South Korean Factory Production Drops by Record 18.6%
South Korea’s industrial production declined by the most on record in December, the latest sign the nation may join Japan, Europe and the U.S. in a recession.
Output tumbled 18.6 percent from a year earlier after a 14 percent plunge in November that was the second-biggest drop since the series began in 1970, the statistics office said today in Gwacheon. That was more than median estimate of a 16.8 percent decrease in a Bloomberg News survey of 12 economists.
The report, coupled with data that showed Japan’s production fell an unprecedented 9.6 percent last month, signal a deepening slump in Asia’s export-dependent nations. South Korea’s economy contracted last quarter by the most since 1998 as exporters Hyundai Motor Co., Hynix Semiconductor Inc. and LG Display Co. cut output to cope with sagging demand.
“Output may fall for quite some time because of the gloomy global outlook,” said Lim Ji Won, an economist at JPMorgan Chase & Co. in Seoul. “The question is how much further the recession will deepen.”
The economy shrank 5.6 percent in the fourth quarter from the previous three months as the deepening global slump sapped demand at home and abroad, the government said last week.
Industrial production declined 9.6 percent from November, today’s report showed.
Samsung Electronics Co., the world’s largest maker of memory chips, liquid-crystal displays and televisions, last week reported its first quarterly loss as the global recession drove down prices instant payday loan.
Stocks Decline
Korea’s won fell 0.3 percent to 1,383.35 per dollar at 2:30 p.m. in Seoul. The Kospi stock index lost 0.5 percent to 1,160.76, led by shares in exporters.
Confidence among South Korean manufacturers remained close to a record low, a central bank survey showed this week. Exports, which make up about half of the economy, probably plunged by a record 29.1 percent in January, economists forecast ahead of a Feb. 2 report.
President Lee Myung Bak has allocated 51 trillion won ($36.9 billion) in tax cuts and stimulus spending and the central bank slashed the key interest rate to a record low of 2.5 percent this month.
The global economy will slow close to a halt this year as more than $2 trillion of bad assets from the U.S. help sink economies from Russia to the U.K., the International Monetary Fund said this week.
South Korean sales of consumer goods fell 1.8 percent in December from November and dropped 7 percent from a year earlier, today’s report showed. Construction orders plunged 33.5 percent from a year earlier and investment in factories decreased 24.1 percent.
A leading index of economic indicators, which forecasts business activity, fell 3.2 percent last month from a year earlier after declining 2.6 percent in November.