Industrial activity trends in 2023
Manufacturing -3.9%, Semiconductor -5.3%
Retail sales and investment are both sluggish
▲ Page 16 As semiconductor exports fell into a recession last year, Korea’s manufacturing production decreased by the largest amount in 25 years since the 1998 foreign exchange crisis. Retail sales, an indicator of consumption, declined by the largest amount in 20 years due to high inflation. Even facility investment has decreased by the largest amount in four years, and the slump in domestic demand appears to be worsening.
According to ‘December 2023 and annual industrial activity trends’ announced by Statistics Korea on the 31st, last year’s overall industrial production index (2020 = 100) was 110.9, an increase of 0.7% from the previous year. The All-Industrial Production Index maintained an upward trend for three consecutive years after increasing 5.3% in 2021.
Service industry production increased by 2.9% and construction industry increased by 7.7%, leading the overall increase. However, the mining industry showed a sluggish performance, declining by 3.8%. The semiconductor recession in the first half of last year had a significant impact, with manufacturing production decreasing by 3.9%. This is the largest decline since the 6.5% drop in 1998.
Semiconductor production decreased by 5.3%, turning negative for the first time since falling 15.3% in 2001. The average operating rate of the manufacturing industry was 71.3%, the lowest since 1998. However, the semiconductor industry’s ‘up and down’ trend last year (sluggish first half, rebound in the second half) was clear. Semiconductor production turned to an increase, recording +4.7% in the third quarter, after -33.8% in the first quarter and -18.6% in the second quarter of last year. Production in the fourth quarter was provisionally calculated to be 35.6%, showing a U-shaped flow.
Due to the effects of high inflation and high interest rates, people’s wallets are tightly closed. Last year’s retail sales index decreased by 1.4% from a year ago. Sales of durable goods such as passenger cars increased by 0.2%, but sales of non-durable goods such as foodstuffs decreased by 1.8% and semi-durable goods such as clothing decreased by 2.6%, dragging down the overall index.
Last year’s retail sales decline was the largest in 20 years since -3.2% in 2003. Gong Mi-sook, economic trend statistics reviewer at the National Statistical Office, analyzed, “Considering that semi-durable goods and non-durable goods have decreased, the consumption pattern appears to be shifting from goods to the service industry.”
Sluggish investment also accelerated the slump in domestic demand. Facility investment recorded -7.2% in machinery and -0.4% in transportation equipment, down 5.5% from the previous year. Kim Gwi-beom, head of the economic analysis department at the Ministry of Strategy and Finance, said, “We plan to focus policy efforts to ensure that the warmth of economic recovery centered on manufacturing production and exports can quickly spread to all sectors.”
Sejong Reporter Kwak So-young
2024-01-31 10:49:41
#Semiconductor #export #bonanza #shrunk #year #Largest #cold #wave #manufacturing #industry #years
