Production in May Increased by 7.7%

Although the US economy becomes dull, the Korean economy continues to rise with the export industry in good condition. According to the announcement made by National Statistical Office and the Bank of Korea on the 28th, production, shipment and facility investment of May recorded a high increase rate compared with the same month last year, and international payments and receipts, which was in the red last April, also turned in the black.

According to the Trend of Industrial Activities in May reported by National Statistical Office, production and shipment respectively increased by 7.7% and 9.7% over May last year. Facility investment also increased by 5.1%.

Production showed the biggest increase rate since last January (10%) thanks to the increased production of semiconductors and automobiles that respectively increased by 20.1% and 17.3%. Facility investment also recorded the biggest increase rate since list January (5.3%).

In succession to the previous month in which export shipment and domestic shipment respectively recorded 13.4% and 8.2%, export shipment (11.9%) in May also showed higher increase rate than domestic counterpart (8.2%). Accordingly, the improvement of business conditions, which had been indebted to domestic consumption, seems to have started to be led by export.

Inventory ratio decreased to 67.4% from 69.4% of the previous month, showing the lowest ratio since 1980 in which year the inventory ratio survey was performed for the first time. Although average operation ratio decreased to 76.5% from 77.7% of the previous year, it still maintained a high level.

“All the object-economy indexes are on the steady increase, but in the case of June, the local election and the World Cup may have a negative influence on production and shipment due to the reduction of working days,” said Minkyung Kim, Director of Economic Statistics Department of National Statistical Office.

In the meantime, according to the Trend of International Payments in May reported by the Bank of Korea, international payments and receipts of the last month was in the black (USD 1.49 billion) owing to the favorable performance of the export industry and reduced payment of foreign interest and dividends.

This monthly black-ink scale is the biggest one during the last twelve months since May 2001. The international payments and receipts up to May this year summing up to USD 2.747 billion has exceeded half of the Government’s annual expectation (USD 5.0 billion).

Sang-Chul Kim Joong-Hyun Park sckim007@donga.com sanjuck@donga.com