SEOUL -- Industrial production in South Korea decreased 1.6 percent in December 2022 from a month earlier as the manufacturing sector took the brunt of an economic downturn, according to data released by Statistics Korea on January 31.
The fall was the steepest since industrial production declined 1.8 percent month-on-month in April 2020 following the outbreak of the COVID-19 pandemic. It came after industrial production increased 0.4 percent in November.
Industrial production dropped 0.2 percent in July last year, 0.1 percent in August, 0.4 percent in September and 1.5 percent in October amid the economic slowdown caused by high inflation and high interest rates.
The manufacturing, mining, gas and electricity industries saw their production decline 2.9 percent in December from a month before. The manufacturing industry led the fall with its output diving 3.5 percent.
Output of electronic parts and automobiles plunged 13.1 percent and 9.5 percent, respectively, amid sluggish exports. However, output of semiconductors and primary metals increased 4.9 percent and 3.1 percent, respectively.
“The output of automobiles and electronic parts decreased, driven by the global economic slowdown and falling demand for mobile devices, while semiconductor production rebounded temporarily in December after suffering a steep fall in the second quarter,” said Kim Bo-gyung, an official in charge of economic data at the statistic agency.
The average manufacturing capacity utilization rate fell to 70.3 percent in December, hitting the lowest level since July 2020.
The services sector’s output also edged down 0.2 percent, marking a decline for four months in a row, due to decreasing purchasing power amid growing inflationary pressure and high borrowing costs. Facility investment plummeted 7.1 percent.
For the entire year of 2022, however, industrial output increased 3.3 percent year-on-year. The output rebounded 4.9 percent in 2021 after falling 1.1 percent in 2020 in the wake of COVID-19.
The manufacturing, mining, gas and electricity industries witnessed their output rose 1.4 percent last year from a year before, while services output jumped 4.8 percent.
Kim said that the annual output increase was attributed to a rebound in exports as well as a rise in private consumption as the country showed a recovery from the coronavirus shock.
Economists predict that industrial output will remain weak at least in the first three months of this year as the economic downturn will continued for the time being.
The Korean economy contracted 0.4 percent year-on-year in the fourth quarter of last year due to falling domestic consumption and exports amid sluggish global demand, runaway inflation and higher interest rates.
Despite the fourth quarter shrinkage, the economy grew 2.6 percent for all of 2022, marking a stable growth for the second consecutive year.
The Bank of Korea (BOK) forecast the economy to grow 1.7 percent this year, while the Ministry of Economy and Finance came up with a lower growth projection of 1.6 percent.
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