South Korea's manufacturing sector ranks as the third most competitive in the world after Germany and China, a UN agency has found.

A report released Wednesday by the Korea Institute for Industrial Economics and Trade cited the findings by the United Nations Industrial Development Organization, which analyzed 2018 data. 

According to its Competitive Industrial Performance Index (CIP) released last year, South Korea ranked third out of 152 countries, beating out the U.S. and Japan for the first time.

The index, which is issued every other year, combines eight categories of industrial performance such as manufacturing export and value added per capita. South Korea has been climbing the ranks since placing 17th in 1990. 

The Korea Institute for Industrial Economics & Trade added its analysis that manufacturing has served as the backbone of Korea's economic growth and job creation during the pandemic.

The report noted that South Korea - which has the second highest share of manufacturing among 28 major economies - had the fourth slimmest decrease in growth vis-a-vis 2019 and ranked the sixth lowest in the rise of the unemployment rate. Its growth was minus one percent last year compared to the global average of minus three-point-three percent.

The report said Korean exports - which are also rebounding fast in a V-shaped recovery - can be credited to the manufacturing sector's competitiveness.