KDI, Government Diagnose "Economic Slowdown Easing"

The government has emphasized the economic slowdown trend in the second half of the year. It diagnosed that signs of recovery are emerging as the decline in exports, centered on semiconductors, is narrowing.

High school students participating in the '2023 Korea High School Talent Recruitment Expo' held at KINTEX in Goyang, Gyeonggi Province on the 31st are listening to an explanation about semiconductor processes. Photo by Jinhyung Kang aymsdream@

On the 11th, the Ministry of Economy and Finance stated in the ‘August Recent Economic Trends (Green Book)’ that “the economic slowdown trend is partially easing due to the recovery of export volumes such as semiconductors, continued improvement in economic sentiment, and employment.” On the 7th, the Korea Development Institute (KDI), a government-funded research institute, also assessed that the Korean economy’s sluggishness is gradually easing.

The background of the analysis that the economy is recovering lies in semiconductors. Semiconductor-related indicators are gradually improving as we enter the second half of the year. KDI explained, “While the decline in semiconductor production is narrowing, indicators suggesting a recovery in the semiconductor economy have increased significantly, such as a large increase in export volumes,” and added, “Manufacturing shows signs of easing sluggishness as inventory ratios have dropped sharply.”

The year-on-year decline rate of semiconductor production narrowed from -18.7% in May to -15.9% in June. The export volume index, which indicates changes in semiconductor export volumes, decreased by 1.3% in April but increased by 8.1% in May and then surged by 21.6% in June. The manufacturing inventory ratio fell from 122.7% in the previous month to 111.4%.

Signs of export recovery are also appearing. According to the Bank of Korea’s announcement on the 8th, the current account balance in June recorded a surplus of 5.87 billion dollars. Following a surplus of 1.93 billion dollars in May, this marks two consecutive months of positive figures. Lee Seunghan, head of the Economic Analysis Division at the Ministry of Economy and Finance, explained, “Manufacturing and exports, which were the biggest factors in the economic downturn, are rebounding in terms of volume, so we have taken a more positive economic outlook compared to last month.”