Ministry of Economy and Finance

Current Economic Situation, January 2021

Manufacturing and Services Improve,

Retail Sales Slowing

Manufacturing and services for November improved from the previous month, as well as facilities investment and construction investment. Retail sales slowed.

Industrial production rose 0.7 percent from the previous month in November. Mining and manufacturing improved (up 0.3%, m-o-m and up 0.5%, y-o-y), as well as services output (up 0.7%, m-o-m and down 1.4%, y-o-y). Industrial production fell 0.6 percent year on year.

Retail sales declined in November (down 0.9%, m-o-m and down 1.5%, y-o-y). Facilities investment rose (up 3.6%, m-o-m and up 5.7%, y-o-y), as well as completed construction works (up 2.1%, m-o-m and down 0.8%, y-o-y).

Exports went up 12.6 percent year-on-year in December backed by the strong IT sector and more days worked (1 day). Average daily exports, an indicator calculated according to the days worked, improved 7.9 percent from a year ago (US $1.99 billion (December 2019) → US $2.14 billion (December 2020)).

The consumer sentiment index (CSI) fell 8.1 points in December to 89.8. The business sentiment index (BSI) for the manufacturing sector declined 3 points to 82, and the BSI outlook for January 2021 went down 4 points to 77.

The cyclical indicator of the coincident composite index for November increased 0.5 points to 98.8, and the cyclical indicator of the leading composite index rose 0.7 points to 102.5

The economy lost 628,000 jobs year-on-year in December, and the unemployment rate rose 0.7 percentage points from a year ago to 4.1 percent.

Consumer prices for December rose 0.5 percent from a year ago, and core inflation went up 0.9 percent.

KOSPI soared in December with vaccine rollout in major economies, as well as on expectations of a new COVID-19 stimulus in the US. The won strengthened and Korea treasury yields went up for mid- to long-term debt.

Housing prices continued to increase in December (up 0.54% → up 0.90%, m-o-m), as well as Jeonse (lump-sum deposits with no monthly payments) prices (up 0.66% → up 0.97%, m-o-m).

Despite strong exports, domestic consumption and employment have not yet rebounded due to stricter social distancing amid a third wave of infection.

There are both worries and expectations with regard to the slowing real economy as lockdowns get stricter in major economies amid a resurgent virus, and at the same time vaccinations have begun and stronger economy-boosting policies are poised to be carried out globally.

The government will work on the fast delivery of the third round of emergency COVID-19 reliefs, and will renew its efforts to ensure job security and basic living standards.

Key Statistics

Employment

	2019						2020
	Annual	Q1	Q2	Q3	Q4	Dec	Annual	Q1	Q2	Q3	Q4	Oct	Nov	Dec
Number of employed (million)	27.12	26.46	27.26	27.38	27.39	27.15	26.90	26.75	26.85	27.07	26.95	27.09	27.24	26.53
Employment rate (%)	60.9	59.6	61.3	61.5	61.4	60.8	60.1	59.9	60.0	60.4	60.0	60.4	60.7	59.1
(Seasonally adjusted)	60.9	60.8	60.8	60.9	61.2	61.3	60.1	61.1	59.5	59.9	59.9	59.8	60.2	59.6

Consumer Price Index

(%)

	2019	2020
	Dec	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
y-o-y	0.7	1.5	1.1	1.0	0.1	-0.3	0.0	0.3	0.7	1.0	0.1	0.6	0.5
m-o-m	0.2	0.6	0.0	-0.2	-0.6	-0.2	0.2	0.0	0.6	0.7	-0.6	-0.1	0.2

Mining and Manufacturing