Domestic Demand Slump... Manufacturing Domestic Supply Declines for Three Consecutive Quarters

Statistics Korea Domestic Supply Trends

Export containers are being loaded onto a ship at Busan North Port. Photo by Jinhyung Kang aymsdream@

Domestic supply of manufacturing products continued to decline for the third consecutive quarter in the first quarter of this year due to weakened demand.

According to the 'Manufacturing Domestic Supply Trends' released by Statistics Korea on the 9th, the manufacturing domestic supply index (provisional) for the first quarter stood at 102.5 (2020=100), down 2.4% compared to the same period last year.

The index has been declining for three consecutive quarters since the third quarter of last year. Domestic supply of locally produced products decreased by 0.6% in the first quarter, while imports fell by 6.7%.

This is interpreted as a result of a contraction in consumption of goods including manufacturing, leading to a chain reaction of decreased supply of manufacturing products. Statistics Korea explained, "As domestic demand declined, the supply of manufactured products decreased, especially imports."

By industry, other transportation equipment such as gas and chemical carriers, container ships, and oil tankers increased by 26.5%, with both domestic (32.4%) and imported (14.7%) products rising.

In contrast, automobiles decreased by 5.9%, with both domestic (-4.5%) and imported (-13.3%) products declining. This is attributed to reduced automobile demand in the first quarter following the start of electric vehicle subsidies in March. Electronics and telecommunications, including semiconductors, fell by 8.9%, and chemical products decreased by 6.4%.

Regarding semiconductors, although export and production indicators have been improving gradually since the second half of last year, the domestic supply, which counts products produced and shipped for domestic consumption, shows a different pattern from export indicators, explained a Statistics Korea official.

By type of goods, domestic supply of consumer goods such as passenger cars decreased by 3.2%. Intermediate goods, including system semiconductors, also declined by 4.0%. On the other hand, domestic supply of capital goods such as gas and chemical carriers increased by 4.9%.

The share of imported products in nominal manufacturing domestic supply in the first quarter was 27.5%, down 0.9 percentage points from the same quarter last year.