KDI "Increased Downside Risks to Economy Due to Accelerated Spread of COVID-19 from Europe"

Publication of 'KDI Economic Trends November Issue' on the 8th

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] The Korea Development Institute (KDI), a government-funded research institute, diagnosed that downside risks to the economy are expanding as the spread of the novel coronavirus disease (COVID-19) accelerates in Europe.

In the 'KDI Economic Trends November Issue' published on the 8th, KDI stated, "Since the end of October, large-scale COVID-19 outbreaks have led to partial reinstatement of lockdown measures in major European countries such as France and Germany, and with the sharp increase in the daily average number of new confirmed cases in the United States, downward pressure on the economy is rising again."

KDI also forecasted that despite a moderate recovery in manufacturing, economic sluggishness continues mainly in the service sector in our economy.

September's total industrial production improved to 3.4% compared to the previous month (-3.4%), and service sector production recovered to the same level as the same month last year at 0.0%, but considering the increase in working days, it was still evaluated as sluggish.

In manufacturing, the inventory ratio declined, while both shipments and average operating rates increased.

Regarding consumption, KDI stated, "Retail sales increased and the decline in service sector production narrowed, but considering the temporary factor of increased working days, the sluggishness in the service sector is still ongoing."

Specifically, most items maintained favorable trends, including passenger cars (23.0%), home appliances (36.7%), and furniture (31.6%). Additionally, nondurable goods increased by 3.6%, mainly food and beverages (13.1%), due to holiday travel.

The retail sales growth rate in September expanded to 4.4% from 0.3% the previous month.

Facility investment maintained an improving trend centered on semiconductors, but construction investment continued to show sluggishness.

September facility investment recorded a 16.8% increase, higher than the previous month (-1.4%), with machinery increasing and transportation equipment significantly improving.

The construction performance growth rate in September was 6.3%, with the building sector and civil engineering sector recording 4.6% and -10.8%, respectively. KDI stated, "Considering that it decreased by 7.3% the previous month due to a long rainy season, the rebound is limited."

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