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The performance of industrial activities in July confirmed the continued recovery of the Korean economy, but uncertainties in the economic flow remain high due to overseas factors including global inflation, slow growth and rate hikes. On the production side, positive signs include the recovery of production in service industries, declining global oil prices and raw material prices, and a partial resolution of disruptions in the supply chain. With regard to consumption and investment, the continued recovery of employment and the slowdown of increases in steel prices are positive signs that exist alongside uncertainties such as the effects that the heavy rain in August may have on consumption and construction activities, continued high prices and rate hikes, and increased volatility in the financial market. .
※ Source: Ministry of Economy and Finance (moef.go.kr) (moef.go.kr)
Production increased by 2.8 percent year-on-year in June 2022, driven by the lift of lockdown of Shanghai, China and the partial resolution of the supply of semiconductors used in cars. In contrast, delivery decreased by 1.3 percent from the same period of 2021 due to the refusal of unionized truckers to transport products and subsequent difficulties in selling products. Consumption in June 2022 shrank by 2.8 percent from the same period of the previous year as the shortage in supply persisted. Exports in June 2022 grew by 17.7 percent year-on-year to record best-ever results for the month of June, boosted by the end of unionized truckers’ strike and the brisk exports of electric cars.
Global ship orders in the first half of 2022 fared better than originally-anticipated to decrease only by 16 percent year-on-year, despite the continued worsening of global economic conditions, which led the International Monetary Fund to revise down global growth by 0.4 percentage point by considering the recession of the Chinese economy, Russia’s war with Ukraine, and high inflation. Driven by the offshore plant sector, exports in July increased by 29.2 percent from the same period of the previous year alongside the persisting effects of orders having plunged in 2022 after the outbreak of COVID-19. The plummeting imports of cargo ships led to the 29.4 percent year-on-year decrease of imports in June 2022 although more ship parts were imported.
Despite the growing equipment investments and orders of machinery, production in June 2022 decreased by 4.0 percent from the same period of the previous year as consumption and exports both declined. Slowdown of the global economy and the subsequent weakening of demands caused exports in July 2022 to fall by 2.9 percent year-on-year despite the continued infrastructure investments of major economies. Imports in June 2022 decreased by 4.5 percent from the same period of 2021 to record USD 2.7 billion.
Although more sheets were produced after the completion of equipment repair and maintenance, production in June 2022 decreased by 2.4 percent from the same period of the previous year, caused by the poor performance of steel-consuming industries including construction. The continuation of high export unit prices pushed up exports in June by 5.2 percent year-on-year as the proportion of exports increased due to the effects of stalling domestic consumption and the soaring won-dollar exchange rate. Amidst the continued price-slashing of China and other exporters, imports continued to grow in June 2022 but the rate of increase was reduced to 7.8 percent year-on-year by reflecting the downward trend of import unit prices.
Domestic consumption decreased by 11.0 percent due to stalling demands for petrochemical products caused by the sustained high oil prices. In comparison, production increased by 2.3 percent year-on-year as improved refining margins pushed up capacity utilization rate. In July 2022, exports reached USD 6.72 billion to record best-ever results as high oil prices and the continuation of high refining margins helped elevate unit prices and export volume.
Wireless communication devices
Exports in July 2022 decreased by 3.5 percent year-on-year, dragged down mostly by declining exports to China and the United States, as demands for ICT final products including smartphones decline due to China’s zero COVID policy causing local lockdowns and affecting economic growth and the slowdown of the global economy bringing disruptions in supply chains and increasing raw material prices. In June 2022, production and delivery increased by 6.1 percent and 3.8 percent, respectively, from the same period of the previous year to overturn the downward trend of the first half of 2022 and increase capacity utilization rate by 5.3 percent.
In June 2022, semiconductor production and delivery increased by 23.9 percent and 5.1 percent, respectively, from the same period of the previous year to support brisk sales, but worries over supply-demand imbalance remain as inventory inclined by almost 80 percent in June despite the continued production decrease from the previous period. Exports in July grew by 2.1 percent year-on-year to stand at USD 11.2 billion dollars, which is the best-ever export results for the month of July.
Production in June 2022 plunged by 21.5 percent year-on-year due to sluggish demands resulting from reduced LCD production and economic slowdown. Global demands shrank in July 2022 to bring down exports by 2.7 percent year-on-year. While the downward trend continued for two consecutive months after the spread of COVID-19, OLED exports grew by 4.3 percent boosted by the dramatic increase in the delivery of panels applied with high value-added technologies including low-temperature polycrystalline silicon (LPTO).
※ Source: Korea Institute for Industrial Economics and Trade (kiet.re.kr)(kiet.re.kr)