South Korean economy appears to be on upswing as manufacturing rebounds

Seoul, July 9 (BNA): A state-run think tank said on Sunday that the South Korean economy appears to have bottomed out recently on the back of recovery in the manufacturing sector.

The assessment came after Asia’s fourth-largest economy saw industrial production rise 1.3% in May from the previous month, with retail sales and investment in utilities also increasing.

“Korea’s economy appears to be going through an economic bottom line, with partial relief in the manufacturing downturn,” Yonhap quoted the Korea Development Institute (KDI) as saying.

“The manufacturing industry is showing signs of easing the downturn, as evidenced by a slow decline in production and exports, particularly in semiconductors,” she added.

Semiconductors, the country’s main export item, fell 28 percent year-on-year in June amid lower demand and lower chip prices. However, the decline slowed from the 36.2 percent year-on-year rate recorded in the previous month.

“The decline in semiconductor production has been steadily decreasing since March, while export volume has taken a turn towards growth,” said the German Development Institute (KDI).

In May, South Korea’s output in the mining, manufacturing, gas and electricity industries rose 3.2 percent month-on-month after strong performances in the auto and chip sectors, which advanced 8.7 percent and 4.4 percent, respectively, according to separate data from Statistics Korea.

The German Development Institute (KDI) also noted that the labor market remained “favourable”, with the service sector also recording moderate growth.

Last week, South Korea noted that the number of workers is rising by 320,000 year-on-year each month, a significant increase from the previous estimate of 100,000 announced in December.

However, the think tank added that doubts remain for the South Korean economy amid prolonged monetary tightening moves from major countries, along with China’s delayed economic recovery.

MI