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Three economic indicators collectively fall in July

Posted September. 01, 2023 08:35,   

Updated September. 01, 2023 08:35


The three major indicators for the real economy - production, consumption, and investment – have all tumbled in July. Heavy rainfall and heatwaves severely impacted production and domestic consumption, and China's economic slowdown led to increased inventory levels among domestic companies, further dragging down the indices. Concerns have arisen that if exports and domestic consumption fail to recover in the second half, the trajectory economic recovery, initially predicted by the government to experience a first-half slump followed by a second-half rebound, won’t likely be materialized.

According to the July industrial activity trends announced by Statistics Korea on Thursday, the composite index of all industries this month stood at 109.8, falling by 0.7% from the previous month. Facility investment decreased by 8.9% from the previous month and retail sales by 3.2%.

It is the first time that the three indicators of production, consumption, and investment have fallen simultaneously since January of this year. Especially, facility investment recorded the largest decline in more than 11 years and four months since March 2012 (-12.6%), and consumption also experienced the most significant decrease in three years since July 2020 (-4.6%). "The rise in companies' inventory levels and the decrease in shipping are due to China's sluggish economy," said Kim Bo-gyeong, an official from the economic trends analysis division at Statistics Korea. "The statistics in July are largely influenced by temporary factors such as the rainfall that was much heavier compared to previous years."

The government introduced measures to boost domestic consumption during the Chuseok holiday season, including designating October 2 as a provisional bank holiday. As a result, a six-day "golden holiday" period was created, including the four-day Chuseok holiday from September 28 to October 1 and October 3, the National Foundation Day. We will distribute 600,000 accommodation discount coupons and exempt highway tolls during the holiday period,” said President Yoon Suk Yeol, presiding over an emergency economic livelihood meeting on the same day.

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