Industrial output in South Korea fell 0.7 percent in May compared to the previous month, according to data compiled by Statistics Korea.Â
This decline comes as losses in the automobile sector offset gains in the semiconductor segment. Additionally, retail sales and facility investment also lost ground during the same period.
The industrial output, which measures the production in the mining, manufacturing, gas, and electricity industries, fell 1.2 percent in May. This was driven by losses in the automobile and machinery sectors, which counteracted the 1.8 percent increase in the chip industry.
Retail sales, a key indicator of private spending, shed 0.2 percent month-over-month in May, mainly due to falling sales of clothes and cosmetic products. On a year-over-year basis, retail sales declined 3.1 percent.
Furthermore, facility investment, a measure of capital spending, inched down 4.1 percent in May, marking the third consecutive monthly decline.
This marks the first time in 10 months that the industrial output, retail, and facility investment indexes have all decreased on a monthly basis.
Robust exports driving economic expansion
Moreover, a recent report suggested that South Korea’s economic growth outlook in 2024 has been revised to 2.7 percent, up from its previous projection of 2.2 percent.
According to a Korean research firm, Hyundai Research Institute (HRI), the robust export emerged as the driving force behind the upward revision.
The paper expected Korea’s exports to grow by 9.3 percent year-over-year in 2024, reversing a 7.5 percent decline in 2023. The strong export performance is forecast to help the country report a trade surplus of $43.4 billion this year, a shift from the $10.3 billion deficit seen in 2023. Korea’s current account surplus is also projected to expand to $61 billion from $35.5 billion over the same period.
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