SEOUL, Aug 31 (Reuters) - South Korea's industrial production in July fell by a seasonally adjusted 0.4 percent from June, data showed on Wednesday, missing market expectations and adding to concerns about sputtering economic growth.
On the year, industrial output -- which covers manufacturing and mining production -- also grew a slower-than-expected 3.8 percent in July, Statistics Korea said in a statement.
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KEY POINTS:
- For full story, double-click
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- Reuters poll forecasts: July industrial production was seen up a seasonally adjusted 0.6 percent from June and up 6.5 percent from a year earlier.
COMMENTARY:
JUN MIN-KYOO, ECONOMIST, KOREA INVESTMENT AND SECURITIES
'Both exports and production will see a modest slowdown due to the worsening economic situation in developed countries. Domestic demand will also likely be weakened by weak employment.'
'I think the central bank will freeze interest rates while inflation peaks. The entire economy will be slowing and people are expected to spend less.'
GOH YOU SUN, ECONOMIST, DAEWOO SECURITIES
'The data reflects the slowing pace of recovery in the global economy, which is impacting exports. The earthquake in Japan also created a necessity to fill in the subsequent production gap in that country, but the normalisation of the Japanese economy has taken away that temporary boost to Korean exports.'
HWANG SOO-HO, BOND ANALYST, DAISHIN SECURITIES
'The data seems to underscore growing downside risks to our economy along with concerns about slowing global economic growth and a subsequent drop in exports.'
'Economic indicators could worsen further in August to reflect the U.S. rating downgrade early this month and weak U.S. data, though the composite leading indicator today showed quickening annual growth.'
IM NOJUNG, CHIEF ECONOMIST, SOLOMON INVESTMENTS
'We believe the central bank rate raising cycle has ended for this year, and if economic pressure increases we are expecting a rate cut within this year.'
'Although the employment rate is improving, it is not enough to bring up consumption with the burden of household debt.'
'Exports and production for the second half are expected to slow down.'
KIM HYO-JIN, ECONOMIST, DONGBU SECURITIES
'I think it is time to lower our expectations on exports given the widened volatility in markets and concerns over another recession.'
'Domestic demand is broadly linked to exports here and looks like it's slowing a bit, considering tightening moves on household lending.'
'With so many changes in August, the central bank will keep rates steady in September again. It needs to take into account recent market situations and step back from its previous stance of raising rates.'
MARKET REACTION:
- The data was released before local financial markets opened.
LINKS:
- Full statement in Korean from Statistics Korea at http://www.kostat.go.kr
- Historical data available at the statistics agency's database at http://kosis.kr
- For all South Korean news and data, 3000 Xtra users can double-click on
BACKGROUND:
- Confidence among top South Korean companies tumbled to its lowest level in almost two and a half years on concerns about a global double-dip slump and heavy household debt, a business lobby group's monthly survey showed on Monday.
- South Korea's short-term foreign borrowings shrank by the sharpest pace in eight months in July, decreasing by $5.05 billion on the month, following a series of capital flow measures aimed at shielding the country from global jitters.
(Reporting by Kim Yeonhee, Ju-min Park, Taeyi Kim, Joonhee Yu and Seongbin Kang; Editing by Jonathan Hopfner) Keywords: KOREA ECONOMY/OUTPUT
(yeonhee.kim@thomsonreuters.com)(+822 3704 5646)(Reuters Messaging: yeonhee.kim.thomsonreuters.com@reuters.net)
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