BOK “Exports and employment increase in the first quarter despite the spread of Omicron”

Although the spread of the Omicron mutant virus continues, the domestic economy is showing signs of recovery. Although the service sector showed the same level as last quarter, manufacturing output continued to show a good trend. As a result, exports and the number of employed showed a solid increase. However, consumption declined in most regions except for Jeju.

The Bank of Korea analyzed the regional economic situation in the first quarter of this year as it released the ‘Regional Economic Report’ on the 28th. First, the BOK analyzed that manufacturing production in the first quarter continued a good trend.

Manufacturing production increased slightly in the southeast region, Chungcheong region, Gangwon region and Jeju region, and decreased slightly in the Daegyeong region. The metropolitan area and Honam area maintained the level of the previous quarter. The Daegyeong area was affected by the continued slump in finished car production due to disruptions in the supply of semiconductors for automobile parts, and the reduction in the production of LCD panels for TVs.

The BOK said, “The metropolitan area, the southeast area and the Honam area will increase slightly compared to the first quarter, and the remaining areas will continue to the level of the first quarter.” However, it is expected that steel production will decrease due to rising raw material prices,” he said.

Regional Economic Report of the Bank of Korea [자료 한국은행]

Service production did not increase in all regions. The metropolitan area, southeast area, Chungcheong area, and Honam area decreased from the previous quarter, while Daegyeong area, Gangwon area and Jeju area maintained the same level as last quarter.

The BOK analyzed that while production in the lodging and restaurant industry increased in the Gangwon region due to increased use of ski resorts in winter, most regions were affected by the increase in the number of confirmed cases of COVID-19 and strengthened quarantine measures. However, as the spread of COVID-19 subsides and quarantine measures are eased, service industry production is expected to increase slightly in most regions.

Consumption decreased compared to the previous quarter in all regions except Jeju. The metropolitan area and Daegyeong area showed the same level, but the southeast area, Chungcheong area, Honam area and Gangwon area decreased.

In most regions by item, sales of passenger cars decreased due to production disruptions due to imbalance in supply and demand for automotive semiconductors, leading to a decrease in durable goods. In the case of durable goods, sales of furniture and computers decreased in the Chungcheong area while sales of passenger cars decreased overall. On the other hand, the Jeju region increased on the back of increased sales of furniture and home appliances. Non-durable goods increased thanks to the expansion of food and beverages in many regions, while consumption of fresh food and vehicle fuel increased in Jeju.

Growth in the number of employed people [자료 한국은행]

Exports continued to grow strongly in all regions. The BOK predicted that exports will also increase in most regions in the future compared to the same period last year, but the extent of the increase is expected to decrease somewhat due to geopolitical risks.

During January and February, the number of employed people increased by 1086,000, significantly exceeding the 660,000 increase in the previous quarter. By industry, it was found that the decrease in the number of employed in the Southeast and South Chungcheong regions increased in the manufacturing sector, and decreased in the Honam region and Gangwon region in the construction sector, but the number of employment in the service sector increased in all regions.

During the same period, consumer prices continued to rise in all regions. While commodity prices were on the rise due to the rise in international oil prices and livestock and fishery products prices, service prices, mainly for personal services such as eating out, also rose.

Reporter Lee Yong-woo lee.yongwoo1@joongang.co.kr