S. Korea’s industrial output, investment rebound in May
South Korea’s industrial output and facility investment rebounded in May from the previous month in the latest sign that Asia’s fourth-largest economy maintains mild recovery momentum amid heightened external uncertainty, data showed Thursday.
Industrial production rose 0.8 percent in May from the previous month, compared with a 0.9 percent on-month fall in April, according to the data from Statistics Korea.
Compared with a year earlier, industrial output grew 7.1 percent.
Facility investment increased 13 percent on-month in May, a turnaround from a 7.6 percent decline in April. It marked the first increase in four months.
But retail sales, a gauge of private spending, declined for the third straight month in May.
Retail sales shed 0.1 percent last month, after a 0.2 percent on-month fall in April.
In April, the country’s industrial production, consumption and investment declined for the first time in 26 months, spawning concerns that the economic recovery momentum remained fragile.
The statistics agency said the rebound in industrial output in May was led by robust service production, as well as an increase in facility and construction investment.
“The production of semiconductor-related equipment suffered setbacks due to disruptions in parts supplies. Last month, investment rebound as such problems were resolved,” Eo Woon-sun, a senior Statistics Korea official, told reporters.
The finance ministry said the economic recovery momentum is continuing, but the Korean economy faces heightened external uncertainty amid the protracted war between Russia and Ukraine, and the Federal Reserve’s aggressive monetary tightening.
Key economic data for May pointed to improvements compared with April.
Output in the manufacturing industry, the backbone of the economy, rose 0.1 percent on-month in May, a turnaround from a 3.2 percent decline in April.
Service output increased 1.1 percent last month as production in the accommodation and eatery segments extended their gains amid the lifting of virus curbs.
The main indices gauging the current economic situations and economic outlook both rebounded in May.
The cyclical component of the composite coincident index, which reflects current economic situations, increased 0.1 point on-month to 102.2. The May figure rose after the second straight month of falls.
The index, which predicts the turning point in business cycles, also rose 0.1 point to 99.4. It marked the first increase in 11 months.
“The rebound in the two indicators looks positive. But we need to further monitor economic situations due to the ongoing war in Ukraine, and the possibility of the deterioration in global financial market conditions,” Eo said.
The government recently presented a bleaker economic assessment, saying that Asia’s fourth-largest economy is at risk of losing steam as deteriorating external economic conditions could dent investment and export growth.
Inflationary pressure has also rapidly built up due to soaring oil and commodity prices, caused by the Ukraine crisis, and the recovery in demand.
High inflation erodes people’s purchasing power, thus possibly hurting private spending and economic growth.
South Korea’s inflation growth is likely to soar to the 6 percent range in June, after spiking 5.4 percent on-year in May.
Earlier this month, the government cut its 2022 economic growth outlook to 2.6 percent from its earlier estimate of 3.1 percent, while sharply raising this year’s inflation outlook to a 14-year high of 4.7 percent from 2.2 percent.
The Bank of Korea (BOK) put its 2022 growth forecast at 2.7 percent and expected consumer prices to rise 4.5 percent this year. (Yonhap)