Expected Economic Slowdown in Second Half... BNK Economic Research Institute Releases 'Review of Southeast Region Economy in First Half of This Year' Report

Busan Bank Headquarters.

[Asia Economy Yeongnam Reporting Headquarters Reporter Hwang Duyul] BNK Economic Research Institute, affiliated with BNK Financial Group, announced the research report "2022 First Half Southeast Region Economic Review" on the 4th.

According to the report, manufacturing production in the Southeast region increased by 2.8% in the first half of this year compared to the same period last year.

By industry, shipbuilding increased by 20.9% and petroleum refining by 12.4%, showing a double-digit high growth rate, driving the growth of regional manufacturing.

The increase in shipbuilding production was attributed to the full-scale construction this year of the large volume of orders received last year, and in the case of petroleum refining, it was analyzed that refineries increased plant operating rates due to rising refining margins caused by recent supply and demand instability.

Production increased in sectors such as metal by 2.0%, automobiles by 1.4%, and steel by 1.1%, but chemicals decreased by -3.5% due to large-scale expansion in China and demand contraction, and machinery decreased by -1.1% due to sluggish domestic and foreign facility investment.

Exports recorded $70.64 billion, an increase of 13.5% compared to the same period last year.

This is the highest export amount in the first half since 2017, and among the five major export destinations in the Southeast region, all increased except China, which decreased by -11.7%; the US increased by 1.1%, Japan by 16.6%, Vietnam by 32.4%, and Australia by 69.3%.

Employment continued to increase. The number of employed persons in the Southeast region increased by 45,000 in the first half of this year compared to the same period last year.

Manufacturing and service industries decreased, but construction and agriculture, forestry, fishery, and mining increased by 35,000 and 34,000 respectively.

Consumption also showed a recovery trend. The large retail store sales index recorded a 1.6% increase in the first quarter of this year due to the spread of Omicron and other factors, but the second quarter increased to 3.5%, resulting in a favorable 2.6% increase in the first half.

The real estate market appeared to be sluggish. Apartment sale prices in the first half of this year rose by 7.8% compared to the same period last year, but the increase slowed compared to the 10.8% rise in the first half of last year.

Apartment transaction volume decreased by 34.0% compared to the same period last year due to weakened buying sentiment amid the entry into a period of rising interest rates.

BNK Economic Research Institute forecasts that the Southeast region economy in the second half of this year will see a significant weakening of the recovery trend due to concerns over the resurgence of COVID-19 and the continuation of the triple burden of high interest rates, high exchange rates, and high inflation.

They also foresee increased uncertainty due to global monetary tightening, prolonged Russia-Ukraine war, and the possibility of renewed lockdowns in China.

They pointed out that downward pressure on consumption and exports, which led the recovery in the first half, is increasing.

They explained concerns about contraction in private consumption due to continued interest rate hikes to respond to inflation, and mentioned that exports of most major Southeast region industries such as shipbuilding, steel, and machinery are expected to slow due to global economic slowdown.

Jung Youngdoo, head of BNK Economic Research Institute, said, "The economic hardship index of Busan, Ulsan, and Gyeongnam exceeds the national average and shows an all-time high level," adding, "As an economic slowdown is expected in the second half, attention and support for vulnerable groups must be greatly increased."

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