South Korea’s April Output, Investment, Consumption Post Triple Decline as Middle East War Bites

South Korea’s output, consumption and investment all fell in April, marking the first simultaneous decline in the three indicators in eight months, since August last year.

Statistics Korea said on May 29 that the seasonally adjusted all-industry production index, which uses 2020 as a base of 100, fell 0.6% from a month earlier to 117.8 in April. The measure excludes agriculture, forestry and fisheries.

All-industry output rose 2.1% in February and 0.4% in March before returning to decline in April, the first drop in three months. The April data suggest the effects of the Middle East war that began in late February have started to show up in real-economy indicators.

Mining and manufacturing output fell 0.7% from the previous month. Petroleum refining output tumbled 19.4%, the steepest drop since a 22.1% decline in May 1988. The fall appears to reflect tighter crude oil supply conditions linked to the Middle East war.

Auto production dropped 10.0%, the biggest decline in seven months since a 15.3% fall in September last year.

Semiconductor production rose 3.1%, extending gains on the back of the industry’s supercycle.

Domestic-demand indicators were also weak. The retail sales index, a gauge of goods consumption, fell 3.6% from a month earlier, the sharpest drop in two years and two months since a 3.7% decline in February 2024.

Service output fell 1.0%. The index is viewed as a gauge of consumption trends in services.

Investment indicators also declined across the board. Facility investment fell 3.6% from the previous month, while construction completed, which reflects domestic building work performed by construction firms, slipped 1.4%.

The coincident composite index cyclical component, which shows current economic conditions, rose 0.2 point from a month earlier. The leading composite index cyclical component, which signals the future path of the economy, gained 0.6 point.

Han Gyeong-woo, Hankyung.com reporter case@hankyung.com