Go to Contents Go to Navigation

(2nd LD) Korea's industrial output dips most in 9 years in Feb. on virus fallout

Economy 09:58 March 31, 2020

(ATTN: ADDS details throughout)
By Kang Yoon-seung

SEOUL, March 31 (Yonhap) -- South Korea's overall industrial output contracted the most in nine years in February as the economic fallout from the spread of the new coronavirus began to affect manufacturing activity and domestic spending, data showed Tuesday.

The 3.5 percent on-month drop in February marks the sharpest decline since February 2011, when the output dipped 3.7 percent, according to the data compiled by Statistics Korea.

The country's production in the mining, manufacturing, gas and electricity industries also fell 3.8 percent in February from a month earlier, marking the sharpest fall since December 2008, the data showed.

(2nd LD) Korea's industrial output dips most in 9 years in Feb. on virus fallout - 1

Production of chips increased 3.1 percent on-month, but that of automobiles nose-dived 27.8 percent, the sharpest drop in more than 13 years.

The output of machinery also decreased 5.9 percent over the period, according to the data.

The spiraling number of COVID-19 cases around the globe has dealt a harsh blow to South Korean industries.

"Local carmakers were acutely hurt by the pandemic as they faced hurdles in securing necessary parts," an official from the agency said. "The virus outbreak also dealt a harsh blow to the service and retail segments due to changing patterns in consumption."

Local manufacturers have been facing hurdles in securing key parts as suppliers around the globe suspended their operations amid the pandemic, with global shipments of goods also being disrupted by entry bans.

The production from the service sector sank 3.5 percent, marking the sharpest drop since the agency started compiling the data in 2000. The output from the hospitality and restaurant industries crashed 18.1 percent.

The virus pandemic weighed on consumers' sentiment as well, leading to a 6 percent drop in retail sales over the period.

Sales of durable goods, such as cars, moved down 7.5 percent, and those of nondurable ones, such as cosmetics, shed 0.6 percent, the data showed.

The demand for semi-durable goods, including clothes, especially plummeted 17.7 percent as people refrained from going outside due to the virus pandemic.

Facility investment decreased a whopping 4.8 percent in February from a month earlier, led mostly by the automobile segment.

The average factory operation rate stood at 70.7 percent in February, down 4.9 percentage points from a month earlier.

The agency warned South Korea may face further headwinds down the road as the full-fledged fallout from the pandemic has not yet been fully reflected in the data.

A Kia Motors Corp. plant in Gwangju, some 330 kilometers south of Seoul, is quiet in this file photo taken on Feb. 11, 2020, as its operation was temporarily suspended due to a shortage of parts from China amid the coronavirus crisis. (Yonhap)

"The impact of social distancing and the global spread of the virus are anticipated to be reflected in data for March and April," the official said.

As part of efforts to revitalize local spending and minimize the economic fallout from the virus outbreak, South Korea said Monday it will push for a second extra budget worth 7.1 trillion won (US$5.8 billion) to provide shopping coupons and certificates to local households.

The government said it would set aside 9.1 trillion won for the relief package for 14 million low-income households that comprise 35 million in a country with a population of 51 million.

The parliament has already approved an 11.7 trillion-won supplementary budget plan over the coronavirus.

The South Korean economy was earlier projected to grow 2.3 percent this year, but the central bank has revised down its growth outlook to 2.1 percent, citing the crippling effects of the new coronavirus outbreak. Another downward revision may be inevitable, it added.

The pandemic also cast uncertainties over outbound shipments.

The country's exports had rebounded in February, snapping their 14-month losing streak aided by the improving chip sector. The recovery, however, is expected to be short-lived due to global supply chain disruption and weak trade.

Amid the dire global pandemic, South Korea has detected 9,661 cases of infections as of Sunday.

colin@yna.co.kr
(END)

HOME TOP
Send Feedback
How can we improve?
Thanks for your feedback!