The Economic Information and Education Center (EIEC) of KDI published the monthly periodical “Republic of Korea Economic Bulletin, May 2024” to promote a greater understanding of the Korean economy by providing readers with information on the latest economic trends and policy issues as well as relevant news and current events. 

The May publication provides updated information related to the overall Korea’s economy including extension of fuel tax cuts, Korea’s GDP in Q1 2024, IMF’s economic outlook on Korea, G20 meeting outcomes, implementation of IPEF, and inbound FDI in Q1 2024. 

Main content is as follows: 

[Economic Bulletin, May 2024]

[Current Economic Trends] 

1. Economic activity

2. Financial markets

3. Public finance

[Current Economic Trends] 

1. Extension of Fuel Tax Cuts

[Economic News Briefing]

1. Korean economy grew by 1.3% in Q1 2024 

2. IMF forecasts Korean economy to grow by 2.3% in 2024

3. Outcomes from G20 Finance ministers and Central bank governors meeting

4. Indo-Pacific Economic Framework for Prosperity (IPEF) Supply Chain Agreement to take effect in Korea

5. Korea achieves inbound FDI of US $7.1 billion in Q1 2024

Overview

In February, industrial production, services production, and facilities investment rose while retail sales and construction dropped. In March, job growth improved while consumer prices growth remained steady.

In February, total production grew (up 1.3% month-on-month and up 2.0% y-o-y), driven by increases in industrial production (up 3.1% m-o-m and up 4.8% y-o-y) and services production (up 0.7% m-o-m and up 1.2% y-o-y) despite a decline in construction production (down 1.9% m-o-m and up 0.5% y-o-y).

In February, retail sales (down 3.1% m-o-m and up 0.9% y-o-y) and construction investment (down 1.9 % m-o-m and up 0.5% y-o-y) decreased while facility investment increased (up 10.3% m-o-m and down 0.3% y-o-y).

In March, exports increased by 3.1 percent from a year ago, driven by increased exports of semiconductors and vessels. The daily average of exports increased by 9.9 percent from a year ago.

In March, the Consumer Sentiment Index (CSI) fell by 1.2 points from the previous month to 100.7. The Business Survey Index (BSI) increased by 1 point to 69 and the BSI outlook for April decreased by 1 point to 71.

In February, the cyclical indicator of the coincident composite index increased by 0.2 points from the previous month, and the cyclical indicator of the leading composite index increased by 0.1 point.

In March, the economy added 173,000 jobs compared to the previous year and the unemployment rate rose by 0.1 percentage point from a year ago to 3.0 percent.

In March, the Consumer Price Index (CPI) rose at a steady pace, increasing by 3.1 percent from the previous year. The index excluding food and energy prices increased by 2.4 percent, and the index excluding agricultural and petroleum products increased by 2.4 percent. The CPI for basic necessities rose by 3.8 percent.

In March, Korean Treasury Bond yields declined amid the ongoing expectations of the interest rate cuts by the US Fed. In addition, stock prices rose on the back of a rebound in semiconductors. The Korean Won weakened against the dollar due to the US economy’s strong performance.

In March, housing prices continued to decline (down 0.12% m-o-m), while Jeonse (lump-sum deposits with no monthly payments) prices rose (up 0.05% m-o-m)

Recently, Korean economic figures show that the moderation in inflation has slowed down, while the economy’s recovery has continued to gain traction mainly driven by increases in manufacturing production and exports, as well as continuing strong job growth. However, the pace of recovery differs across economic sectors amid weak consumption in commodities and sluggish construction sector.

Internationally, the prospects of a soft landing for the global economy remain, driven by expectations of growth in the global manufacturing industry including the IT sector. At the same time, uncertainties linger due to geopolitical risks such as the Russia-Ukraine war and escalating tensions in the Middle East, which have contributed to the volatility in commodity prices. 

Along with concerted efforts to achieve price stability, the government will seek to promote a balanced economic recovery by reviving domestic demand and ensuring that the recovery benefits the everyday lives of Koreans. The government will also seek to carefully manage potential risks and enhance the Korean economy’s dynamism by promoting innovation, fairness, and social mobility. 

If you have any inquiries, please feel free to contact us.

(KDI Economic Bulletin, +82-44-550-4170, sjung@kdi.re.kr)