In the first half of this year, the southeastern region (including Busan, Ulsan and South Gyeongsang) saw worsening economic conditions compared with the second half of last year, while its inflation rate was the highest in the country. It was directly hit by higher international oil prices due to the Middle East war. As the market share of Chinese-made imported cars expanded, production in autos, one of the region's key industries, also declined.
According to the "first-half regional economy report" released by the Bank of Korea on the 29th, consumer price inflation in the southeastern region was 2.7%, the highest among the nation's seven regions. That was up 0.4 percentage points from the second half of last year. The Honam–Gangwon region was 2.6%, the Chungcheong–Daegyeong–Jeju region was 2.5%, and the capital region was 2.4%.
The Bank of Korea said, "Although the rise in prices of agricultural, livestock and fishery products slowed, petroleum product prices rose sharply due to the Middle East situation," and noted that "this was mainly attributable to the expanded rise in service prices such as domestic and international airfares." In the second quarter, the year-over-year increase in petroleum product prices was 24.8% in Busan, 25.9% in Ulsan, and 24.1% in South Gyeongsang.
The southeastern economy was flat. That means it fell short of the long-term average growth rate estimated by the Bank of Korea. It slipped a notch from the slight improvement in the second half of last year (in line with the long-term average growth rate). Excluding the southeast, the only area where economic conditions worsened was the Chungcheong region (improvement → slight improvement).
The southeastern economy was heavily affected by disruptions in manufacturing output. The sector deteriorated under pressure from low-priced Chinese imported cars. In the first half of this year, imports accounted for 22.8% of domestic auto sales, up from 19.3% last year. Imported car sales also rose 31.8%, with China's BYD up 807.9% and Tesla up 192.2%.
The Bank of Korea said, "Southeastern oil refining faced disruptions in crude oil supply and demand due to the closure of the Strait of Hormuz," and added, "Petrochemicals also declined due to supply constraints of feedstocks such as naphtha."