The Bank of Korea: "Regional Economy in Q3 Maintains Previous Quarter Level... Slight Improvement Expected in Q4"

Publication of Regional Economic Report on the 25th

Due to the global economic downturn and the slow pace of China's economic recovery, regional economies in the third quarter of this year maintained the same level as the previous quarter. The regional economy in the fourth quarter is expected to show a slight improvement compared to the third quarter as the manufacturing sector remains flat due to delayed improvement in the semiconductor industry, while the service sector recovers.

On the 25th, the Bank of Korea published the 'Regional Economic Report' stating, "In the third quarter of this year, regional economies saw manufacturing production remain flat due to sluggish semiconductor production and a slowdown in automobile growth, despite recovery in shipbuilding and display sectors. However, service production slightly increased, mainly in finance, transportation, and real estate."

According to the regional economic conditions assessed comprehensively based on production, demand, and employment trends collected through monitoring companies and related organizations, among the seven regions nationwide, the Daegyeong region slightly deteriorated, while the Seoul Capital Area, Southeast region, Chungcheong region, Honam region, Gangwon region, and Jeju region showed stable conditions.

Lee Jae-won, head of the Regional Economic Survey Team at the Bank of Korea's Research Department, said, "The regional economy is expected to improve slightly compared to the third quarter. Manufacturing will remain flat due to the slow recovery of China's economy, a major export market, despite expectations for a turnaround in the semiconductor industry. However, the service sector is expected to continue moderate growth, supported by recovery in travel-related consumption and easing of real estate sector downturn."

Manufacturing production in the third quarter remained at a similar level to the second quarter due to continued sluggish global trade and weakened recovery in China's economy. The Honam and Gangwon regions showed slight increases, Chungcheong remained flat, while the Seoul Capital Area, Southeast, Daegyeong, and Jeju regions experienced declines. The Bank of Korea expects semiconductor production cuts to continue and slight decreases in automobile and steel sectors, but recovery in display, mobile phones, and petroleum refining will maintain the overall level.

Service production stagnated in retail and accommodation/food services due to accumulated high inflation, but slightly increased overall due to continued improvement in finance and insurance, and signs of recovery in real estate following easing housing market downturn. The Southeast region showed an increase compared to the previous quarter, while the other six regions remained stable. The Bank of Korea forecasts that service production will slightly increase compared to the third quarter as transportation improves with recovery in travel demand and cargo volume, and accommodation/food services improve in some areas due to increased foreign visitors, while retail and real estate remain stable.

Private consumption in the third quarter remained at the previous quarter's level as goods consumption slightly decreased but service consumption remained stable. By region, the Seoul Capital Area and Chungcheong region were stable, while the Southeast, Honam, Daegyeong, Gangwon, and Jeju regions declined. Despite constraints such as increased household principal and interest repayment burdens, the Bank of Korea expects private consumption to slightly increase compared to the third quarter due to favorable employment conditions and accumulated excess savings.

Facility investment slightly decreased as the trend of reduced investment centered on semiconductors expanded. By region, the Seoul Capital Area decreased, and Gangwon region also slightly decreased. In contrast, the Southeast region slightly increased, and other regions remained stable. The Bank of Korea expects facility investment to maintain the third quarter level as investment reduction centered on semiconductors continues despite investments for eco-friendly transitions such as automobiles and secondary batteries.

Construction investment slightly decreased in both private and public sectors due to high raw material prices and reduced social overhead capital (SOC) budget execution. By region, the Honam region decreased, and the Seoul Capital Area, Chungcheong, Daegyeong, and Jeju regions also slightly decreased. Other regions remained stable. Construction investment is expected to slightly decrease compared to the third quarter as the decline in new housing starts due to the real estate market slowdown impacts with a time lag, limiting private sector recovery. By region, Honam is expected to remain stable, while other regions are expected to slightly decrease.

Exports increased centered on ships but decreased in petrochemicals, maintaining the previous quarter's level. By region, Gangwon, Honam, and Jeju regions slightly increased, while Southeast, Chungcheong, and Daegyeong regions decreased. The Seoul Capital Area remained stable. Exports are expected to maintain the third quarter level as IT items continue recovery trends but automobile exports slow down. By region, the Seoul Capital Area, Chungcheong, and Daegyeong regions are expected to slightly increase, Southeast and Jeju regions to maintain the third quarter level, while Gangwon and Honam regions are expected to decrease, according to the Bank of Korea.

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