‘Triple Rise’ in Production, Consumption, and Investment After Six Months... First Quarter Production Posts Largest Increase in 17 Quarters (Comprehensive)

Last month, South Korea’s production, consumption, and investment all rose together for the first time in six months. Despite a slowdown in semiconductors, the automotive and shipbuilding industries led production, while the launch of new mobile phones and an increase in foreign tourists supported a rebound in consumption. In addition, first-quarter production posted its highest growth rate in over four years, and the impact of the Middle East war that broke out at the end of February has so far remained limited.

Last July, automobiles awaiting shipment were lined up at the export yard of Pyeongtaek Port in Gyeonggi Province, ready for export. Photo by Jin-Hyung Kang.

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According to the “March 2026 Industrial Activity Trends” released by the Ministry of Data and Statistics on April 30, total industrial production (up 0.3%), retail sales (up 1.8%), and facility investment (up 1.5%) all increased compared to the previous month. This is the first time in six months that all three indicators have grown together, since September last year. The Ministry of Economy and Finance stated, “Despite the negative factor of the Middle East war, the effects of policies supporting domestic demand recovery and capital market revitalization have become visible, and rapid responses such as the price cap system have helped minimize the impact of the war. We will do our utmost to ensure the recovery trend continues.”

In the manufacturing sector, even though semiconductor production (down 8.1%) underwent an adjustment due to a base effect after surging 28.2% last month, automobiles (up 7.8%) and other transportation equipment such as shipbuilding (up 12.3%) performed well, leading the overall increase. Service sector production also grew, with finance and insurance (up 4.6%) and transportation and storage (up 3.9%) contributing to a 1.4% rise compared to the previous month. Lee Doo-won, Director of Economic Trend Statistics at the Ministry of Data and Statistics, said, “The base effect comes from semiconductors having the biggest increase in five years and eight months last month. The sector’s fundamentals still appear strong.”

Consumption (retail sales) rose 1.8% from the previous month. While sales of non-durable goods such as food and beverages fell by 1.3%, sales of durable goods increased by 9.8%. In particular, sales of communication devices jumped 30.1% thanks to new product launches. Sales of semi-durable goods also grew by 0.3%, led by duty-free sales of bags and cosmetics due to the increase in tourists. In March, the number of foreign tourists visiting South Korea reached about 2.06 million, a record high for a single month.

Facility investment increased by 1.5% from the previous month, as a decline in machinery investment such as semiconductor manufacturing equipment (down 0.3%) was offset by a rise in transportation equipment investment, including already-contracted aircraft imports. Construction completed (in constant terms) fell by 7.3%, with both civil engineering (down 13.7%) and building construction (down 4.5%) showing reduced performance. The Ministry of Data and Statistics explained that a base effect from the 14.6% increase in February also played a role. The coincident composite index, which indicates current economic conditions, rose by 0.5 points from the previous month, while the leading composite index rose by 0.7 points.

For the first quarter, total industrial production increased by 1.7%, marking the highest quarterly growth rate since the fourth quarter of 2021 (2.7%) over a span of 17 quarters. Manufacturing rose by 2.8%, and the service sector by 1.2%. Consumption (up 2.4%), facility investment (up 12.6%), and construction completed (up 1.2%) also increased. It is the first time in 11 quarters since the second quarter of 2023 that all six indicators (total industry, manufacturing, service sector, consumption, facility investment, and construction completed) have risen together.

While the external factor of the Middle East war did have some impact, it did not cause significant damage to the overall indicators. Petroleum refining production decreased by 6.3% month-over-month, reflecting a combination of the war’s effects, seasonal factors, and government policies such as naphtha export restrictions. In transportation and storage (up 3.9%), the increase was attributed to higher shipping rates and rising export volumes, while in waste management (up 3.0%), changes such as increased processing volume due to higher raw material prices were observed. Director Lee commented, “Despite the war, the main overall trends have been maintained. However, more pronounced effects could start to appear in the April and May indicators, so we need to watch future developments closely.”

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