Korean Manufacturers Witnessing More and More Idle Production Facilities
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It has been found that Korean manufacturing companies’ rate of operation reached a record low since the IMF bailout in 1998 due to the sluggish exports and domestic consumption.
Under the circumstances, the manufacturers’ investment is forecast to decline to cause an increase in unemployment and the slowdown of the national economy as a whole.
The Statistics Korea announced on February 11 that Korean manufacturers posted an average rate of operation of 74.2% last year, down 1.9 percentage points from a year ago, with their exports showing no signs of recovery amid the global economic recession. The percentage of 2015 was the lowest since 1998.
According to the Bank of Korea, Korea’s total exports decreased by no less than 10.5% year-on-year to US$548.93 billion last year. Besides, Korea’s exports to the emerging markets including China, which account for 60% of the total exports, showed a decline of 7.9% in 2015.
Sluggish domestic consumption is another reason for the low operating ratio of the manufacturing firms. According to the Statistics Korea’s report that was released on January 29, Korea’s retail sales index fell 1% from a month ago in November last year and 0.1% in the following month.
Questions & Answers
Q.What was the record low manufacturing operation rate reported, and when was it last at this level?
What was the record low manufacturing operation rate reported, and when was it last at this level?
Korean manufacturers' average rate of operation was 74.2% last year. This was the lowest percentage recorded since 1998, following the IMF bailout.
Q.Which specific economic factors are contributing to the low operating ratio for manufacturers?
Which specific economic factors are contributing to the low operating ratio for manufacturers?
Sluggish exports and declining domestic consumption are cited as the main reasons for the low operating ratio. Exports fell by 10.5% year-on-year, and retail sales declined.
Q.How significantly did Korea's overall exports decrease last year, and what impact did emerging markets have?
How significantly did Korea's overall exports decrease last year, and what impact did emerging markets have?
Korea’s total exports decreased by 10.5% year-on-year to US$548.93 billion last year. Exports to emerging markets, accounting for 60% of the total, fell by 7.9% in 2015.
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