Seoul: The global economy is facing risks from the conflict in Ukraine to rising interest rates, and South Korea's factory output declined for the second consecutive month in August.
Following a 1.3 percent decline in July, industrial output in the fourth-largest economy in Asia shrank by a worse-than-anticipated 1.8 percent on a seasonally adjusted monthly basis, according to government data released on Friday.Factory output increased by 1.0 percent in comparison to the same month a year earlier, which is the slowest rate since September 2021.
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However, the services sector's output increased by 1.5% on a monthly basis, and retail sales increased by 4.3%, the fastest increase since May 2020.The figures come after a slew of information showing that factory output is slowing in other significant Asian economies, such as China, Japan, and Taiwan.
According to a private sector survey released on Friday, China's factory activity slowed down even more in September after already declining the previous month as Beijing's strict "zero COVID" policies hurt sales and production. One of the largest producers of ships, chips, and automobiles worldwide, South Korea is regarded as a gauge of the state of world trade because of the size of its companies' operations.
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News agency survey of economists predicts that South Korea's exports, which make up nearly 40% of its GDP, will grow at its slowest rate in nearly two years in September. This prediction comes ahead of the release of official figures next month. According to Min Joo Kang, senior economist at ING for South Korea and Japan, "this is definitely worrying for the national and global economy."
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"Korea's main export goods, such as semiconductors and petrochemicals, were the driving force behind the weaker than anticipated industrial production. This would undoubtedly have a negative effect on Korea's GDP and indicates a decline in global demand. The bottom hasn't hit yet because it usually takes semiconductors 4-5 quarters to exit their downward cycle.