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November uptick in data suggests recovery starting

Doom and gloom lift a bit as strong output statistics are reported
Dec 31,2019
The economy performed well toward the end of 2019, with data showing a healthy uptick, though it is still not clear whether GDP growth will hit 2 percent this year.

Output in November rose 0.4 percent compared to the previous month, the first such rise in three months, and rose 1.2 percent on year, compared with a 0.2 percent drop in October, according to a Statistics Korea release Monday.

Mining and manufacturing output improved last month, only dropping half a percent compared to the previous month. In October, it fell 1.6 percent.

Compared to the previous year, mining and manufacturing output retreated 0.3 percent, an improvement from the 2.1 percent drop recorded in October.

Statistics Korea said that the improvement in the semiconductor industry, led by demand for memory chips, helped in driving the sharp rise in manufacturing. When compared to the previous month, semiconductor output grew 9.3 percent, while year-on-year it surged 30.9 percent.

The overall performance could have been much better if not for the automobile category, where output fell 7.5 percent month-on-month and 11.2 percent year-on-year.

The service output grew at a faster pace. When compared to the previous month, it was up 1.4 percent, up from the half percent growth October. When compared to the previous year, it was up 2.5 percent, faster than October’s 0.8 percent.

Services were led by the financial industry, as borrowing grew sharply. Financial and insurance output was up 2.1 percent month-on-month and 4.8 percent year-on-year.

Consumer spending last month when compared to the previous month expanded 3 percent, a turnaround from October’s 0.4 percent decline.

Year-on-year spending was up 3.7 percent, stronger than October’s 2 percent.

The government said the Korea Sales Festa, the monthlong discount event, helped drive spending growth.

Change was pronounced in investment statistics. When compared to the previous month, investment grew 1.1 percent, a turnaround from the 0.7 percent drop in October. In November, investment was unchanged from a year ago.

Finance Minister Hong Nam-ki expressed his confidence in the economy based on the latest report.

“All three major economic indicators - production, consumption and facility investments - grew,” Hong said on Monday. “And the composite index has grown for three consecutive months, which allows us to expect momentum for an economic rebound.”

He said the government currently estimates that the fall of exports will ease this month.

He added that the global situation, including the first phase of trade agreements between the United States and China, will likely have a positive effect on the Korean economy as well.

“The International Monetary Fund and Fitch project, [as a result of the trade agreement], China’s economy would see [an additional increase] of 0.2 to 0.3 percentage points,” Hong said. “If China’s economy grows faster, I believe it will help our economy.”

Hong said the most difficult obstacle he has faced this year was the lukewarm response from the private sector.

“The government throughout the entire year has done all it can on vitalizing the private sector,” Hong said. “But it didn’t rise up to expectations.”

On comments that the government is too optimistic in setting next year’s growth target at 2.4 percent, the Finance Minister said it is his hope and goal.

“But this does not mean that we will only focus on short-term economic recovery,” Hong said.

“We will continue to work on establishing the foundation that will contribute in raising the potential economic growth in the mid- to long term.”

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]