Numerous Constraints on Q3 Rebound... Negative Growth Inevitable

Total Industrial Production Turns Negative Again After 3 Months

Deputy Prime Minister for Economy Hong Nam-ki attended the plenary meeting of the Planning and Finance Committee held at the National Assembly on the 21st and received a report from a committee official during the meeting. Photo by Yoon Dong-ju doso7@

[Asia Economy Reporter Jang Sehee] There is an analysis that the economic rebound in the third quarter (July to September) will also be difficult due to the longest rainy season on record and the resurgence of the novel coronavirus infection (COVID-19).

According to the government and economic experts on the 2nd, the economic rebound in the third quarter is also unlikely to be as easy as expected. In fact, sectors such as accommodation, restaurants, arts, and leisure, which were hit hard by strengthened social distancing measures in the Seoul metropolitan area, showed particular weakness.

According to the 'August Industrial Activity Trends' announced by Statistics Korea on the 29th of last month, total industrial production fell by 0.9% compared to the previous month. Total industrial production had been declining since January this year but turned to an increase in June (4.1%) and July (0.1%), only to switch back to negative after three months. Additionally, facility investment also decreased by 4.4% compared to the previous month as investments in machinery (-5.8%) and ships and other transportation equipment (-0.2%) both declined.

However, exports rebounded after seven months, recording the highest level this year. According to the Ministry of Trade, Industry and Energy on the 1st, exports in September recorded $4.805 billion, an increase of 7.7% compared to the same period last year. This is the first time exports have shown an increasing trend since COVID-19, and the 7.7% export growth rate in September is the highest in 23 months since October 2018.

The average daily export amount, considering the number of working days, was $2.09 billion, showing a 4.0% decrease compared to the previous year, which is the most favorable rate of change since COVID-19. The number of working days in September this year increased by 2.5 days compared to September last year due to the Chuseok holiday.

As the possibility of a third-quarter rebound diminishes, there is also an analysis that the growth rate could record the worst case of the -2% range.

The Korea Economic Research Institute projected in its '2020 Third Quarter Report' that this year's economic growth rate would be -2.3%, marking the lowest growth rate since the IMF financial crisis.

Meanwhile, the Bank of Korea significantly lowered its GDP growth forecast to -1.3% at the regular Monetary Policy Committee meeting in August. This is because the recent resurgence of COVID-19 is expected to delay economic recovery.

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