Clouds continue to hang low over South Korea's economy, but clearer skies are becoming visible. Photo: Andrew Salmon

South Korea’s May industrial output plunged 5.6% year-on-year and fell 1.2% month-on-month as Covid-19 continued to infect the national economy.

However, even though the annual comparison was grim, the month-month figure showed that the rate of decline in production was slowing, following April’s steeper 2.8% month-on-month drop.

The economic data for May, produced by Statistics Korea and reported by Yonhap news agency,  also showed a 4.6% rise in retail sales over the previous month.

Among key items, production of semiconductors increased 10.8% on-month as demand for data storage during the crisis, and related lockdowns, boosted chip demand. But auto output fell 21.4% due to supply-chain disruptions.

South Korea’s plunge in exports also appears to be easing. Statistics Korea found that exports were down 7.5% year-on-year in the first 20 days of June.

That is hardly good news, but looks set to be an improvement over the situation in May, when South Korea’s outbound shipments spiraled down a whopping 23.7%, year-on-year.

South Korea did not enact any lockdowns, even at the height of the pandemic crisis in February and March, but eased social distancing guidelines in May. As a result, the South Korean economy has had more of a cushion than many in Europe, and in May a cautiously confident populace apparently indulged in “comfort spending,” a government official told Asia Times.

The South Korean economy contracted 1.3% in the first quarter, its worst quarterly performance since the global financial crisis of 2008.

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