[Photo by Yonhap]
South Korea’s manufacturing production capacity index has experienced a historic decline for the seventh consecutive month, reaching its lowest level in three years and two months. The decline, coupled with a sharp drop in all industry production index, has raised concerns about the country‘s overall economic growth in the second quarter.
According to data released by Statistics Korea on Monday, the country’s manufacturing production capacity index for April fell by 0.2 percent compared to the previous month, standing at 99.1 based on 100 in 2020. This marks the lowest level since February 2020 when it stood at 99.0.
The index has been declining for the past seven months since October of last year, and this continuous decline is the first of its kind since data compilation in 1971.
By sector, the decline in electronic component production capacity by 1.6 percent compared to the previous month has had a significant impact on the overall index decline. Statistics Korea said that the slump in the production of devices such as liquid crystal displays (LCDs) played a major role. The metal processing sector (-1.7 percent) and the semiconductor sector (-0.2 percent) also experienced declines in the index.
The decrease in manufacturing production other than semiconductors has only occurred for the first time in four months since December of last year.
The substantial decrease in production in April has led to concerns about the lackluster performance of the second-quarter growth rate. In the fourth quarter of last year, which saw reverse growth, total industrial production fell 1.1 percent in October. Additionally, the decline of 2.3 percent in retail sales, which reflects consumer trends in April, is also a worrisome factor.
While there are expectations for economic recovery due to signs of improvement in exports with daily average exports topping $2.4 billion for the first time since October of last year, uncertainty about future growth remains.
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]