Consumption, investment both fall in March amid recovery concerns

Stacks of containers are seen at a port in Korea's southeastern city of Busan, in this April 21 file photo. Yonhap

Korea's industrial output rebounded in March after two straight months of decline, but consumption and facility investment lost ground in the latest sign that economic recovery momentum remains fragile, data showed Friday.

Industrial production increased 1.5 percent from the previous month, compared with a 0.3 percent month-on-month drop in February, according to the data from Statistics Korea.

Compared with a year earlier, industrial output rose 3.1 percent.

Retail sales, a gauge of private spending, declined in March amid the fast spread of the Omicron variant of COVID-19. Retail sales fell 0.5 percent, after remaining flat in February.

Facility investment decreased 2.9 percent in March, compared with a 5.6 percent decline in February.

The statistics agency said industrial output turned to growth last month as recoveries in services and exports remained robust.

"But domestic demand-related data were sluggish, an indication that economic recovery momentum remains fragile," Eo Woon-sun, a senior Statistics Korea official, told reporters.

Asia's fourth-largest economy has been on a recovery track on the back of robust exports and improved private spending. But it faces heightened economic uncertainty as soaring energy prices have put upward pressure on inflation amid Russia's war with Ukraine.

In terms of the economic outlook for April, Eo cited robust exports and the lifting of almost all COVID-19 social distancing rules as positive factors.

"But amid global supply chain disruptions, the Ukraine crisis and China's COVID-19 lockdown of its major cities could weigh on the economy. Uncertainty for growth momentum still remains high," he added.

Korea's consumer prices grew 4.1 percent in March from a year earlier, the fastest year-on-year gain in more than 10 years, amid surging fuel prices. The Bank of Korea aims to keep annual inflation at 2 percent over the medium term.

The International Monetary Fund recently lowered its 2022 growth outlook for the South Korean economy to 2.5 percent, while raising its inflation projection to 4 percent. (Yonhap)