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The performance of industrial activities in August confirmed that the economy continued to recover with the support of private consumption despite difficult external conditions, but uncertainties in the economic flow remain high with global economic downside risks escalating from the monetary tightening of major economies and the energy crisis triggered by Russia. In terms of production, the continued recovery of service industries and the easing of disruptions in the supply chain are positive signs, while the slowdown of the global economy weakening the recovery of exports and the devastation caused by the typhoon undermining steel production may burden recovery. Continued recovery of employment and the additional supply of housing may boost consumption and investment, but high prices, the continuation of interest rate increases, and the escalated volatility of financial and foreign exchange markets remain as uncertainties.
※ Source: Ministry of Economy and Finance (moef.go.kr)
→In July 2022, production and shipment of cars gained 11.2 percent and 13.9 percent, respectively, from the same period of the previous year, supported by the partial resolution of disruptions in the supply of semiconductors used in cars, and utilization rate also jumped 11.3 percent. Domestic consumption increased for the first time in 2022 by slightly gaining 0.5 percent year-on-year with the support of the inflow of imported cars. Exports in August spiked 28.6 percent from a year ago led by expanded exports of EVs and dramatic increases in the exports to the United States.
→The decline in accumulated ship orders was limited to 20 percent year-on-year in July 2022 to display better-than-expected market conditions as Qatar continued to order more LNG carriers to support the weakening market conditions of tankers and bulk carriers, alongside the orders of container ships sliding by 12 to 34 percent due to worsening market conditions. Exports in August fell by 25.8 percent from the same period of 2021 due to the base effect and the continued effect of COVID-19 having slashed orders in 2020. Imports in July declined by 37.6 percent year-on-year as the imports of cargo ships nosedived against the growing imports of ship parts and diesel engines.
→Production in July declined by 4.4 percent year-on-year and by 3.4 percent month-on-month as equipment investment slowed while maintaining the upward trend and as domestic consumption continued to fall. Exports in August grew by 2.4 percent from the same period of the previous year despite the continued decrease of exports to China as major economies expanded infrastructure investments and lifted the demands for equipment. Imports in July recorded USD 2.7 billion, up by 2.2 percent year-on-year.
→Production in July slid by 3.9 percent from a year ago due to the slowdown of the construction sector and the anticipated fall in prices delaying purchases. With the downward adjustment of global steel prices wiping out the price effect, exports in August grew by 2.8 percent year-on-year with the increase of exports to major countries. Imports in July sharply fell by 14 percent year-on-year, as the slowdown of domestic consumption slashes import demands and as the industry anticipates a decrease in import prices.
→Domestic consumption in July increased by 1.5 percent with the support of recovered demands for transportation oil and petroleum products for petrochemicals. Production in July gained 5.5 percent year-on-year as the global demands for petroleum products lifted capacity utilization rate. Exports in August reached USD 6.5 billion by growing for eighteen straight months, backed by high oil prices and improvements in refining margin, which lifted export unit prices and export volume.
Wireless communication devices
→With more experts anticipating a slowdown of the global economy due to China’s sluggish economic growth, China’s lockdown of major cities, and the interest rate increases led by the US, the overall demands for electronic products including smartphones declined, and exports in August slid by 20.7 percent year-on-year largely caused by declining exports to China and the US. Production and shipment declined by 3.5 percent and 8.6 percent, respectively, from a year ago, and capacity utilization rate also fell by 15.1 percent.
→In July 2022, production and shipment of semiconductors are up by 17.4 percent and down by 22.7 percent, respectively, from a year ago as the industry witnessed a sharp decrease in shipment. Whereas exports have continued to grow year-on-year since July 2020, exports in August stood at USD 10.78 billion and declined by 7.8 percent year-on-year to start falling for the first time in twenty-six months. Exports for the month of August have surpassed the USD 10 billion mark for the third time in history, followed by August 2018 and August 2021, but recovery appears unclear as exports start declining after having maintained the upward trend this year.
→Production in July slid by 24.5 percent from the same period of the previous year as the economic slowdown sharply dimmed the outlook for smartphone production. Exports in August fell by 5.7 percent due to the sluggish global economy to continue the downward trend for three straight months. However, LCD exports gained slightly by 2.2 percent, mostly in IT panels and car panels with the support of improved added values of LCDs.
※ Source: Korea Institute for Industrial Economics and Trade (kiet.re.kr)