Current Economic Trends
Services production, retail sales, facility investment and construction investment increased while industrial production decreased in February. Employment growth rose at a faster pace and CPI inflation rose at a slower pace in March. All industry production increased 0.3 percent month-on-month in February as services production rose (up 0.7% m-o-m and up 7.2% y-o-y) while industrial production fell (down 3.2% m-o-m and down 8.1% y-o-y) from the previous month. In February, retail sales rose 5.3 percent month-on-month (down 0.8% y-o-y). Facility investment (up0.2% m-o-m and up 5.7% y-o-y) and construction investment (up 6.0% m-o-m and up 22.4% y-o-y) allincreased from the previous month. Exports declined 13.6 percent year-on-year in March, reflecting an overall slump in semiconductors,displays and other IT exports. Average daily exports decreased 17.2 percent year-on-year to US $2.30billion in March 2023. The consumer sentiment index (CSI) rose 1.8 points month-on-month in March to 92.0. The businesssurvey index (BSI) for all industries rose 3 points to 72, and the BSI outlook for April 2023 increasedby 2 points to 73. In February, the cyclical indicator of the coincident composite index rose 0.4 points month-on-monthand the cyclical indicator of the leading composite index fell 0.3 points. The economy added 469 thousand jobs year-on-year in March and the unemployment rate fell 0.1percentage points to 2.9 percent. Consumer prices rose at a slower pace by 4.2 percent year-on-year in March, and the CPI excluding thefood and energy sectors rose by 4.0 percent and the index excluding the agricultural and petroleum products rose by 4.8 percent. In March, stock prices increased, Korean Treasury yields fell, and the won strengthened on expectationsfor shifting monetary tightening policies, and also as financial instability caused by the collapse ofsome small and medium-sized US banks was alleviated. Housing price falls slowed down in March (from down 1.15% to down 0.78% m-o-m), and the falls inJeonse prices (lump-sum deposits with no monthly payments) were also somewhat slower than theprevious month (from down 1.80% to down 1.13% m-o-m). Amid an easing of inflation in Korea, domestic demand has gradually improved backed by an increase of in-person activities. However, economic growth continued to slow down mainly inthe manufacturing industry as indicated by downturns in exports and facility investment. Global economic uncertainties continue to linger driven by downside risks including financial instability in the vulnerable sectors stemming from monetary tightening policies and concerns about theprolonged Russia-Ukraine war, despite expectations of Chinas reopening. The government will make all-out efforts not only for restructuring the economy but also for increasingeconomic vitality, better managing risks at home and abroad, boosting exports, investment anddomestic demand while stabilizing prices and households livelihoods. * For further details, please refer to the attached file
May 2023
