"Regional Economy in Q1 at Previous Quarter Level... Slight Improvement Expected in Q2"

Bank of Korea Publishes Q1 Regional Economic Report
Slight Improvement in Chungcheong and Gangwon Regions

The Bank of Korea is unveiling the exterior of its newly constructed integrated annex, completed after six years, in Jung-gu, Seoul on the morning of the 27th. Photo by Joint Press Corps

Due to delayed recovery in consumer sentiment and deterioration in the real estate market, the domestic regional economy in the first quarter of this year remained at the previous quarter's level, continuing its sluggish performance. However, the regional economy in the second quarter is expected to show slight improvement as manufacturing production increases, centered on growth in the IT sector.

In the 'Regional Economic Report' published on the 25th, the Bank of Korea stated, "The regional economy in the first quarter of this year maintained the previous quarter's level." It added, "Manufacturing production slightly increased, supported by growth in semiconductors despite declines in automobiles and parts. The service sector showed mixed results, with increases in finance, insurance, and transportation, but decreases in wholesale and retail trade and accommodation and food services, resulting in a stable trend across industries."

Based on monitoring production, demand, and employment trends collected from companies and related organizations, the regional economic conditions were comprehensively assessed by area. The Chungcheong and Gangwon regions showed slight improvements, while the Southeast region slightly deteriorated, and the remaining regions remained stable.

Lee Jae-won, head of the Bank of Korea's Regional Economic Survey Team, explained, "The regional economy is expected to improve slightly compared to the first quarter. Manufacturing production is anticipated to continue growing, driven by increases in IT sectors such as semiconductors, although petrochemicals may slightly decline. The service sector is expected to see improvements in wholesale and retail trade, but real estate is likely to remain sluggish, resulting in an overall stable level."

Manufacturing production in the first quarter slightly increased compared to the fourth quarter of last year, influenced by improvements in the global semiconductor market and rising prices. By industry, semiconductors showed an upward trend, while automobiles, parts, and displays declined, and petrochemicals remained stable. By region, Gangwon showed an increase; the Seoul Capital Area, Chungcheong, and Honam regions showed slight increases; the Southeast region slightly decreased; and Daegu-Gyeongbuk and Jeju regions remained stable. The Bank of Korea expects petrochemicals to slightly decline in the future, but growth will continue centered on semiconductor production as the global IT economy recovers.

Service sector production maintained the previous quarter's level despite increases in domestic and international passenger numbers and cargo volume recovery, due to delayed recovery in consumer sentiment caused by high interest rates and inflation. By industry, finance, insurance, and transportation improved, but wholesale and retail trade and accommodation and food services decreased. By region, Daegu-Gyeongbuk and Gangwon showed slight increases, while the Southeast, Chungcheong, and Honam regions slightly decreased, and the Seoul Capital Area and Jeju remained stable. According to the Bank of Korea, service sector production is expected to maintain the first quarter's level overall, with wholesale and retail trade improving somewhat but real estate continuing to struggle, resulting in mixed industry performance. By region, slight increases are expected in the Seoul Capital Area, Honam, Gangwon, and Jeju regions, while the Southeast region is expected to slightly decrease, and Chungcheong and Daegu-Gyeongbuk regions are expected to remain stable.

Private consumption in the first quarter remained at the previous quarter's level, with a slight decrease in goods consumption offset by a slight increase in services consumption. By region, Gangwon showed a slight increase, while the Southeast and Chungcheong regions slightly decreased, and other regions remained stable. Going forward, private consumption is expected to maintain the previous quarter's level, as service consumption gradually improves but goods consumption recovery is constrained by high interest rates and inflation. By region, slight increases are expected in the Seoul Capital Area, Honam, Gangwon, and Jeju regions, while other regions are expected to remain stable.

Facility investment slightly increased due to expanded advanced process investments in semiconductors and displays, but decreases in steel and petrochemicals resulted in maintaining the previous quarter's level. By region, slight increases were seen in the Seoul Capital Area, Southeast, and Daegu-Gyeongbuk regions, while other regions remained stable. Facility investment is expected to continue increasing slightly, centered on IT sectors such as semiconductors. By region, slight increases are anticipated in the Seoul Capital Area, Southeast, Chungcheong, Daegu-Gyeongbuk, and Gangwon regions, while Honam and Jeju regions are expected to remain stable, according to the Bank of Korea.

Construction investment in the first quarter slightly decreased due to declines in the private sector, mainly in residential buildings. By region, decreases were observed in the Southeast and Gangwon regions, slight decreases in Daegu-Gyeongbuk, and stability in other regions. According to the Bank of Korea, despite increases and early execution of public sector SOC budgets, construction investment is expected to slightly decline due to the continued impact of accumulated unsold housing and sluggish new housing starts in the private sector. By region, slight decreases are expected in the Seoul Capital Area, Chungcheong, and Gangwon regions, while other regions are expected to maintain the previous quarter's level.

Exports maintained the previous quarter's level, with semiconductors increasing due to price rises from resolving supply-demand imbalances, but decreases in automobile and display exports. By region, Gangwon showed a significant increase, Honam increased, and the Seoul Capital Area and Chungcheong showed slight increases, while the Southeast and Daegu-Gyeongbuk regions decreased, and Jeju slightly declined. Exports are expected to slightly increase going forward, with semiconductor exports continuing to grow and display exports improving due to TV replacement demand related to the Olympic Games. By region, increases are expected in the Seoul Capital Area and Jeju, slight increases in the Southeast, Chungcheong, and Daegu-Gyeongbuk regions, while Gangwon is expected to decrease and Honam to slightly decrease.

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