South Korean manufacturers face third consecutive quarter of declining domestic supply in Q1

Statistics Korea reported that South Korean manufacturers faced a third consecutive quarterly decline in domestic supply in Q1 2024, with the manufacturing domestic supply index dropping to 102.5, reflecting a 2.4 per cent decrease year-on-year.

Data released by Statistics Korea on Thursday revealed that South Korean manufacturers experienced a decline in domestic supply for the third consecutive quarter in the first quarter of 2024. The manufacturing domestic supply index, a crucial indicator of domestic demand trends, dropped to 102.5, marking a 2.4 per cent decrease from the previous year.

The decline in the quarterly figure has been consistent since the third quarter of the previous year, indicating sustained challenges for the manufacturing sector. Both locally produced goods and imports contributed to the decline in the index.

Locally produced goods saw a slight decrease of 0.6 per cent, while imports for domestic use experienced a more substantial decline of 6.7 per cent. Among specific industries, the automotive sector witnessed a 5.9 per cent drop in domestic supply, while semiconductors and electronic items experienced a significant tumble of 8.9 per cent. Chemical products also faced a decline of 6.4 per cent in domestic supply.

However, there were some areas of growth noted, particularly in the index for container ships and other transportation equipment, which saw a notable increase of 26.5 per cent year-on-year.

The weak domestic demand was reflected in the decline of 3.2 per cent year-on-year for consumer goods. On the other hand, the supply of capital goods saw a marginal increase of 0.1 per cent.

Overall, the South Korean economy has been on a path of modest recovery, driven primarily by rising exports. However, challenges persist due to weak domestic demand exacerbated by high interest rates and inflation. Despite the government’s projection of a 2.2 per cent growth for 2024, the economy remains vulnerable to ongoing uncertainties both domestically and globally.