Korea: Industrial production rebounds markedly in December
January 31, 2020
Industrial production, which includes output from the mining, manufacturing, and electricity and gas sectors, surged 4.2% year-on-year in December, contrasting November’s revised 0.2% drop (previously reported: -0.3% year-on-year). This was mainly because output in the manufacturing sector—which accounts for the majority of industrial production—increased at a significantly stronger pace in December. That said, December’s rebound rounded out an overall poor performance for the industrial sector in 2019, with the average industrial production falling 0.7% in 2019 compared to the 1.4% increase in 2018.
In month-on-month and seasonally-adjusted terms, industrial production jumped 3.5% in December, contrasting the 0.5% decrease in November. Meanwhile, the average factory capacity utilization rate increased to 74.3% in December from 71.9% in the prior month.
Separately, the services sector grew 2.8% year-on-year in December, up from November’s 2.5% expansion, due to stronger output in the wholesale and retail trade sector.
Looking ahead, a supportive fiscal stance, an expected recovery in global demand for tech and a bustling 5G network industry should prove supportive this year. That being said, a stronger-than-expected slowdown in China, and in turn, demand for Korean manufactured goods poses a significant downside risk to the outlook.
Author: Steven Burke, Economist