MoEF "Korean Economy Contracts Due to COVID-19 Spread... Financial Uncertainty Also Expands"

Recent Economic Trends March Issue

[Sejong=Asia Economy Reporter Joo Sang-don] The government has diagnosed that the spread of the novel coronavirus infection (COVID-19) is causing contraction in our economic activities and economic sentiment, while uncertainty in the real economy and financial markets is expanding.

On the 13th, the Ministry of Economy and Finance published the March issue of the 'Recent Economic Trends (Green Book)' containing these details.

In fact, production and construction investment increased in January this year, but manufacturing production, retail sales, and facility investment decreased. Production saw a slight increase in total industry production (0.1%) as service industry production (0.4%) rose despite a decline in manufacturing production (month-on-month -1.3%). In terms of expenditure, retail sales (-3.1%) and facility investment (-6.6%) decreased, but construction investment (3.3%) increased.

Exports in February increased by 4.5% due to factors such as an increase of 3.5 working days compared to the same month last year. However, the average daily export amount decreased by 11.7%, from $2.08 billion in February last year to $1.83 billion in February this year.

Economic sentiment also contracted significantly. The Consumer Sentiment Index (CSI) in February was 96.9, down 7.3 points from the previous month. The Manufacturing Business Survey Index (BSI) for February performance was 65, down 11 points from the previous month, and the March outlook was 69, down 8 points from the previous month.

Employment continued to increase, and inflation maintained a rise in the 1% range for two consecutive months. In February, the number of employed persons increased by 492,000 year-on-year, mainly in the service sector, and the unemployment rate was 4.1%, down 0.6 percentage points from the same month last year. The consumer price index in February rose 1.1% year-on-year due to a reduced increase in agricultural, livestock, fishery products, and personal services, but an increase in petroleum products. Core inflation, which shows the underlying trend of prices, also rose by 0.6%.

The financial market showed a rapid decline in stock prices and government bond yields from late February, while the exchange rate continued to fluctuate.

An official from the Ministry of Economy and Finance said, "Concerns about the global ripple effects of COVID-19 are growing internationally, leading to downward revisions of economic growth forecasts worldwide, including major countries, and increased volatility in commodity and financial markets, thereby expanding global downside risks. We will strengthen monitoring of the domestic and international ripple effects of the COVID-19 situation and the overall macroeconomy including real and financial sectors, closely examine developments, and respond proactively and comprehensively at the government-wide level."

This content was produced with the assistance of AI translation services.