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(2nd LD) Industrial output falls for 2nd month in Feb.

Economy 09:47 March 31, 2022

(ATTN: UPDATES with more details throughout; CHANGES photo)
By Kim Soo-yeon

SEOUL, March 31 (Yonhap) -- South Korea's industrial output fell for the second straight month in February as economic uncertainty has heightened amid the upsurge in COVID-19 cases and surging energy costs driven by the Ukraine crisis, data showed Thursday.

Industrial output declined 0.2 percent in February from the previous month, compared with a 0.3 percent on-month fall in January, according to the data compiled by Statistics Korea.

Compared with a year earlier, industrial output rose 4.3 percent.

This file photo, taken Feb. 26, 2022, shows closed shops in the shopping district of Myeongdong in Seoul amid the pandemic. (Yonhap)

Retail sales, a gauge of private spending, grew a mere 0.1 percent on-month in February, compared with a 2.1 percent on-month fall in January.

Facility investment fell 5.7 percent on-month in February, compared with a 2.1 percent gain in January. It marked the sharpest decline since February 2020.

The statistics agency said economic recovery momentum has weakened amid the fast spread of the omicron variant.

"Output in in-person service sectors faltered, and supplies of raw materials were dented amid their surging prices," Eo Woon-sun, a senior Statistics Korea official, told reporters.

Asia's fourth-largest economy has been on a recovery track on the back of robust exports. But economic uncertainty at home and abroad has heightened amid a spike in COVID-19 infections and Russia's invasion of Ukraine.

Last month, output in the manufacturing sector went up 0.5 percent on-month on the back of the robust production of chips.

But service output declined for the third straight month amid the surge in COVID-19 cases. Service output fell 0.3 percent as production in in-person service segments, including accommodations and eateries, lost ground.

Construction output slid 8.5 percent on-month due to soaring prices of raw materials.

Finance Minister Hong Nam-ki said the country's exports and manufacturing sector remain robust, but the recovery of domestic demand was constrained by the spread of the omicron variant.

"But once the current wave is brought under control after its peak, private spending is likely to recover," Hong wrote in a Facebook message.

Health authorities said the omicron-driven wave of the virus appears to have passed its peak last week and the number of daily virus cases is expected to slowly fall.

South Korea reported 320,743 new COVID-19 cases Thursday, raising the total to 13,095,631, according to health authorities. The number of daily virus cases hit a record high of 621,197 on March 17.

Hong said the government will also mobilize all policy means to prevent rising inflationary pressure from boosting price burdens on households and businesses, and weighing on the economy.

The Bank of Korea (BOK) and the International Monetary Fund (IMF) forecast the South Korean economy to grow 3 percent this year. But global credit appraisers Moody's Investors Service and Fitch Ratings both lowered their 2022 growth outlooks for South Korea to 2.7 percent.

The BOK and the IMF expect South Korea's inflation to grow 3.1 percent this year, above the central bank's inflation target of 2 percent.

This file photo, taken March 21, 2022, shows stacks of containers at a port in South Korea's southeastern city of Busan. (Yonhap)


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