"Timely Assessment of Regional Economy Possible"…Bank of Korea Develops 'Weekly Regional Economic Index'

The Bank of Korea announced on the 20th that it has developed the Weekly Regional Economic Index (WREI) for the first time domestically to timely assess the economy at the regional level.

According to the Bank of Korea, regions have fewer available statistics compared to the national level, and since the Gross Regional Domestic Product (GRDP), which corresponds to the Gross Domestic Product (GDP), is compiled with a significant time lag between preliminary and final figures, it is difficult to comprehensively and timely assess the economic situation.

The WREI developed by the Bank of Korea allows for regional comparisons due to its consistent composition indicators and has excellent timeliness because it uses weekly data. Additionally, when monthly or quarterly data among the WREI’s component indicators are updated, the new information is immediately reflected in the most recent WREI, which is an advantage.

(Data provided by the Bank of Korea)

The WREI classifies its component indicators into five categories (real economy, economic sentiment, finance, household, labor market), enabling storytelling about the main drivers of regional economic conditions, according to the Bank of Korea.

As a result of analyzing regional economic conditions using this, most WREIs by city and province showed trends similar to the national WREI.

However, in some regions, the growth rate of economic indicators differed from the national trend for certain periods due to specific regional economic conditions.

For example, in the early 2010s, regional economic conditions generally improved due to active trade with China centered on manufacturing industries such as automobiles, chemicals, and petroleum refining. However, Jeju showed weaker economic trends compared to other regions because of its low proportion of exports to China.

In March 2020, as COVID-19 cases surged in the Daegu-Gyeongbuk region, consumption by residents in this area sharply declined, causing the WREI growth rate in this region to drop significantly.

Recently, due to the weakening recovery of the Chinese economy and the downturn in the semiconductor industry, regions with a high export ratio such as Gyeonggi Province and the Chungcheong area showed relatively sluggish economic performance.

When decomposing the WREI related to the national economy during the post-pandemic period, the main drivers of Korea’s economy were found to be the real economy and economic sentiment. However, after the COVID-19 crisis response and the Legoland incident, the importance of the financial sector increased.

(Data provided by the Bank of Korea)

The Bank of Korea also developed a snapshot that visually represents the business cycle stages by categorizing them into 10 stages to provide an overview of regional economic conditions at a glance.

The deeper the red color, the more prosperous the economy; the deeper the blue color, the more severe the recession.

The Bank of Korea explained, "In the future, utilizing the WREI is expected to enable more precise analysis of how changes in regional economic conditions affect the regional economy."

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