-on-year as Washington’s imposition of tariffs added uncertainty to the global economy. In February, imports increased by 8.6 percent year-on-year as domestic demand recovered and capital investment increased

‘Exports Fell Further due to Weak Unit Prices, while Production Continued to Shrink’
→ In February, steel production decreased by 7.2 percent year-on-year even as exports to ASEAN countries increased, affected by sluggish domestic demand and inventory adjustments by steel companies. Even as export volume maintained the same level as a year ago, March exports shrank by 10.6 percent year-on-year due to falling export unit prices. In February, imports decreased by 15.1 percent year-on-year as slow domestic demand weakened demand and anti-dumping lawsuits and rising prices of imported goods slashed import volume.

‘Exports Plunged by 28.1 percent Year-on-Year as Unit Prices and Volume Decreased Together’
→ February production shrank by 5.8 percent year-on-year due to reduced operating rates and regular maintenance. March exports decreased by approximately USD 1.3 billion year-on-year as unit prices fell and volume continued decreasing due to expanded regular maintenance.

‘March Exports Increased by 13.8 percent Year-on-Year Driven by an Increase in High-Value-Added Parts and Strong Sales of New Products’
→March exports grew by 13.8 percent year-on-year, driven by rising global demand for AI smartphones and increased exports of domestically-produced high-value-added smartphone components required for these devices. February production rose by 14.0 percent year-on-year and shipments grew by 12.0 percent as well, leading to a significant 30.5 percent jump in the operating rate, while inventory fell by 6.9 percent. February imports rose slightly by 1.5 percent year-on-year, driven by a big jump in imports of smartphones by 35.8 percent, which was offset by sharp declines in components and wireless transmitters.

‘Strong Exports Continued’
→ In March, exports returned to growth after one month to increase by 11.9 percent year-on-year and reach USD 13.1 billion, continuing the strong performance of semiconductor exports. The semiconductor production index for February maintaining its upward trend and stood at 157.3, an increase of 11.6 percent year-on-year and 0.7 percent month-on-month.

‘The Adoption of AI Tech in Products Enabled the Recovery of Exports Despite Falling OLED Panel Unit Prices’
→ Exports in March increased by 2.9 percent year-on-year as major customers adopted AI in their products. The production index for February was 62.3, up 0.8 percent year-on-year and 9.1 percent month-on-month.