The Bank of Korea Publishes March Regional Economic Report
Due to the global economic downturn and the fact that the effects of China's reopening (resumption of economic activities) have not yet fully materialized, the regional economy in the first quarter of this year maintained the same level as the previous quarter. The regional economy in the second quarter is also expected to remain close to the first quarter level in both manufacturing and service production.
On the 27th, the Bank of Korea published the 'Regional Economy Report' stating, "In the first quarter of this year, the regional economy maintained the previous quarter's level as manufacturing production slightly decreased due to the global economic downturn, while service production remained steady."
According to the regional economic conditions, which comprehensively assess the economic situation compared to the previous quarter based on production, demand, and employment trends collected through monitoring companies and related organizations, among the seven regions nationwide, the economies of Chungcheong, Daegu-Gyeongbuk, Gangwon, and Jeju regions slightly deteriorated, while the Seoul metropolitan area, Honam, and Southeast regions remained stable.
In particular, despite the slowdown in inflation and expectations of economic recovery due to China's reopening, uncertainties both domestically and internationally remain high due to major countries' monetary tightening policies and financial instability, making it difficult for the regional economy to improve easily.
Manufacturing production in the first quarter slightly decreased compared to the fourth quarter of last year amid the ongoing global economic slowdown and poor semiconductor production. Five regions, excluding the Southeast and Honam regions which remained stable, showed a decline. Lee Jae-won, head of the Regional Economy Survey Team at the Bank of Korea's Research Department, forecasted, "Manufacturing production in the second quarter is expected to remain at a similar level to the first quarter in most regions, as China's reopening is a positive factor, but demand from other major countries is unlikely to recover quickly."
Service production maintained the previous quarter's level as high inflation continued and consumer sentiment improvement was delayed. The Seoul metropolitan area, Southeast, Honam, and Gangwon regions remained stable compared to the previous quarter, while Chungcheong, Daegu-Gyeongbuk, and Jeju regions showed a decline. The Bank of Korea expects service production to remain similar to the first quarter due to limited consumer spending capacity caused by a slowdown in inflation and weakening employment improvement. By region, the Seoul metropolitan area, Daegu-Gyeongbuk, and Jeju regions are expected to see slight increases, while the other regions will remain stable.
Private consumption in the first quarter stayed at the previous quarter's level as goods consumption was sluggish but service consumption remained stable. By region, the Seoul metropolitan area, Southeast, and Daegu-Gyeongbuk regions were stable, while Chungcheong, Honam, Gangwon, and Jeju regions declined. The Bank of Korea forecasts that private consumption will remain at the first quarter level due to weakened household real purchasing power and the burden of principal and interest repayments.
Facility investment decreased compared to the previous quarter despite continued investments in some eco-friendly and new business sectors, due to a decline in the import of manufacturing equipment. The Seoul metropolitan area decreased compared to the previous quarter, and Chungcheong and Gangwon regions slightly declined. The Southeast, Honam, Daegu-Gyeongbuk, and Jeju regions remained stable. The Bank of Korea expects facility investment to maintain the first quarter level as investments in electric vehicle transitions continue despite reductions in investments caused by the downturn in semiconductor and other industries.
Construction investment slightly decreased compared to the previous quarter due to a reduction in private sector construction area in some regions and a decrease in expected execution of public sector social overhead capital (SOC). Most regions showed sluggishness. Construction investment is expected to remain at the first quarter level in the second quarter due to a slowdown in the housing market and SOC budget cuts.
Exports (daily average) slightly decreased compared to the previous quarter due to sluggishness in the IT sector despite increases in automobile and secondary battery exports. By region, exports increased in the Southeast and Daegu-Gyeongbuk regions, remained stable in Jeju, and decreased in the other regions.
Team leader Lee said, "It appears that the regional economy has not yet felt the benefits of China's reopening," adding, "Exports in the second quarter are expected to continue to be sluggish due to the global economic slowdown and IT sector contraction."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
