Poor domestic consumption slows economy

The three major indicators of industrial activity, namely those on production, shipments and plant operation rates at manufacturing firms fell for the fourth straight month in December of last year, an indication that the economy is still shrinking.

Unveiling a report on trends in industrial activities in December 2000, the National Statistical Office (NSO) said Tuesday that production, shipments and plant operation rates at manufacturing firms were on a downward slope since September last year. As a result, stockpiles at factories continued to increase for the sixth consecutive month since last July. Owing to sluggish domestic consumption and dampened investment sentiment, actual economic indicators worsened sharply.

The NSO said that production in the manufacturing sector in December last year increased by just 4.7% from the same month last year and decreased by 2.7% from November. Shipments also dropped by 2.3% from the previous month, the fourth straight month of decline.

The manufacturing plant operation rate slipped by 1.5% from the previous month, falling 7.1% from the same month in 1999.

Affected by the economic slowdown, facility investment activities also dwindled. Owing to poor investment in communication instruments and transportation equipment, the facility investment volume decreased by 2.1 % from December 1999, showing a downward trend for the second month in a row.

Production in the textile and automobile sectors, which registered a decline for the fourth consecutive month since September last year, saw negative growth rates of 12.7% and 4.3%, respectively.

Choi Young-Hae moneychoi@donga.com