South Korea's factory activity accelerated in April, but cost pressures due to the Ukraine crisis and China's strict lockdown measures continued to weigh heavily on manufacturers, a private-sector survey showed on Monday, Reuters reported. The S&P Global purchasing managers' index (PMI) rose to 52.1 in April from 51.2 in March, standing above the 50-mark threshold for the 19th straight month that indicates expansion in activity. Output returned to expansion after shrinking in March, with new orders increasing at a faster pace, though those for exports continued to decrease.
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South Korea
Bank of Korea Governor Rhee Chang-yong highlighted rapidly rising private and public debt and an aging population as threats to South Korea’s economic outlook in his inauguration speech. Rhee took office Thursday after being nominated by President Moon Jae-in almost a month ago. He has so far expressed support for higher interest rates to rein in inflationary pressures while pointing to economic risks from the war in Ukraine, China’s virus lockdowns and the Federal Reserve tightening.
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A Seoul court on Thursday approved a new auction to sell debt-ridden SsangYong Motor Co. following its preferred bidder's payment failure for the carmaker last month, Yonhap News Agency reported. In January, Edison Motors Co. signed a deal to acquire SsangYong for 304.8 billion won (US$249 million). But the deal collapsed as the electric bus maker failed to make the full payment by the March 25 deadline. The Seoul Bankruptcy Court extended the deadline for SsangYong to find a new owner and submit a new restructuring plan by six months until Oct. 15.
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South Korea’s parliament passed a larger-than-planned first extra budget of the year as the government tries to shore up parts of the economy worst hit by the nation’s biggest coronavirus outbreak of the pandemic, Bloomberg News reported. The 16.9 trillion won ($14.2 billion) budget, approved by parliament late Monday, is aimed at compensating losses to businesses that have been laboring under some of the strictest conditions since Covid-19 erupted, as virus cases rose from thousands a day to over a 100,000. The government had initially proposed a 14 trillion won plan.
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South Korea's economy expanded at the fastest pace in 11 years in 2021 helped by a jump in exports and construction activity, tempering declines in capital investment and a slow recovery in the coronavirus-hit service sectors, Reuters reported. Record exports drove the rebound but swathes of the economy have fallen behind. Jobs are still vanishing across manufacturing and service sectors, a reminder that liberal President Moon Jae-in's promises to boost employment have not materialised.
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A consortium led by South Korean electric carmaker Edison Motors Co has agreed to acquire debt-ridden SsangYong Motor Co Ltd for 305 billion won ($254.65 million), SsangYong Motor said on Monday, Reuters reported. SsangYong is burdened with high debt and its vehicle sales last year fell to 84,496, down about 21% from a year earlier, a regulatory filing from the automaker showed. The automaker reported a January-September 2021 operating loss of 238 billion won from revenue of 1.8 trillion won.
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Activity in South Korea's factories expanded at the fastest pace in three months in December but the economy struggled to gather momentum as rising global coronavirus cases and continued supply constraint weighed on production and overseas demand, Reuters reported. The IHS Markit purchasing managers' index (PMI) for the final month of the year rose to 51.9 from 50.9 in November, remaining above the 50 threshold that indicates expansion in activity for a 15th consecutive month.
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Edison Motors is acquiring SsangYong Motor, the South Korea-based automobile manufacturer that has gone bankrupt, and it was reported that the deal may be completed this week, Economic Times reported. Sources stated that the merger is likely to be sealed in a few days, with Jan. 7 being the latest. "We need to adjust the contents of the contract, but if the discussion goes well, it can be done within this month," an official from Edison Motors said in a statement.
Personal and corporate bankruptcies in South Korea increased by more than 10 percent last year, data showed Monday, reflecting the economic impact of COVID-19 on both businesses and households, the Korea Herald reported. According to the report released by the National Court Administration, the number of personal bankruptcies filed in 2020 rose by 10.4 percent from the previous year, from 45,654 cases to 50,379 cases. Last year’s tally was the biggest figure since 2015.
South Korea’s leading opposition candidate warned of a potential collapse in the housing market and a spike in bankruptcies as interest rates rise, blaming President Moon Jae-in for letting debt levels hit a record through expansionary spending, Bloomberg News reported. Hong Joon-pyo, one of the top-ranked conservatives seeking to be the next president, said the current level of fiscal spending is unsustainable with government debt expected at over 1,000 trillion ($855 billion) next year.
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