The Bank of Korea: "Regional Economy Slightly Improved in Q3 Despite COVID-19 Resurgence"

Bank of Korea 'Regional Economic Report (September 2021)'

[Asia Economy Reporter Kim Eunbyeol] Although the resurgence of COVID-19 was observed in the third quarter, the regional economy showed some improvement overall compared to the previous quarter, as manufacturing production continued to increase supported by strong exports. Going forward, with the continued growth in manufacturing production and facility investment, along with expanded vaccination and the effects of the supplementary budget (추경) execution, service sector production is expected to increase, leading to a recovery trend in most regions.

On the 29th, the Bank of Korea stated in its 'Regional Economic Report (September 2021)' that "During the third quarter, manufacturing production slightly increased in most regions including the Seoul Capital Area, while the Southeast region remained stable." In the Seoul Capital Area, semiconductors continued to perform well due to global data center investment expansion and new smartphone launches, while pharmaceuticals increased due to expanded production of biosimilar products. The Chungcheong region showed growth in secondary batteries, and the Honam region saw an increase in petrochemicals.

Looking ahead, manufacturing production in the Southeast and Gangwon regions is expected to increase compared to the third quarter, while most other regions are projected to maintain the previous quarter's levels.

During the third quarter, service sector production slightly decreased in the Seoul Capital Area, Southeast, Chungcheong, and Honam regions compared to the previous quarter, while other regions maintained their levels. This was due to the resurgence of COVID-19 and strengthened social distancing measures. However, with recent vaccination expansion and government support policies, service sector production is expected to improve, particularly in accommodation and food services. Consumption notably decreased in the Seoul Capital Area during the third quarter, while other regions mostly maintained or slightly decreased compared to the previous quarter.

Regarding facility investment, the Seoul Capital Area saw a slight increase as semiconductor manufacturing equipment such as extreme ultraviolet (EUV) lithography equipment imports remained at the previous quarter's level, and display facilities increased investment to secure production capacity for small- and medium-sized organic light-emitting diodes (OLEDs). In the Chungcheong region, facility investment slightly increased as automobile, pharmaceutical, and semiconductor sectors expanded production facilities. The Honam region also saw a slight increase due to the full-scale industrial complex redevelopment projects in petrochemicals, refining, and steel, as well as production facility expansions in precision chemicals, non-metallic materials, and electrical equipment.

Exports in most regions continued to increase during the third quarter compared to the previous quarter. The Bank of Korea stated, "Exports are expected to continue growing in most regions, with semiconductor exports in the Seoul Capital Area driven by increased demand for data servers, and automobile exports in the Southeast region rising due to the easing of supply shortages of automotive semiconductors."

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