Korea Industry March 2017

Korea

Korea: Growth in industrial production moderates in March

April 28, 2017

In March, industrial production rose 3.0% from the same month last year. The result followed a 6.7% expansion in February—the highest reading in four years—and came in below market expectations of a 3.7% rise. Despite the deceleration, the trend continues to point upwards. Annual average growth in industrial production rose from 1.7% in February to 2.0% in March, the highest reading since January 2013 and a boon to policymakers seeking to shore up the Korean economy.

The deceleration was largely driven by a smaller increase in the all-important manufacturing output sub-index. After soaring by 6.9% in February, growth in manufacturing came in at a smaller 3.2% expansion in March. The manufacturing capacity utilization rate was down 1.4% in annual terms in March, a deterioration over the 3.1% expansion observed in February. On a better note, growth in the services sector picked up some pace as it expanded 2.8% in March (February: +2.5% year-on-year).

A month-on-month comparison paints a brighter picture of the industrial sector. Korea’s factory output growth, when adjusted for seasonality, rebounded from a 3.3% plunge in February—the worst reading since December 2008—to a 1.0% expansion in March. The subdued performance in February had been expected due to temporary factors related to the launch of Samsung’s new line of high-tech phones. This was confirmed with March’s rebound, which saw semiconductor production of electronic parts and automobiles soar compared to the previous month.

FocusEconomics Consensus Forecast panelists expect industrial production to expand 2.0% in 2017, which is up 0.2 percentage points from last month’s forecast. For 2018, panelists expect industrial output to increase 1.8%.


Author:, Economist

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Korea Industry March 2017

Note: Year-on-year and annual average var. of industrial production index in %.
Source: Korea National Statistics Office (KOSTAT).


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