S. Korea’s industrial output marks steepest drop in 9 years

South Korea’s industrial output, consumption and investment contracted in February, as the economic fallout of the new coronavirus spread has started unleashing its impact, government data showed Tuesday.

The country’s industrial output shed 3.5 percent in February from a month earlier, according to the monthly industrial indexes compiled by Statistics Korea. This marked the sharpest drop since the 3.7 percent on-month fall observed in February 2011, when the foot-and-mouth disease had been rampant.

The production of semiconductors climbed 3.1 percent on-month but that of automobiles dipped 27.8 percent, the sharpest in more than 13 years.

The production of mining, manufacturing, gas and electricity industries slipped 3.8 percent on-month, in a steepest pace since December 2008, which was during the global financial crisis.

The service sector saw its production sink 3.5 percent on-month, marking the sharpest decline since the agency started compiling such data in 2000.

The retail sales -- a key index for consumer sentiment -- slipped 6 percent.

“The service and retail businesses suffered as the consumption pattern changed drastically amid the epidemic spread and the quarantine measures,” said Ahn Hyung-joon, an official in charge of economic trend statistics.

“Also, automakers took a hard blow from the pandemic as they faced challenges in securing the necessary parts.”

The average factory operation rate stood at 70.7 percent in February, down 4.9 percentage points from a month earlier.

Asia’s fourth-largest economy is likely to face further headwinds down the road, the agency added.

“The consequences of extensive social distancing and the global spread of the virus are expected to be reflected in the next couple of months,” Ahn said.

In a struggle to revitalize the stalled economy, the government is currently pushing ahead with a second extra budget amounting to 7.1 trillion won ($5.8 billion), adding to the already-approved 11.7 trillion won.

By Bae Hyun-jung (tellme@heraldcorp.com)