South Korea’s industrial output, consumption and funding all fell in April as larger uncooked materials costs and provide chain disruptions weighed on Asia’s fourth-largest economic system, knowledge confirmed on Tuesday.
It was the primary time in two years that every one three indicators fell in the identical month.
Manufacturing facility output in April shrank by a seasonally-adjusted 3.3 per cent from a month earlier, falling for the primary time in seven months and marking its greatest decline since Might 2020. However output within the service sector elevated 1.4 per cent.
Facility funding decreased 7.5 per cent final month, larger than a 2.2 per cent fall in March. Facility funding additionally fell for the third consecutive month, as corporations delayed investments amid rising provide chain dangers and rising materials costs.
Retail gross sales declined 0.2 per cent final month, after a 0.7 per cent fall in March.
The info sign slowing development momentum regardless that the South Korean economic system has recovered rapidly from the pandemic. Officers mentioned the export-driven economic system was dealing with rising uncertainty, citing growing inflationary stress as a result of warfare in Ukraine and provide chain disruptions triggered by China’s pandemic lockdowns.
Economists at Goldman Sachs mentioned the contraction in industrial output was a lot sharper than anticipated and broader throughout most sectors, regardless of the service sector enchancment.
“The divergence may very well be sustained via the second quarter, given China’s slowdown and contractionary impression of financial tightening in Korea’s main commerce companions,” they mentioned in a report on Tuesday.
The Financial institution of Korea final week raised its benchmark rate of interest by 1 / 4 level to 1.75 per cent within the fifth rise since final summer season and downgraded its development forecast for this yr to 2.7 per cent from the three per cent forecast made in February.
The South Korean authorities on Monday accredited a report supplementary funds of Won62tn ($49.3bn) to shore up small companies hit by the pandemic.