South Korea’s industrial output declined for a second consecutive month in May, as weakening global demand and the impact of US trade restrictions continued to weigh on key sectors of the economy, hampering Seoul’s economic growth significantly.
According to data released by Statistics Korea on Monday, the seasonally adjusted industrial production index — excluding agriculture, livestock, and fisheries — fell by 1.1% in May from the previous month, following a 0.8% drop in April.
Manufacturing, a core component of the economy, contracted sharply by 3% in May, compared to a 0.6% decline the month before.
Officials linked the downturn to a fall in overseas demand for Korean-made goods, partly due to protectionist policies and tariffs imposed by the United States.
The average manufacturing capacity utilisation rate also fell to 71.7%, down 2.1 percentage points from April.
The construction sector also showed weakness, with output dropping 3.9% in May after a 1.4% slide in April.
The service industry, which had remained relatively stable, slipped by 0.1%. In contrast, public administration output rose by 0.8%, driven by increased government activity.
Consumer spending remained stagnant. The retail sales index, a key indicator of private consumption, was unchanged in May, following a 0.9% decline in April. Meanwhile, facility investment — which reflects business spending on equipment — dropped 4.7%, extending its downward trend for the third straight month.
Leading indicators, used to gauge future economic momentum, edged down 0.1 points to 100.9 in May, while the index of coincident indicators, which reflects current economic conditions, decreased by 0.4 points to 98.5.
The sustained downturn in industrial activity highlights the strong challenges faced by South Korea, whose economy is heavily export-dependent. With a slowing global economy, tighter trade conditions, and cautious consumer spending at home, South Korea’s growth outlook remains under significant pressure.
As of late June, the Korean won traded around 1,390 to the US dollar, increasing import costs and adding to inflation concerns.
