According to a report released by Statistics Korea this week, South Korea’s factory output has dropped a disappointing 2.8 percent from a year earlier in April – worse than the estimated 1.3 percent decline that had been predicted by economists.
The figure is released as the South Korean won posted its worst monthly decline since July 2015. Production of electronic components fell 12.7 percent from a year ago, while output of cars and machinery dropped 8.7 percent and 9.5 percent, respectively. “The negative factory output data trend shows that the foundations of growth are weak,” says Suh Dae Il, an economist at Mirae Asset Daewoo Securities.
An inventory-to-shipment ratio of 124.2% is a concerning sign of weak export demand, as manufacturers stockpile unsold goods at warehouses. Worryingly, exports have been in continual decline for the last 16 months. Weak demand has left factory activity low across Asia, as the region’s export-driven businesses struggle for new orders in a slow global economy. It is expected that corporate restructuring of South Korean shipbuilders and shipping companies will further continue to hurt domestic demand and contribute to low business confidence.
Despite the gloomy data, the Bank of Korea maintains that domestic demand is in good form, and will support growth. Also on the positive side, shipments in the first twenty days of May have risen by 2.7% on an annualized basis, this better-than-expected data offering some hope of an end to the trend of declining exports.
Meanwhile, South Korea’s Ministry of Strategy and Finance has said in a release that “The government will put more policy efforts into expanding recovering momentum in the latter half of the year”. The Ministry also says that it is strengthening its monitoring of the global financial and foreign currency markets in order to stave off any fallout of external risks.
- Benefits to Korea in Free Trade Agreements with EU, ASEAN, US and Chile?
- Korea International Trade Orgaizations Chair calls for FTA with China
- Korean Economy Strong this Year According to Moody’s
- South Korea and Vietnam Negotiate FTA: Korea’s Nuclear Exports
- Camry Prices in Korea May be Cheaper from Next Year: Customer Benefits of the KORUS FTA
- Korea Legal News for the Week of May 26
- Why are American Cars not Popular in Korea?: Decrease in Duties from FTA has not Helped Market Share
- South Korea Puts Near-Total Ban on Japanese Fish Imports Opening Opportunities for other Nation Exporters
- Korean Legal News for the Week of 24 November, 2013
- Korean Legal News for the Week of November 17, 2013