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Korea's economic recovery remains 'elusive': economists
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By Lee Kyung-min
Data for industrial output, consumption and investment rise in December
By Lee Kyung-min
Data for the country's industrial output, consumption and investment all turned upward in December, raising hopes that the economy has bottomed out and is about to get back on track for recovery amid the COVID-19 pandemic.
According to data released Friday by Statistics Korea, industrial output grew 0.5 percent last month from a month earlier, while retail sales edged up 0.2 percent, the first rebound since last September. Facilities investment jumped 0.9 percent during the same period.
However, economists say these numbers are not enough to fan optimism since data in the coming months will be grim, an inevitable result given tightened economic activities in the last two months of 2020 will be translated into figures for February and March.
Seoul National University economist Lee In-ho said the much-needed momentum for growth remains elusive, given the expected data for the coming months.
“Social distancing rules last November and December dealt a severe blow to the economy. Data to be released a couple of months from now will show how much economic activity was constrained,” he said.
Also advancing the cautious outlook is the widening income divide among households and industries, as low-income earners and service industries hit by the virus will not be able to recover as fast.
For the whole of 2020, Korea's overall industrial output reported a 0.8 year-on-year decrease in 2020, the first setback the agency has recorded in the 20 years it has been compiling data. It contrasts with a 0.6 percent year-on-year gain the previous year.
“Last month's production in the service sector declined due to a surge in COVID-19 cases, but the country's overall industrial output gained mostly due to the semiconductor industry,” a statistics agency official said. “In 2020, Korea's overall industrial output fell as production in the face-to-face service industries suffered a direct blow.”
The Korean economy contracted 1 percent in 2020, the first year-on-year contraction since the Asian financial crisis in the late 1990s.