Export Shipment Recorded the Lowest in 11 Years

As industrial production and shipment have continually reduced for three months, economy is freezing.

Especially, it was revealed that the export shipment and the equipment investment decreased by the largest range in 11 years and 9 months and 2 years and 9 months, respectively. As `the trend of industrial activities in August` announced by the National Statistical Office (NSO) today includes such a report, it amplifies anxiety on the delay of economic recovery.

- Simultaneous fall off of production and shipment: Industrial production in last month fell by 4.7 percent compared with last August. It has declined for three months since June. With 5.8 percent decline compared with last August, shipment also recorded minus growth for three months. Especially, export shipment recorded the lowest in 11 years and 9 months since November 1989 (minus 15.4 percent), with 14.6 percent decline compared with the same month last year due to the export reduction of semiconductors and personal computers. Semiconductors and cars fell by 11.6 percent and 1.4 percent compared with the same period of last year, respectively. Although the decreases slowed down compared with July (minus 15 percent in semiconductors and minus 12.6 percent in cars), personal computer fell by 40.8 percent by widening the reduction from the previous month (minus 29.4 percent). Average operation rate of the manufacturing industry, which hit the lowest in July recording 71 percent in two years and five months, was a little bit more improved than the previous month, recording 73.4 percent.

- No indication of recovery in the equipment investment: The equipment investment, which is a leading indicator of the possibility of economy recovery hereafter, remained the lowest level, falling by 19 percent compared with the same period of last year, in two years and nine months since November 1998 (minus 27.3 percent). Major reason for this was lack of investment on personal computer, office machine, special industrial machine, and cable communication equipment.

Despite the government`s various pump-priming policies on construction, construction orders, which showed 11.9 percent of a `transient` increase in July, decreased by 18.8 percent since the orders on the private sector, such as housing, decreased by 27.7 percent. In the public sector, construction orders increased by 16.7 percent with the increasing orders on harbor, airport, and railroad.

- Is it possible to recover the economy through the domestic demand? The wholesale business and retail business increased by 3.5 percent and 2.9 percent, respectively, compared with the same month of last year, and the sales of cars increased by 5.2 percent. Therefore, the wholesale and retail sale increased by 3.5 percent in August, up 0.6 percent from 2.9 percent of the previous month. Shipment of the domestic consumption goods increased by 10.4 percent backed up by the increase of cellular phones, showing a ray of hope for the economic recovery through the activation of domestic demand.

A leading index, which indicates the economic situation hereafter, recorded 0.3 percent, up 0.7 percent from the same month of the previous year, increased for four months since May, reflecting high expectation on the economic recovery.

Park Joong-Hyun sanjuck@donga.com