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South Korea saw better production, Consumption, Investment in 2022, But Outlook for 2023 remains Grim

#Hot Issues of the Week l 2023-02-05



South Korea saw an increase in on-year production, consumption and investment last year, according to latest government figures. It was a triple rise for the second consecutive year. However, amid slowing exports and weakened domestic recovery, coupled with inflation and high interest rates, a grim outlook is being forecast for this year. 

According to Statistics Korea on Tuesday, the nation's industrial output last year rose three-point-three percent from a year earlier. This came on the back of an on-year jump of four-point-nine percent in 2021. 

Production in the mining and manufacturing industries expanded one-point-four percent, while the service sector saw a four-point-eight-percent on-year expansion.

Retail sales increased zero-point-two percent on-year, as did facility investment by three-point-three percent.

While the three major indicators of production, consumption and investment all rose for the second consecutive year, suggesting a recovery in industrial activity, the most recent monthly data suggests otherwise.

Industrial output last month fell one-point-six percent on-year, the biggest margin in 32 months. Facility investment dropped seven-point-one percent in the same period.

The cyclical component of coincident index, which paints a picture of the current economic state, fell zero-point-nine points, as did the cyclical component of leading index, a glimpse of the future, by zero-point-five points.

Attributing the declines to slowing exports and weakened domestic recovery, the government pledged to execute projects worth 340 trillion won in the first half of the year as a supplementary measure.

Meanwhile, the International Monetary Fund(IMF) forecast that the South Korean economy will grow one-point-seven percent this year, down zero-point-three percentage points from its previous outlook in October.

South Korea's exports shrank some 16 percent on-year in January, declining for the fourth consecutive month. 

According to the Ministry of Trade, Industry and Energy on Wednesday, the country's outbound shipments dropped 16-point-six percent from a year earlier, standing at 46-point-27 billion U.S. dollars last month. 

Outbound shipments of semiconductors, a leading export item, plunged 44-point-five percent, due to a slump in chip prices and demand. 


Imports dropped by two-point-six percent on-year to 58-point-95 billion dollars. This has resulted in an all-time monthly high trade deficit of 12-point-69 billion dollars. 

The nation has logged a trade deficit for eleven straight months since March last year, the longest streak since January 1995 to May 1997.

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