Korea’s industrial output declines in March

South Korea’s industrial output fell in March mainly due to a drop in the machinery and electronics parts sector, government data showed Friday.

Production in the manufacturing, mining and utilities declined 1.5 percent in March from a year earlier, according to Statistics Korea. 

The March figure is a setback from a 2.2 percent growth in February, which was the first increase in three months.

From a month earlier, industrial output fell 2.2 percent in March.

By sectors, the machinery’s output plunged 10.4 percent and the electronics parts, an 11.5 percent drop year-on-year. The services industry saw a 2.7 percent growth on increased production in finance and retail.

Domestic consumption jumped 5.7 percent in March, the highest on-year gain in four months, mainly boosted by increase sales of durable goods such as automobiles.

From a month earlier, consumption rose 4.2 percent in March, the highest monthly gain since February 2009, when the figure hit 5 percent.

An economist said the seemingly upbeat figures in consumption will be short-lived.

“It seems to be a rebound effect from worse economic indicators earlier this year. A rise in domestic consumption mainly resulted from the government’s extension of tax cuts on cars,” said Lee Geun-tae, research fellow at LG Economic Research Institute.

However, effects of the government measures on consumption will fade away and exports, affected by industrial output, will remain weak moving forward to the second half of the year, Lee added.

Korea’s exports remained persistently low in March, falling for the 15th consecutive month to post a record-breaking losing streak.

The Korean economy is expected to see a slow growth this year, with the International Monetary Fund forecasting the growth rate at 2.7 percent for 2016. Asia’s fourth-largest economy expanded 2.6 percent in 2015.

By Kim Yoon-mi (yoonmi@heraldcorp.com)