Industrial production in Asia’s fourth-biggest economy contracted 1.8 percent worse-than-expected in August.
South Korea’s factory production fell for the second straight month in August, a warning sign for the global economy as it faces risks from the war in Ukraine and rising interest rates.
In Asia’s fourth-biggest economy, industrial production shrank a worse-than-expected 1.8 percent on a seasonally adjusted monthly basis after falling 1.3 percent in July, government figures showed on Friday.
Compared to the same month last year, factory production rose 1.0 percent, the slowest pace since September 2021.
However, service sector output rose 1.5 percent for the month, while retail sales rose 4.3 percent, the fastest rise since May 2020.
The numbers follow a series of data showing slowdowns in factory production in other major Asian economies, including China, Japan and Taiwan.
China’s factory activity slowed further in September after a fall in the previous month when Beijing’s ultra-tight “zero-COVID” guidelines impacted production and sales, according to a private sector survey released on Friday.
South Korea, one of the world’s largest makers of cars, chips and ships, is considered a barometer of the health of global trade, with its companies covering a large chunk of the global economy.
South Korea’s exports, which account for nearly 40 percent of gross domestic product (GDP), are expected to slow sharply in September, with a Reuters poll of economists predicting the slowest growth in almost two years ahead of official figures released next month.
“This is certainly a concern for the domestic and global economy,” Min Joo Kang, senior economist for South Korea and Japan at ING, told Al Jazeera.
“Weaker than expected industrial production was driven by Korea’s top exports such as semiconductors and petrochemicals. This would certainly have a negative impact on Korea’s GDP and also points to weakness in global demand. It usually takes 4-5 quarters for semiconductors to come out of their down cycle, so it hasn’t bottomed out yet.”