Value context and insight. lkm@koreatimes.co.kr
Is Korean economy bottoming out?
Statistics Korea official Ahn Hyung-joon speaks during a briefing at the Sejong Government Complex, Friday. Yonhap
By Lee Kyung-min
By Lee Kyung-min
The nation's industrial output jumped 4.2 percent in June on the back of strong production, consumption and investment all snapping out of a months-long downtrend brought on by the COVID-19 pandemic, data showed Friday.
The substantial month-on-month increase provides rationale for some optimism that Asia's fourth-largest, export-reliant economy could bottom out sooner than expected, helped by a gradual recovery in exports following a slow yet clear resumption of economic activities in Korea's trading partner countries.
Experts say too rosy an optimism will backfire, stressing the need to stay prepared at all times against uncertainties from rapid changes and deterioration of global financial conditions.
Data from Statistics Korea showed Korea's overall industrial production rose 4.2 percent in June from a month earlier. Notably, retail sales and facility investments reported monthly additions of 2.4 percent 5.4 percent, respectively. The industrial output, retail sales and facility investment all reporting a jump is a first in six months since December 2019 when the figure was 1.7 percent.
Chief among the growth driver was a 7.4 percent month-on-month increase in the manufacturing sector, advanced by a strong rebound of the automotive and semiconductor industries. The figure was the sharpest month-on-month rise since February 2009 when it was reported a 7.3 percent.
Production of semiconductors rose 3.8 percent while car output soared 22.9 percent last month. But on a year-on-year basis, the manufacturing sector shrank 0.4 percent, indicating the sector has yet to fully recover to its pre-pandemic strength.
“Consumption recovered to a level similar to where it was before the pandemic, while manufacturing has yet to. The virus-triggered economic crisis took a heavier and more direct toll than previous ones in the 1990s and 2000s. As hard and fast as the impact might have been, the recovery seems to take place just as fast,” a statistics agency official said.
Seoul National University economist Kim So-young said the local economy shows signs of bouncing back, but it is too premature to be “too optimistic.”
“The numbers reporting increases is certainly better than reporting decreases, but they are figures compared to a month earlier. They should not be taken to be as good as they seem because of the base effect, also explained by the year-on-year figure reporting a drop of 0.4 percent,” he said.
First Vice Finance Minister Kim Yong-beom said the Friday figures are indicative of a greater possibility of economic rebound in the third quarter.
“All three key indices have reported an increase since the pandemic. The government will mobilize efforts to induce greater private investment and consumption.”