In June 2023, Korea's industrial activities grew for two consecutive months, with all industrial production, retail sales, and equipment investment expenditures increasing. Manufacturing production turned positive for the first time in five quarters.

In June, production of mining and manufacturing industries fell by 1.0% from the previous month, as the semiconductor industry grew by 3.6% but automotive and petroleum product industries declined by 12.9% and 14.6%, respectively. Service industry production rose by 0.5% as real estate fell by 2.2%, but arts and leisure and finance and insurance industries grew 5.7% and 3.5%, respectively. Retail sales rose by 1.0% from the previous month as sales of semi-durable and non-durable goods fell by 0.1% and 0.3%, respectively, but durable good sales increased by 4.7%. Equipment investment grew by 0.2% as investment in machinery such as video, audio, and communication equipment fell by 0.2%, but investment in transportation equipment such as automobiles grew by 1.6%. Construction investment fell by 2.5% from the previous months due to an 8.0% decrease in civil engineering works. The cyclical change in the coincident index started declining as the retail sales index and imports fell, while the cyclical change in the leading index rose for two straight months, supported by improvements in sub-category indexes, including the inventory cycle index, economic sentiment index, and KOSPI. As difficult real economic conditions persist at home and abroad, downside risks have partially eased recently, but uncertainties remain. On the production side, positive factors include recovering export volumes, falling semiconductor inventories, and launches of major IT new products in Q3. At the same time, persisting global economic uncertainties and temporary disruptions in production due to summer weather conditions burden the economy. In the case of consumption and investment, there are positive factors such as a favorable employment situation, a recovery in household and business sentiment, and a slowdown in inflation. However, the short-term investment adjustment due to semiconductor production cuts, uncertainties in the construction sector, and household debt burden pose risks.

‘'Imported car sales stopped declining, and domestic sales posted a double-digit growth'’
→In May, production increased by 18.5% year-on-year, driven by solid global demand and expanding domestic market. Domestic consumption in June grew by 11.6% from a year ago as sales increased before the end of the individual consumption tax cut. June exports grew by 41.3% year-on-year, led by stronger exports of eco-friendly vehicles. As Korea exported more eco-friendly vehicles, such as EVs with high export unit prices, and sold more vehicles in the EU region based on improved consumer awareness, exports of finished cars increased by 58.3%.

‘Production index slowed, but exports turned positive’
→ Global ship orders in the first half of 2023 decreased by 34.3% year-on-year to 17.81 million CGT as high interest rates, trade wars and environmental regulations aggravated uncertainties in the shipping market, but the newbuilding price index continued to rise to 171.3. Despite a dramatic increase in imports of ship engines and ship parts in May, imports fell by 28.5% year-on-year due to the base effect of declining ship imports from China. Exports rose by 98.6% from a year ago in June, as a large number of container ships, LPG carriers, tankers, and high-end offshore plants were delivered.

‘Production continued declining as domestic consumption slowed, but exports grew faster’
→ Despite stronger exports, production in May fell by 6.8% year-on-year on the back of weaker domestic consumption. With domestic shipments falling faster, the decline in domestic consumption has accelerated as capital investment and domestic machinery orders recorded negative growth rates. Imports rose by 1.0% year-on-year to USD 2.836 billion in May. In June, exports rose by 8.1% from a year ago, led by strong exports to most regions except China.

‘Production decline widened on weak construction demands, but exports turned up환’
→ In May, steel production decreased by 2.6% year-on-year as sluggish construction industry weakened demands for bar steel. Imports in May fell by 17.6% from a year ago due to sluggish domestic consumption and falling import unit prices. Exports in June turned to growth, increasing by 3.1% year-on-year based on stronger exports to the US and the Middle East.

‘Exports declined for four straight months due to declining unit prices and base effect’
→ While production and export volumes increased in May, domestic consumption slowed and resulted in an increase in inventories. By region, exports to major customers such as the US and ASEAN countries plunged year-on-year, affected by falling unit prices.

‘June exports fell by 12.0%, but demand is expected to recover in the second half of 2023세’
→ In May, production decreased by 18.3% year-on-year due to weaker exports, and shipments fell by 5.9% as well. May imports declined by 28.1% from a year ago due to nosediving imports of smartphones and parts. The global smartphone market is expected to weaken in 2023, but a gradual recovery is expected from 2024 as demand recovers from the second half of 2023.

‘Prospects of the semiconductor industry remain uncertain’
→ In May, semiconductor production continued to weaken, with production falling by 16.7% year-on-year and shipments also declining by 20.5%, but the rate of production decline is narrowing. Due to the base effect of record-high exports and production in the first half of last year, this year’s production continues to decline year-on-year, but the rate of decline is narrowing. Compared to the previous quarter, production appears to be stabilizing slowly by posting increases since March. Exports fell by 28.0% from a year ago to USD 8.896 billion in June and decreased for eleven consecutive months after ending a long-term rally.

‘Exports declined for thirteen straight months due to sluggish exports to China’
→ In May, production continued to weaken due to sluggish demands for electronic devices. Sluggish exports to China caused panel exports to fall by 11.1% in June to decrease for thirteen straight months.