Government Sees "Signs of Economic Recovery" for 2 Consecutive Months... Semiconductor Production and Export Rebound Expected

December Recent Economic Trends
"Uncertainty Remains Amid Slowing Inflation and Other Factors"

The government diagnosed that signs of recovery in the Korean economy have appeared for two consecutive months. This is due to improvements in external factors such as semiconductor-centered export recovery and the strong domestic demand in the U.S. economy. However, it analyzed that domestic and international risk management is necessary as uncertainties remain, including raw material price fluctuations caused by supply chain instability and sluggish domestic demand in China.

On the 15th, the Ministry of Economy and Finance evaluated in the 'December Recent Economic Trends (Green Book)' that "signs of economic recovery are gradually appearing due to the recovery in manufacturing production and exports centered on semiconductors and improvements in employment." Lee Seung-han, head of the Ministry's Comprehensive Policy Division, said, "According to growth indicators, the Korean economy is improving in the second half of the year compared to the first half, driven by manufacturing-centered exports, and the growth rate for the fourth quarter of this year is expected to be in the low 2% range."

The government had diagnosed in June last year that the Korean economy was 'at risk of economic slowdown' due to worsening external conditions, and in February this year stated that 'economic slowdown has become visible.' It mentioned a 'partial easing' of the slowdown only in August and last month, for the first time in one year and five months, saw signs of economic recovery.

Export containers are being loaded onto a ship at Busan North Port. Photo by Jinhyung Kang aymsdream@

The government focused on signs of rebound in production and exports of manufacturing industries such as semiconductors. Semiconductor production in October increased by 14.7% compared to the same month last year. During the same period, semiconductor inventory decreased by 9.6% compared to the previous month, indicating that accumulated inventory is gradually declining. Exports are also showing a favorable trend. According to the Korea Customs Service, semiconductor exports last month increased by 10.8% compared to the same month last year. The rise in semiconductor prices is also positive. According to market research firm DRAMeXchange, as of November, the fixed transaction price of PC DRAM general-purpose products (DDR4 8Gb 1Gx8) was $1.55, rising 19.2% in just two months.

Thanks to semiconductors, overall exports have also begun to improve. Last month, export value recorded $55.776 billion, an increase of 7.8% compared to the same month last year. Monthly export values had declined consecutively for one year from October last year to September this year but increased in October for the first time in 13 months and showed positive growth for two consecutive months.

The stable trend of international oil prices, considered a major external risk, is also positive for the Korean economy. As of the previous day, the closing price of West Texas Intermediate (WTI) crude oil futures for delivery in India traded on the New York Mercantile Exchange was $71.58 per barrel, down more than $20 compared to the peak of $93.68 in September.

The steady employment and consumption trends in the U.S. economy and the continuous slowdown in inflation are also interpreted as positive signals. Last month, the U.S. employment market saw an increase in non-farm payrolls by 199,000 (32.6%) compared to 150,000 in the previous month, exceeding market expectations of 180,000, and the unemployment rate fell by 0.2 percentage points from 3.9% to 3.7%.

Domestic employment indicators also continued their positive trend. Last month, the number of employed persons was 28.698 million, an increase of 277,000 compared to the same month last year, and the employment rate (aged 15 and over) rose by 0.4 percentage points to 63.1%. The unemployment rate remained at 2.3%, the same level as the previous year, but the number of unemployed increased by 11,000 to 677,000 compared to the same period last year.

Inflation also began to slow last month after rising for three consecutive months. Prices of agricultural, livestock, fishery products, and petroleum products fell sharply compared to the previous month, and prices of durable goods such as imported cars declined, resulting in an inflation rate of 3.3% year-on-year, down 0.6 percentage points from the previous month. The Ministry of Economy and Finance stated, "However, since the Chinese economy is not clearly improving, the overall upward trend of economic recovery can be seen only when the Chinese economy recovers and sectors such as petrochemicals, steel, and machinery improve."

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