(Source = Korea Development Institute (KDI))
In the February issue of Economic Trends released on the 7th, the Korea Development Institute (KDI) said, “Recently, the Korean economy has experienced a worsening of domestic demand due to the third epidemic of the new coronavirus infection (Corona 19) in Korea. It is judged that there is some easing.”
Regarding domestic demand, “consumption and employment have drastically declined due to the re-proliferation of Corona 19, and the economic slump continues, centered on domestic demand.” “As external activities contracted due to concerns about infection and strengthened quarantine measures, He pointed out that the decline in production in the face-to-face service industry expanded, and the number of employed people, mainly in the service industry, declined sharply due to sluggish demand and limited economic activity, and the inactive population also increased significantly.”
In December of last year, service industry production and retail sales decreased 2.2% and 2.0% from the same month of the previous year, respectively. Compared to the previous month’s -1.4% and -1.5%, the decline has expanded. As a result, the unemployment rate soared to 4.6% and the number of employed fell 2.3%.
However, KDI evaluated that “the manufacturing industry is continuing a solid growth trend while maintaining high growth in exports and facility investment due to the improvement in foreign product demand.” In December of last year, facility investment increased by 5.3%, and exports in January this year increased by 11.4%, recording a double-digit increase for the second consecutive month. Exports are showing improvement, mainly centering on information and communication technology (ICT) and automobiles. In particular, exports of semiconductors increased significantly due to rising export prices.
This is leading to an improvement in the manufacturing industry. In December last year, mining and industrial production maintained a high increase, mainly in semiconductors. Indicators related to the manufacturing industry, such as average utilization rate, emission and inventory rates, are also showing an overall improvement. KDI observed, “It is believed that the manufacturing industry is showing a favorable growth trend, such as continued increase in facility investment, mainly in semiconductors, and is partially easing the economic downturn.”