Government: "Prolonged Ukraine Crisis Limits Export Recovery... Inflationary Pressure Expands"

Ministry of Economy and Finance Announces 'Recent Economic Trends (Green Book May Issue)'
"Global Inflationary Pressures Intensify"

[Asia Economy Sejong=Reporter Kwon Haeyoung] The government has diagnosed that the export recovery may be constrained due to the prolonged supply chain disruptions caused by the Ukraine crisis, and that the inflationary trend is continuously expanding.

The Ministry of Economy and Finance stated in the 'Recent Economic Trends (Green Book May issue)' released on the 13th, "Externally, global inflationary pressures are intensifying due to the spread of the impact of the Ukraine crisis."

It also assessed that volatility in the international financial markets and downside risks to the global economy have increased due to the acceleration of major countries' monetary policy shifts and the prolonged lockdown measures in China. Internally, it viewed that employment recovery continues and consumption constraints have eased due to the lifting of social distancing measures.

Earlier, the Ministry of Economy and Finance had expressed concerns last month about constraints on domestic demand recovery and rising prices due to the spread of COVID-19 variants and the Ukraine crisis.

Looking at the industrial activity trends in March, manufacturing and service production increased by 1.3% and 1.5% respectively compared to the previous month, but retail sales, facility investment, and construction investment all decreased. Retail sales fell by 0.5% compared to the previous month, while facility investment and construction investment decreased by 2.9% and 0.3% respectively.

Last month, consumer prices rose 4.8% year-on-year as petroleum prices continued to increase. Core inflation, which excludes agricultural products and petroleum affected by supply and demand, also rose by 3.6%, showing the underlying trend of prices.

In the financial markets, stock prices fell due to concerns over US interest rate hikes, the Ukraine crisis, and global inflation worries, while exchange rates and government bond yields rose.

A Ministry of Economy and Finance official said, "While thoroughly ensuring macroeconomic stability and risk management both domestically and internationally, we will focus policy capabilities on stabilizing livelihoods, such as alleviating the inflation burden on low-income and vulnerable groups, and promptly supporting the second supplementary budget bill for recovery of small business damages."