South Korea’s industrial output shrinks in June
South Korea’s industrial output fell in June, snapping a two-month run of positive readings, as the Asian manufacturing and export hub continues to battle with the impact of global trade tensions and a downturn in its important chipmaking sector.
Figures published by Statistics Korea on Wednesday showed that industrial output in the country fell by 2.9 per cent year on year during the month, which was worse than the 1.5 per cent contraction forecast by economists polled by Reuters.
Revised figures showed that output ticked up by 0.2 per cent year on year in both April and May. June’s data is the worst reading for the industrial gauge since February. On a month-to-month basis, seasonally-adjusted output was up 0.2 per cent, which was ahead of forecasts. The data showed that output during the month had been weighed down by falling activity in the construction and manufacturing sectors.
South Korea’s economy, Asia’s fourth-largest, is facing multiple headwinds, including a slowdown in major trading partner China, a trade spat with Japan and the US-China trade war. The country is also highly dependent on sales of high-tech electronic components, such as computer chips, to China, but this industry is experiencing a slowdown.
Still, South Korea’s economy grew at its fastest rate in nearly two years in the second quarter, boosted by hefty government spending. But analysts are unconvinced that recovery will last, given the deteriorating external conditions the economy faces.
Singapore, another trade-dependent Asian economy, experienced its slowest rate of GDP growth in a decade in the second quarter of this year.