The downward and downward curves of our economy are getting steeper as production and consumption are steadily decreasing. The global economic situation is expected to worsen as the spread of new coronavirus infections (Corona 19) worldwide, including the United States and Europe, has not yet been reflected in the statistics released by the National Statistical Office in March. The remarks are the same with all statements that Hong Nam-ki, the deputy prime minister of the economy and the Minister of Strategy and Finance, said at the 1st meeting of the Central Emergency Management Headquarters (Economic Major), “The impact of Corona 19 is in earnest in terms of psychology, real life, and employment.”
According to Statistics Korea's industrial activity trend in March on the 28th, all industrial production increased 1.7% MoM in December last year to -0.1% in January, -3.4% in February, and -0.3% in March for 3 months. It is decreasing continuously.
In particular, the production of service industry shrank significantly due to the social distance. Service industry production fell 3.5% MoM in February and recorded the biggest drop since 2000, when statistics were started. In March, it fell 4.4%, breaking the record for the largest decline in a month. If the previous month's indicators are bad, it is normal for the next month to decrease or somewhat rebound due to the base effect.
By industry, lodging and restaurant business plunged 17.7% MoM, while transportation and warehouse business also fell 9.0% due to a decrease in passenger traffic. In addition, education -6.9%, wholesale and retail -3.3%, arts, sports, and leisure -31.2%. The decline is more pronounced compared to last year. Compared to the same month last year, lodging and restaurant business fell 32.1%, transportation and warehouse 16.4%, education 9.6%, wholesale and retail 6.7%, and arts, sports and leisure, 45.9%.
The government explained that the mining industry increased 4.6% in March, which is the base effect of the record of -3.5% in February. The number is ‘plus’, but it is not really good. Minister of Strategy and Finance Kim Yong-beom, Minister of Strategy and Finance, said, “It is a temporary phenomenon that occurred as the production of automobiles, which had been disrupted due to problems with the supply and demand of Chinese parts in February, is a temporary phenomenon. According to the “Status of Passenger Car Trade” released by the Korea Customs Service on the same day, exports of passenger cars in the first quarter were $ 83.73 billion, a decrease of 10.1% from the previous year's $ 93.1 billion.
A reduction in consumption affecting production was also confirmed. Sales of durable goods such as passenger cars increased 14.7% due to the reduction of individual consumption tax for passenger cars, but semi-durable goods such as cosmetics and semi-durable goods decreased by 4.4% and 11.9%, respectively, and retail sales decreased 1.0%.
By industry, duty-free shop sales fell 48.8% YoY, department store sales fell 36.9%, and hypermarket sales decreased 8.5% YoY. Retail sales in the first quarter of this year were down 6.4% from the previous quarter. Ahn Hyeong-joon, an Economic Statistics Trend Deliberation Officer at Statistics Korea, said, “Retail sales have declined since February due to changes in consumption patterns that avoid face-to-face contact.”
The prospect that the future will not be better continues. The ‘leading index circulation fluctuation’, which shows the future economic situation, recorded -0.6 points compared to the previous month, the biggest drop in 12 years and 1 month. The cyclical fluctuation index, which shows the current economic situation, also fell by 1.2 points, recording the largest drop in 11 years and 3 months since December 2008 (1.2 points), which was the worst of the global financial crisis.
The same is true of the BSI announced by the Bank of Korea on the same day, dropping to 51, the same level as in December 2008. The corporate economic due diligence index is an index that examines entrepreneurs' judgments and outlooks on the current management situation. If the number of negative respondents is positive, the index is below 100.
“The impact of overseas factors such as the US and Europe on Korea is still limited,” said Ahn Shim. “In April, the impact of the spread of corona19 in major exporting countries and the containment of the economy will be largely reflected in manufacturing exports and production.” Said.
Moody's, an international credit rating company, predicted Korea's real GDP this year on the 28th (local time) at -0.5% compared to the previous year. On the other hand, the G20 (20 major countries) growth forecast was expected to be -4.0%. The United States and Europe projected -5.7% and -6.5%, respectively, and Japan forecast -6.5%. It is comforting that Korea has the smallest decline in growth rate among the top 10 developed countries. It is solved thanks to the strong Corona 19 prevention.
Sejong = Reporter Park Young-jun email@example.com
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