Fears stoked as industrial output ebbs

Industrial output shrank for the second straight month in July, raising concerns that the country’s economy might be faltering in the face of headwinds from the euro zone debt crisis and a global slowdown, a government report showed yesterday.

According to the report by Statistics Korea, production in the mining, manufacturing, gas and electricity industries fell 1.6 percent in July from a month earlier following a revised 0.6 percent decline in June.

From a year earlier, the output inched up 0.3 percent but it decelerated from a revised 1.4 percent on-year gain tallied in the previous month.

The country’s service sector production, meanwhile, increased 1.5 percent on-year in July and inched up 0.7 percent from the previous month, the report showed.

The data comes as Korea’s economy has been faced with shrinking overseas demand for its goods.

Exports, which account for more than 50 percent of the economy, fell 4.1 percent in July from a year earlier, according to the central bank.

The government predicted earlier that exports will grow 3.5 percent this year, but it is far lower than a 19-percent advance registered a year earlier.

Wary of the gloomy market, Seoul cut its 2012 growth forecast from 3.7 percent to 3.3 percent last June.

Concerns seem to be deepening further after the central bank announced earlier that the economy grew 0.4 percent on-quarter in the April-June period, slowing from a 0.9 percent gain in the first quarter.

This is the slowest growth since a 0.3 percent expansion in the fourth quarter of last year. The economy grew 2.4 percent from a year earlier.

Yonhap