Thu, June 27, 2024 at 23:15

• 

  Kang-hoon

  • Hello Annie.

  • Today, I want to discuss the recent 'triple-dip decline' in industrial activity in South Korea.

  • This is the first time in 10 months that production, consumption, and investment have all fallen together.

  • 
• Annie

  • Oh, that sounds concerning.😟 What exactly happened?

  
• 

  Kang-hoon

  • According to the 'May Industrial Activity Trends' released by Statistics Korea on May 28, the index of all industrial production fell by 0.7% from the previous month.

  • This index excludes agriculture, forestry, and fishing.

• Annie

  • I see.

  • So, it’s not just one sector that’s affected?

  
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• 

  Kang-hoon

  • Correct.

  • By sector, mining led the decline with a 1.2% drop.

  • Manufacturing production, which is a significant part of the mining industry, fell by 1.1%.

  • Services output also decreased by 0.5%.

• Annie

  • What about consumer spending?

  • Is it also declining?

  
• 

  Kang-hoon

  • Yes, retail sales, which measure goods consumption, fell by 0.2%.

  • This marks the second consecutive monthly decline.

  • The last time we saw such a trend was in March-April of last year.

• Annie

  • Wow, that's quite a downturn.

  • How about capital investment?

  
• 

  Kang-hoon

  • Capital investment fell by 4.1%, marking the third month of decline.

  • This is significant because it indicates reduced business spending on long-term assets.

• Annie

  • That's alarming.

  • Is there any sector that remained stable?

  
• 

  Kang-hoon

  • Construction starts remained unchanged but still fell by 4.6%.

  • This is another indicator of the overall slowdown in economic activity.

• Annie

  • What do the leading and coincident indices say about the future?

  
• 

  Kang-hoon

  • The coincident index cyclical change reading for current conditions was 98.8, down 0.6 points from the previous month.

  • The leading index, which forecasts future conditions, was 100.5, down 0.1 point.

• Annie

  • So, the future doesn’t look too bright either.

  • What’s the general sentiment among experts?

  
• 

  Kang-hoon

  • Gong Mi-sook, a statistician at Statistics Korea, mentioned that while production was negative due to the base effect, the overall trend is decent.

  • However, spending is not keeping up with this trend.

• Annie

  • Hmm, that's a bit contradictory.🤔 What does this mean for the market?

  
• 

  Kang-hoon

  • In the short term, this is definitely bad news.

  • 

  • The simultaneous decline in production, consumption, and investment indicates a broad-based economic slowdown.

  • This could negatively impact market sentiment and investor confidence.

• Annie

  • So, should I be cautious with my investments?

  
• 

  Kang-hoon

  • Yes, I would advise caution.

  • The current indicators suggest that the economy is facing challenges, and it might be wise to hold off on making significant investments until we see signs of recovery.

• Annie

  • Thank you for the detailed explanation, Kang-hoon.

  • This helps a lot.😊

  
• 

  Kang-hoon

  • You're welcome, Annie.

  • Always happy to help.

  • Stay informed and make wise decisions.

  • Upon comprehensive consideration, this news is perceived as a 😱Bearish.