Economic Bulletin, October 2024

Current Economic Trends

Overview

In July, services production and facilities investment increased, while industrial production, retail sales, and construction investment decreased. In August, job growth increased and consumer prices growth slowed down.

In July, total production fell (down 0.4% m-o-m and up 2.7% y-o-y), as industrial production (down 3.6% m-o-m and up 5.5% y-o-y) and construction production (down 1.7% m-o-m and down 5.3% y-o-y) declined while services production increased (up 0.7% m-o-m and up 2.2% y-o-y).

In July, facilities investment increased (up 10.1% m-o-m and up 18.5% y-o-y), while retail sales (down 1.9% m-o-m and down 2.1% y-o-y) and construction investment (down 1.7% m-o-m and down 5.3% y-o-y) decreased.

In August, exports grew by 11.4 percent from a year ago, driven by increased exports of the IT sector including semiconductors. The daily average of exports increased by 13.7 percent from a year ago.

In August, the Consumer Sentiment Index (CSI) dropped by 2.8 points to 100.8 month-on-month. The Composite Business Sentiment Index (CBSI) fell by 2.6 points to 92.5 in August, and the CBSI outlook for September also decreased by 0.7 points to 92.7 month-on-month.

In July, the cyclical indicator of the coincident composite index decreased by 0.6 points from the previous month, and the cyclical indicator of the leading composite index remained unchanged.

In August, the economy added 123,000 jobs compared to the previous year and the unemployment rate fell by 0.1 percentage points from a year ago to 1.9 percent.

In August, the Consumer Price Index (CPI) grew by 2.0 percent from the previous year. The index excluding food and energy prices increased by 2.1 percent, and the index excluding agricultural and petroleum products increased by 1.9 percent. The CPI for basic necessities rose by 2.1 percent.

In August, Korean equity prices fell driven by concerns over a potential slowdown in profitability of big tech and AI-related companies. The Korean Treasury Bond yields fell driven by growing expectations of an interest rate cut by the U.S. Fed, and the Korean Won strengthened against the dollar.

In August, housing prices and Jeonse (lump-sum deposits with no monthly payments) prices continued to rise (up 0.24% m-o-m and up 0.22% m-o-m, respectively).

As prices have continued to moderate and stabilize recently, the Korean economy has been able to show a sustained recovery, mainly driven by robust performances in the export and manufacturing sectors. Though domestic demand has shown a moderate recovery, particularly in facility investment and services, the pace of the recovery has varied across sectors.

The global economy has generally been on a recovery trend, mainly driven by a rebound in trade and a shift in monetary policy in major economies. However, the pace of recovery differs across regions.  In addition, geopolitical risks such as the ongoing Russia-Ukraine war and the potential for further escalation in the Middle East conflict, and concerns about an economic slowdown in major economies, are contributing to increased uncertainty.

Against this background, the Korean government will seek to implement key policy tasks in a timely manner, including ensuring price stability, providing customized support for small business owners, and shoring up domestic demand. These efforts will also be pursued along with policies outlined in the ‘Dynamic Economy Roadmap’ which seeks to improve the quality of life of Koreans and enhance the sustainability of the Korean economy.

Policy Issue 

- 2025 Budget Proposal

Economic News Briefing

- Korea’s GDP in Q2 2024

- 2024 G20 Conference

- OECD’s Economic Outlook on Korea

- Korea’s External debt in Q2 2024

- Korean OFDI in Q2 2024

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