The regional economy of our country in the fourth quarter of this year has maintained a similar level to the third quarter. While the Daegyeong region saw a slight improvement, the Honam, Southeast, and Jeju regions experienced a slight decline. By industry, the information and communications (IT) sector increased, primarily driven by semiconductors, but petroleum refining, chemistry, and steel decreased.

The Bank of Korea noted this in the December Regional Economic Report published on the 23rd. The Regional Economic Report is a quarterly report based on company monitoring results and available statistics conducted by 15 regional headquarters under the Bank of Korea. The regional economic conditions are divided into seven categories: ▲significant decline ▲decline ▲slight decline ▲steady ▲slight improvement ▲improvement ▲significant improvement.

Regional economic level. /Courtesy of Bank of Korea

Compared to the third quarter, the capital region was adjusted from a slight improvement to steady, while the Gangwon and Chungcheong regions moved from decline to steady. The Daegyeong region maintained the same slight improvement as the previous quarter, and the Honam, Southeast, and Jeju regions, which had been steady, turned to a slight decline.

By industry, both manufacturing and service production exhibited a steady trend in the fourth quarter. In manufacturing, the IT industry increased mainly due to semiconductors, but petroleum refining, chemistry, and steel decreased. In the service sector, transportation increased, but real estate and restaurant businesses decreased.

Demand saw a slight increase in private consumption and facility investment, while construction investment slightly decreased. Private consumption increased slightly due to a rise in service consumption, and facility investment increased as investments for expanding high-bandwidth memory (HBM) production capacity grew. In contrast, construction investment slightly decreased due to poor accumulated construction starts and a persistently high level of unsold inventories.

The average daily export level was steady overall as semiconductors maintained a high level and ships and automobiles increased, but petroleum refining and chemistry decreased.

The Bank of Korea projected that the regional economy is expected to maintain the fourth-quarter level in the future, while noting that downside risks due to domestic political conditions appear to have increased.

Specifically, both manufacturing and service production are expected to show a steady trend. Manufacturing production is expected to maintain the fourth-quarter level overall, although automobiles may see some improvement. Service production is expected to remain steady as the downturn in real estate continues, but wholesale and retail, as well as accommodation and food services, are expected to recover.

Demand is expected to slightly increase due to improved household consumption capacity, resulting from a slowdown in inflation and easing financial conditions. Facility investment is expected to continue with advanced process investment in semiconductors and facility expansion for eco-friendly vehicle production. However, construction investment is expected to slightly decrease due to the impact of new construction and order contraction.