SEOUL, Nov. 7 (Yonhap) — South Korea’s economic stagnation is beginning to lessen due to the resurgence of the semiconductor industry in spite of persistent external doubts, according to a report from a state-run think tank on Tuesday.
“The economic slowdown is starting to ease, spurred by the semiconductor industry, while external uncertainties remain, as indicated by high interest rates and Middle East instability,” the Korea Development Institute (KDI) said in a monthly economic assessment.
“Services production is sustaining a steady growth, and the decline in manufacturing production and exports is beginning to diminish, thanks to the semiconductor industry,” the report showed.
Containers for exports and imports are transported at a pier in the southern port city of Busan on Oct. 17, 2023. (Yonhap)
In September, the nation’s industrial output increased 1.1 percent month-on-month and 2.8 percent compared to the same period a year ago.
The increase was due to a 12.9 percent increase in chip production from the previous month and a 23.7 percent year-on-year increase, the highest since June 2022, according to government data.
As a result, the country’s overall manufacturing sector output grew 1.9 percent month-on-month.
The service sector also reported a 0.4 percent month-on-month increase in output, due to the robust accommodation and hospitality sector.
Last month, exports increased 5.1 percent year-on-year to $55 billion, the first time in 13 months, thanks to the improvement in the chip sector.
However, the think tank noted that rising interest rates in the U.S. to combat inflation and escalating tensions in the Middle East due to the Israel-Hamas war are major economic obstacles.
“The rise in U.S. market interest rates is likely to affect domestic market rates, potentially hindering domestic demand,” the report stated. “Escalating geopolitical tensions are driving up the volatility of global oil prices.”
graceoh@yna.co.kr
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