The Bank of Korea: "Regional Economy in Q1 Shows Some Improvement Mainly in the Capital Area"

Bank of Korea Regional Economic Report

[Asia Economy Reporter Kim Eun-byeol] In the first quarter, the regional economy showed some improvement compared to the previous quarter, mainly centered around the Seoul metropolitan area. Although the sluggishness in the service sector continued due to the ongoing impact of COVID-19, manufacturing production increased thanks to the recovery in exports. However,

The Bank of Korea stated on the 30th in its "Regional Economic Report (March 2021)" that "Looking at the manufacturing production trends by region in the first quarter, the Seoul metropolitan area, Chungcheong region, Honam region, and Daegyeong region showed slight increases." Meanwhile, the Dongnam region and Gangwon region remained flat, and manufacturing production in the Jeju region slightly decreased.

In the Seoul metropolitan area, semiconductor production increased due to the resumption of data center investments and growing global demand, while machinery and equipment production rose with expanded infrastructure investments in the Chinese market. The Chungcheong region also saw increases in semiconductor, petrochemical, and pharmaceutical production. The Honam region experienced growth in shipbuilding and petrochemical production, and the Daegyeong region was positively influenced by mobile phone and display production.

However, in the Dongnam region, petroleum refining declined, and in the Gangwon region, cement shipments remained at the previous quarter's level, mainly driven by domestic demand. In the Jeju region, production of alcoholic beverages and food products decreased due to reduced dining-out demand.

During the first quarter, service sector production slightly increased in the Jeju region, slightly decreased in the Dongnam and Honam regions, and remained flat in other regions. The Bank of Korea stated, "Looking ahead, service sector production is expected to slightly increase in most regions, including the Seoul metropolitan area, supported by the recovery of consumer sentiment due to government disaster relief policies, despite high uncertainties caused by the spread of COVID-19 and the pace of vaccination."

Consumption slightly increased in the Seoul metropolitan area, slightly decreased in the Dongnam region, and remained flat in other regions. With the easing of social distancing measures last month and the recovery of consumer sentiment, consumption in the Seoul metropolitan area slightly increased, centered on food and beverages and cosmetics. Facility investment slightly increased in the Seoul metropolitan area, Chungcheong region, Honam region, and Daegyeong region, while other regions remained at the previous quarter's level. Exports increased in most regions, including the Seoul metropolitan area.

A Bank of Korea official said, "Going forward, the regional economy is expected to show a generally moderate improvement trend, supported by strong exports, recovery in manufacturing production and facility investment, and easing sluggishness in service sector production." However, the official added, "Uncertainties in the outlook remain high depending on the development of COVID-19 and the vaccination situation."

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