Latest data show signs of recovery in the South Korean economy on the back of increased production in chips and strong auto exports. Concerns remain though over high oil prices and interest rates globally.
South Korea's economy is showing signs of moderate recovery in certain areas. According to a monthly report released by the Korea Development Institute on Tuesday, the ease in the slowdown of the economy was mostly driven by the rise in production across various industries.
Overall production increased by 2-point-8 percent on-year in September, higher than the 1-point-3 percent from a month earlier. Growth was seen in industrial production on the back of a recovery in semiconductor demand, with chip production surging 23-point-7 percent on-year in September compared to 8-point-4 percent the previous month.
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While service production showed a slowdown compared to the previous year due to the base effect, it saw a moderate increase of 0-point-4 percent from the month before due to the rise in demand for travel. Production in construction also showed continued growth. Meanwhile, exports showed a slight recovery on the back of increased exports to the U.S.
Exports to the U.S. in October rose sharply by more than 17 percent from the previous year but exports to China fell 9-point-5 percent. Vehicle exports maintained robust growth in October and semiconductor exports showed signs of recovery. The increase in imports was mostly led by the rise in crude oil imports.
Overall, the trade balance in October recorded a surplus of 1-point-64 billion U.S. dollars. However, external factors continue to weigh on the South Korean economy as the global economy grapples with uncertainties such as monetary policy tightening and the Israel-Hamas conflict.
Growing geopolitical tensions have fueled volatility in oil prices and the continued high interest rates in major economies has led to subdued business sentiment.
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