Industrial output grows for 9 months in row

By Yoon Ja-young

Staff Reporter

Industrial output grew for nine consecutive months in March, reflecting the solid economic recovery.

Leading indicators, however, fell for the third month in a row, adding to the outlook that the economy may slow.

According to Statistics Korea, the country's industrial output grew by 22.1 percent in March from a year ago, continuing the positive growth since last July, thanks to increasing output in the country's key industrial sectors ― semiconductors and automobiles.

Industrial output inched up 1.6 percent compared with February.

The quarterly industrial output rose by 25.6 percent from the previous year, marking the biggest quarterly growth since the first quarter of 2000.

Leading indicators, however, fell by 0.7 percentage points, continuing the contraction started in January.

"Leading indicators fell due to the base effect ― growth was so good in the second and third quarters last year," said a representative at the Ministry of Strategy and Finance.

"If external conditions are good, the recovery is expected to continue in the second half of the year," he added.

Economists paint a positive outlook on the Korean economy. "The economic recovery didn't slow down much, and it is rather stronger than expected. There is the positive cycle of export and import recovery leading to production, and production leading to investment and job market recovery," said Song Jae-hyuk, an economist at SK Securities.

"The economy could somewhat slow in the second and third quarters, but the momentum and the rising mood won't weaken much. We expect annual growth of 5.4 percent," he said.

The better-than-expected economic indices are adding to the pressure that the government should now consider raising key rates.

The central bank recently announced 7.8-percent economic growth for the first quarter, and the business survey index marked 103 in April.

"The improving indicators may raise the possibility of an exit strategy. However, the chances of a key rate hike in the first half of the year are slim.," said Kim Yoo-mi, an economist at KTB Securities.