The Bank of Korea Maintains Stable Economic Conditions in the Seoul Metropolitan Area... Slight Improvement in Gangwon and Jeju

Bank of Korea Releases 'December Regional Economic Report'
Omicron Impact Not Reflected... Future Damage Inevitable

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Amid continued export growth and recovery in consumer sentiment due to COVID-19 vaccinations, the metropolitan area economy in the fourth quarter of this year remained flat. The Gangwon region, Honam region, and Jeju region showed slight improvements.

The Bank of Korea stated this in its "Regional Economic Report (December 2021)" published on the 27th, based on economic trend surveys conducted by 15 regional headquarters targeting companies and related organizations within their jurisdictions. The survey period was from November 11 to December 8.

In the fourth quarter, the metropolitan area maintained a flat level. Regions such as Gangwon, Daegu-Gyeongbuk (Daegyeong), Southeast, Honam, and Jeju, which were initially flat, all showed slight improvements.

The Bank of Korea explained, "Manufacturing production remained at the previous quarter's level, but production slightly increased due to COVID-19 vaccinations and government spending expansion," adding, "Most regional economies showed slight improvements compared to the previous quarter."

By sector, manufacturing production increased in the Honam region, centered on petroleum refining and steel. Conversely, the Chungcheong region saw a decline due to reduced demand for electric vehicle batteries.

Elsewhere, the metropolitan area saw an increase due to expanded contract manufacturing of COVID-19 treatments and biopharmaceuticals, but automobile production decreased, keeping the overall level steady compared to the previous quarter. Both the Southeast and Daegu-Gyeongbuk regions also remained flat.

The Bank of Korea forecasted, "Manufacturing production in the Southeast region is expected to slightly increase compared to the fourth quarter, while the metropolitan area is expected to slightly decrease. Other regions are expected to maintain the fourth quarter levels."

National Consumption Revived but... "Omicron Impact Not Reflected"

Consumption in the fourth quarter increased in all regions compared to the previous quarter. The Gangwon and Jeju regions showed relatively larger increases. However, in the metropolitan area, demand that had strongly rebounded slowed down as quarantine measures were reinforced again.

Future consumption is expected to increase mainly in face-to-face service sectors such as accommodation and food services, as consumption capacity improves in most regions due to easing of quarantine measures, COVID-19 vaccinations, and consumption promotion policies.

Facility investment in the Jeju region slightly decreased as most industries reduced or postponed investments due to uncertainty about the future economy. However, the metropolitan area, Southeast, Chungcheong, Honam, Daegu-Gyeongbuk, and Gangwon regions recorded flat levels.

The Bank of Korea stated, "Future facility investment is expected to slightly increase in the metropolitan area, Southeast, and Gangwon regions, but remain at the fourth quarter level in Chungcheong, Honam, Daegu-Gyeongbuk, and Jeju regions."

Construction investment slightly increased in the Southeast, Gangwon, and Jeju regions compared to the third quarter. Conversely, it slightly decreased in the Chungcheong region. The metropolitan area, Honam, and Daegu-Gyeongbuk regions remained flat.

Regarding employment, the average monthly number of employed persons in October and November increased by 603,000 compared to the same period last year. This is an expansion from the 577,000 increase in the third quarter of last year. By industry, the increase was significant in business, personal, and public services; electricity, transportation, communication, and finance; and construction, while retail, accommodation, and food services decreased. By employment status, regular and temporary wage workers increased, while daily workers decreased.

The average monthly consumer price index in October and November rose more sharply in all regions compared to the third quarter. This was mainly due to a significant increase in petroleum product prices caused by rising international oil prices. The average monthly housing sale prices in October and November showed a reduced rate of increase compared to the third quarter in most regions.

Meanwhile, the Bank of Korea forecasted that regional economies will maintain the fourth quarter level but noted that uncertainties remain due to COVID-19 variants.

Lee Jaewon, head of the Bank of Korea's Regional Economy Team, said, "Future regional economies are expected to remain at the fourth quarter level, but recent uncertainties are increasing," adding, "There is high uncertainty regarding the progression of COVID-19 and related quarantine measures." He also noted that this survey did not reflect the recent government quarantine strengthening measures due to the Omicron variant.

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