In March, South Korean consumers were taken aback at sky-high apple prices. Apples, popular among Koreans, topped the list of fruit the prices of which had surged from a year earlier. Apple prices had risen 88.2 percent, the steepest since 1980 when related data began to be compiled.
This price spike was caused by decreased apple production affected by abnormal weather.
North Gyeongsang Province is traditionally famous for apples, and the Jeolla Provinces for pears, another Korean favorite fruit, but apple and pear growing areas are said to be shifting due to climate change. There is even a gloomy forecast that by 2100, apples may grow only in parts of Gangwon Province, geographically located above the Gyeongsang and Jeolla Provinces.
A new study by the Bank of Korea is drawing attention to this situation. The central bank analyzed the effect of abnormal weather on real economic trends and released a related report on Monday. The conclusion was that extreme weather in Korea was found to have lowered industrial production and raised prices.
Noteworthy is the correlation between abnormal weather and prices. The bank found that about 10 percent of domestic inflation was attributable to abnormal weather. Climate change has emerged as a major cause of inflation in Korea.
Abnormal weather such as heat waves and droughts has led to poor crops, raising the prices of groceries and fruits and pushing up overall consumer prices by 0.03 percentage points. Had it not been for the import substitution effect from free trade agreements, the inflation rate would have risen 0.08 percentage points further, the study says.
Recent extreme weather is disturbing the marine ecosystem here as well. About 1.4 million fish died from rising water temperatures in aquaculture facilities nationwide from July 30 to Aug. 17, according to the Ministry of the Interior and Safety.
The decline in both crops and fish catches leads to food price inflation. If the cost of groceries soars, members of the working class, among others, have to resort to spending less on other goods. This reality is why the self-employed have been struggling these days to cope with depressed domestic demand.
Abnormal weather also drags down industrial output because productivity falls due to excessive heat, droughts and flooding. According to the BOK report, from 2001 to 2023, cases of abnormal weather shaved 0.6 percentage points off the rate of increase in industrial production in the 12 months following each case.
As a matter of fact, the Korean economy is vulnerable to external factors such as supply networks and oil crises. But abnormal weather adds insult to injury by bringing down growth. Economic damage from abnormal climate conditions should not be viewed lightly.
Abnormal weather is no longer a temporary phenomenon. It has become the new normal and emerged as a major variable that can change the global industrial landscape.
In the semiconductor industry alone, where countries rather than companies seem to compete against each other, growth cannot be sustained without stable supplies of electricity and water. But the basic mid and long-term plan for electric power demand and supply, which covers 15 years from 2024 to 2038, has not been finalized yet.
The government should speed up related processes. It should reflect global warming and abnormal weather sufficiently in its plans, and also upgrade its plans for responding to natural disasters amid climate change.
To minimize the adverse effects of abnormal weather on the real economy, climate change-related risks need to be managed proactively and all related agencies should take coordinated measures.
Weather forecasting should be upgraded to provide customized weather data to industries. Companies ought to develop technologies to make up for the loss of production attributable to abnormal weather.
To help stabilize prices, the government should improve the distribution structure for agricultural and fishery products while removing regulatory obstacles and also offering related tax support.
To curb agricultural product price inflation caused by abnormal weather, it should be able to secure substitute goods sufficiently by importing agricultural products from overseas.
Damage from abnormal weather will likely grow and worsen unless global warming is mitigated. An understanding of the climate crisis as an economic crisis is needed.
