"First Quarter Metropolitan Area Economy Stable... Most Regions Expected to Slightly Improve Going Forward"

The Bank of Korea Releases 'March Regional Economic Report'

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] Manufacturing production showed a favorable trend, but due to the rapid spread of the Omicron variant, service sector production slightly decreased, resulting in the economy of most regions, including the Seoul metropolitan area, remaining flat in the first quarter of this year.

The Bank of Korea announced on the 28th in its 'Regional Economic Report (March 2022)' that this was the result of an economic trend survey conducted by 15 regional headquarters targeting companies and related organizations within their regions. The survey period was from February 10 to March 8.

In the first quarter of this year, the Seoul metropolitan area's economy remained flat. Manufacturing production was flat, while service sector production slightly decreased. On the demand side, facility investment slightly increased, while consumption and construction investment remained at the levels of the fourth quarter of last year. Exports continued to show a favorable trend.

The Bank of Korea explained, "Going forward, regional economies are expected to slightly improve in most areas as manufacturing production maintains the first quarter level due to continued export strength, and service sector production increases due to the easing of quarantine measures, increased economic activities, and improved consumer sentiment. However, there are significant domestic and international uncertainties due to the prolonged spread of COVID-19 and recent events such as the Ukraine situation."

By sector, manufacturing production slightly increased in the Southeast region, Chungcheong region, Gangwon region, and Jeju region. In the Southeast region, shipbuilding increased due to the full-scale construction of new orders that surged last year, and petroleum refining improved profitability due to rising oil prices. The Seoul metropolitan area and Honam region maintained the previous quarter's level. The Daegu-Gyeongbuk region slightly decreased due to continued sluggish finished car production caused by supply disruptions of vehicle semiconductors in automobile parts.

The Bank of Korea stated, "Going forward, manufacturing production is expected to slightly increase in the Seoul metropolitan area, Southeast region, and Honam region compared to the first quarter, while other regions are expected to maintain the first quarter level."

As the operating hours for multi-use facilities such as cafes and restaurants, which have been subject to COVID-19 restrictions, have been extended by one hour from 10 PM to 11 PM, a notice about the new closing time is posted at a restaurant in Jongno, Seoul on the 6th. Photo by Hyunmin Kim kimhyun81@

In the first quarter, service sector production slightly decreased in the Seoul metropolitan area, Southeast region, Chungcheong region, and Honam region compared to the previous quarter, while the Daegu-Gyeongbuk region, Gangwon region, and Jeju region showed similar levels to the previous quarter. Accommodation and food services increased in the Gangwon region due to increased visitors to ski resorts, but decreased in most regions due to the rise in COVID-19 cases and strengthened quarantine measures.

The Bank of Korea said, "Going forward, service sector production is expected to slightly increase in most regions. Retail and accommodation/food services are expected to increase due to the subsiding spread of COVID-19 and easing of quarantine measures, and transportation is also expected to increase in most regions due to the recovery of passenger demand."

In the first quarter, consumption slightly increased in the Jeju region compared to the previous quarter. The Seoul metropolitan area and Daegu-Gyeongbuk region maintained the previous quarter's level, but the Southeast region, Chungcheong region, Honam region, and Gangwon region slightly decreased. Future consumption is expected to slightly increase in most regions compared to the first quarter due to increased economic activities from the government's easing of quarantine measures and recovery of consumer sentiment.

Facility investment slightly increased in the Seoul metropolitan area, Southeast region, Chungcheong region, and Gangwon region, while the Honam region, Daegu-Gyeongbuk region, and Jeju region showed similar levels to the previous quarter. The Bank of Korea said, "Going forward, facility investment is expected to slightly increase in the Seoul metropolitan area and Jeju region, while other regions are expected to remain at the first quarter level."

Construction investment increased in the private sector in some regions, but the public sector showed sluggish performance in all regions due to poor execution of social overhead capital (SOC) budgets, resulting in levels similar to the previous quarter.

The Bank of Korea stated, "Going forward, construction investment is expected to slightly increase in most regions centered on the public sector as SOC budget execution expands compared to the first quarter. However, rising raw material prices and potential contraction in residential and commercial building investments may act as constraints."

Exports showed a solid increase in all regions following the previous quarter. The Bank of Korea added that exports are expected to increase year-on-year following the first quarter, but the growth rate may slightly shrink due to geopolitical risks and other factors.

Regarding employment, the average monthly number of employed persons in January and February increased by 1,086,000 compared to the same period last year, expanding the increase from the previous quarter. By industry, manufacturing saw a larger decrease in the Southeast and Chungnam regions, and construction decreased in the Honam and Gangwon regions, but service sector employment increased in all regions.

The average monthly consumer price index in January and February continued to rise year-on-year in all regions. Product prices showed a strong increase due to rising international oil prices and agricultural, livestock, and fishery product prices, while service prices also rose mainly due to personal service prices such as dining out.

The average monthly housing sale prices in January and February saw a reduced increase in most regions compared to the end of the previous quarter due to weakened housing purchase sentiment, and the Daegu-Gyeongbuk region turned to a decline.

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