According to a Reuters article, South Korea’s factory activity has experienced its longest downturn in at least 19 years. The country’s manufacturing sector has been grappling with various challenges, including supply chain disruptions, a global semiconductor shortage, and the ongoing impact of the COVID-19 pandemic.
The article highlights that South Korea’s manufacturing Purchasing Managers’ Index (PMI) dropped to 48.4 in June, marking the 11th consecutive month below the 50-point threshold that separates contraction from expansion. This prolonged downturn is the longest since comparable data became available in 2004, indicating the severity of the challenges faced by the sector.
The semiconductor industry, which plays a crucial role in South Korea’s economy, has been particularly affected by the global chip shortage. As demand for electronic devices continues to rise, supply constraints have hindered the production and export capabilities of South Korean manufacturers.
The article also notes that the resurgence of COVID-19 cases globally has further disrupted supply chains and dampened demand, impacting South Korean exports. Measures taken to contain the virus, such as lockdowns and travel restrictions, have contributed to reduced consumer spending and weakened global trade.
Despite the challenging conditions, there are expectations that the manufacturing sector could rebound in the second half of the year as vaccination efforts progress and economies gradually reopen. The South Korean government has been implementing various measures to support the industry, including financial assistance for businesses and efforts to enhance domestic production capabilities.
In summary, South Korea’s manufacturing sector is facing its longest downturn in at least 19 years, primarily due to supply chain disruptions, the global semiconductor shortage, and the ongoing impact of the COVID-19 pandemic. However, there are hopes for a recovery in the coming months as vaccination rates increase and economic conditions improve.