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KOREA REPORT - AUGUST 2022.
TOP ISSUES.
SKorea added 44,689 new COVID-19 infections on 1st, 112,901 on 5th, 151,792 on 10th, 180,803 on 17th, 129,411 on 20th, 113,371 on 25th, 103,961 on 31st, bringing total caseload to 23,246,398.
SKorea¡¯s first lunar orbiter Danuri launched into space on 5th and successfully reached the ballistic lunar transfer trajectory, a path that will take it toward the moon, Ministry of Science and ICT said. Danuri separated from SpaceX Falcon rocket at around 8:48 am when it reached an altitude of around 703 kms. The journey to the moon is expected to take 4 1/2 months. If Danuri successfully lands in the target orbit by end of this year, SKorea will become seventh country in the world to have explored the moon after China, India, Japan, Russia, the UK and the US. Danuri¡¯s dry mass comes to 418 kgs and is about 2m in length, height and width when all parts are folded.
SKorea's economy is feared to lose growth momentum as the country is grappling with high inflation and export growth could slow down amid heightened external economic uncertainty, finance ministry said on 19th. The Federal Reserve's fast rate hikes, China's economic slowdown, and the protracted war between Russia and Ukraine have increased downside risks to the global economy. Inflationary pressure in SKorea has rapidly built up due to high oil and commodity prices and a recovery in demand from the pandemic. In June, the government lowered its 2022 economic growth outlook to 2.6%, while sharply raising this year's inflation outlook to a 14-year high of 4.7%.
SKorea¡¯s trade deficit with China is likely to persist for the time being, according to Korea Chamber of Commerce and Industry on 9th. The growing reliance on China over key materials used for Korean semiconductor or battery manufacturing signals Seoul¡®s need to upgrade its FTA terms with China as cost attractiveness of Chinese goods will continue to deteriorate. Korea, China¡¯s fifth-largest trading partner, recorded $570 mil shortfall in its trade with China in July, following deficit of $1 bil in May and $1.2 bil in June. Korea had not logged a trade deficit with China since 1994 until May.
SKorea posted a trade deficit of $9.47 bil in Aug, suffering trade deficit for fifth consecutive month, for the first time in nearly 14 years on high global energy prices. Outbound shipments stood at $56.67 bil, up 6.6% on-year, the highest tally for any Aug since 1956. Aug also marked 22nd consecutive month that the country's exports have logged an on-year expansion. But imports jumped 28.2% on-year to $66.15 bil on soaring global energy prices.
Big Korean businesses saw their inventory surge by about 50% on-year in the first half, sparking concerns that the piling products left unsold is maybe a sign that SKorea is entering a fog of economic uncertainty. According to Leaders Index, inventory assets held by 192 conglomerates came to KW147.6 tril ($110 bil) in first half of the year, a 49.6% increase from KW98.6 tril in the first half of 2021. Read more¡¦
Hyundai Motor Group said on 15th that it ranked third globally in car sales in Jan-June period. Hyundai Motor (HMC) and Kia Corp sold a total of 3.299 mil vehicles in global markets. The sales figure is third largest following Toyota Motor Group¡¯s 5.138 mil units and Volkswagen Group¡¯s 4.006 mil units. Hyundai¡¯s ranking jumped from No 5 a year ago, outpacing Renault-Nissan-Mitsubishi Alliance and Stellantis Group that sold 3.14 mil units and 3.019 mil units in the first half, respectively.
SKorea's foreign reserves came to $436.4 bil as of end Aug, down $2.2 bil on-month, as strong US dollar reduced conversion value of euro and other currency-denominated assets. Global energy crunch from Russian invasion of Ukraine along with natural disaster in China have pushed up the value of the US greenback. Foreign securities were valued at $394.9 bil, up $3.1 bil on-month. SKorea was world's ninth-largest holder of foreign reserves as of end July.
Bank of Korea on 25th raised the policy rate by 0.25% to 2.5%, up from 1.25% in Jan and closer to the low 3% range expected by year-end. ¡°BOK will tighten policy to corral inflation but cannot end it before the US Federal Reserve,¡± BOK Gov Rhee Chang-yong said on 27th. Read more¡¦
SKorea's consumer prices grew at a slower pace to 5.7% on-month in Aug, as global oil prices slid, in a sign that high inflation may have peaked. But inflationary pressure still remains high, given volatility in oil prices and a weaker won. Prices of Dubai crude stood at $96.63 per barrel on average in Aug, down 6.3% on-month, but still up 39% on-year. Prices of agricultural, livestock and fisheries goods went up 7% on-year. Vegetable prices climbed 27.9% and core inflation rose 4% on-year in Aug.
Korea¡¯s Big3 have posted achievement rates of over 90% in their yearly order targets. KSOE has been awarded 161 newbuilds worth $19.29 bil so far this year, filling 110.6% of its 2022 order goal $17.44 bil. SHI won 33 units worth $6.3 bil, showing 72% achievement in this year's order target of $8.8 bil, while DSME saw 75% rates by winning 29 units worth $6.67 bil. What is notable is that the Big3¡¯s main focuses are on lucrative projects. Read more¡¦
Despite of their 2Q losses of KW620 bil ($462 mil), the Big3 didn't slow down at research & development (R&D) sector. KSOE reportedly spent KW43.28 bil in R&D investment for the first six months of 2022. The figure represents 36.6% on-year upturn. SHI reportedly injected KW28.29 bil in R&D segment from Jan to June this year, up 17.8% on-year. DSME invested KW32.05 bil in its R&D projects, up 11% on-year.
Ship demolition volume for the first six months of 2022 represents second lowest half-year record since 2008. 205 ships of combined 4.9 mil gt were sold to the scrap yards during Jan-June, according to Clarksons Research, down 59% (in terms of gt) compared to average recycling volumes in the 2010s. The figure even decreased by 34% from the low point of 1H 2021. Read more¡¦
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