[Weekly Review] Reality of Triple Highs in Interest Rates, Oil Prices, and Inflation... Government Also Expresses "Concerns Over Supply Chain and Inflation"

Secured 5.3 Months' Supply of Diesel Exhaust Fluid

But US Semiconductor Pressure and Other Risks Threaten South Korea's Economy

Employment Also Unstable with Rising Number of 'Solo Business Owners'

On the afternoon of the 12th, officials are seen moving urea solution produced and supplied by the government at Dobong Public Garage in Seoul. (Image source=Yonhap News)

[Sejong=Asia Economy Reporter Moon Chaeseok] Interest rates, oil prices, and inflation are sweeping through the Korean economy. Although the supply of urea solution, which had experienced shortages, has increased, supply chain risks still remain. Major semiconductor companies such as Samsung Electronics and SK Hynix have also provided supply chain information to the United States.

Along with supply chain risks and inflation, the employment sector, a key component of the country's economic fundamentals, continues to show high instability. Until last month, the number of self-employed business owners running their operations alone without any employees, known as 'solo bosses,' continued to rise.

On the 12th, a gas station in downtown Seoul appeared deserted. Photo by Mun Ho-nam munonam@

According to the 'October Export-Import Price Index' released by the Bank of Korea on the 12th, last month's index was 130.43, up 35.8% compared to the same month a year earlier. This is the highest increase rate in 13 years since October 2008.

The rise in international oil prices has had a significant impact. The average price of Dubai crude oil last month was $81.94 per barrel, an 8% increase from the previous month.

Market interest rates are also on the rise. The 3-year government bond yield was 1.947% the day before, nearly 1 percentage point higher since the beginning of the year. This has increased concerns about inflation.

Government Also Acknowledges "Supply Chain and Inflation Concerns"

Kim Young-hoon, Director of Economic Analysis at the Ministry of Economy and Finance, presenting recent economic trends on the morning of the 12th at the Government Complex Sejong in Sejong City. (Image source=Yonhap News)

The shortage of vehicle urea solution and urea itself has also become a burden on the Korean economy. The government announced the day before that it had secured an additional supply of vehicle urea solution equivalent to up to 2.9 months from third countries such as Vietnam and Saudi Arabia, increasing the stockpile from the previous 2.4 months to 5.3 months.

The total volume of vehicle urea and urea solution currently scheduled to arrive from overseas or under supply negotiations is about 82.75 million liters. However, the structural problem of excessive dependence on specific countries such as China remains a burden as it has not been resolved.

For this reason, the government also admitted concerns about supply chains and inflation. The Ministry of Economy and Finance stated in the 'Recent Economic Trends (Green Book November issue)' published the day before, "Amid ongoing inflation concerns due to rising raw material prices, uncertainties persist, including the possibility of major countries shifting monetary policies and expanding global supply chain disruptions."

However, it expects the domestic demand sector to gradually recover due to policies such as the Win-Win Consumption Support Fund (card cashback) and the With Corona (gradual return to normal life) measures.

Risks Remain Including US Semiconductor Pressure

[Image source=Yonhap News]

Major semiconductor companies such as Samsung Electronics and SK Hynix submitted some information excluding sensitive customer data at the request of the United States. The problem is that they could be pressured to provide sensitive information again at any time.

Gina Raimondo, US Secretary of Commerce, recently said, "They were all cooperative in providing strong and complete data," but added, "If the data is not sufficiently satisfactory, additional measures may be necessary."

The government has recently created a consultative body called the Foreign Economic Security Strategy Meeting to respond. On the 9th (local time), Minister of Trade, Industry and Energy Moon Seung-wook met with Secretary Raimondo in Washington. As a result of the meeting, they achieved progress by upgrading the industrial cooperation dialogue from director-general level to ministerial level, establishing a semiconductor subcommittee within the dialogue consultative body, and scheduling the first meeting on the 8th of next month.

Still Unstable Employment Among Self-Employed

[Image source=Yonhap News]

Besides the supply chain and inflation crises, long-standing issues such as improving the quality of employment among the self-employed continue to hamper the Korean economy. According to the 'October Employment Trends' released by Statistics Korea on the 10th, the number of self-employed without employees ('solo bosses') increased by 45,000, marking 33 consecutive months of growth since February 2019. Meanwhile, self-employed with at least one employee decreased by 26,000, continuing a decline for 35 consecutive months since December 2018. This indicates an increase in self-employed individuals who manage all business activities alone, such as cooking and serving.

Regarding this, Jeong Dong-myeong, Director of the Social Statistics Bureau at Statistics Korea, said, "With the expansion of kiosks, unmanned businesses, and platform-based workers, self-employed without employees mainly increased in transportation and warehousing, agriculture, forestry and fisheries, and accommodation and food service industries. On the other hand, self-employed with employees decreased mainly in wholesale and retail trade and manufacturing due to industrial structural changes and the prolonged COVID-19 pandemic."

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