NABO Economic Trends (No. 42)

Published on April 26, 2024
Published by Economic Analysis Coordination Division

■ Economic Trends
   Recently, our economy has experienced robust growth in exports, driven by the resurgence of the global semiconductor industry. However, despite the prevailing global high interest rate trend, domestic consumption remains sluggish. Additionally, both internal and external factors, such as instability in international oil prices and disruptions in transportation caused by geopolitical tensions in the Middle East, continue to pose risks. In February, retail sales declined by 3.1% MoM due to persistently weak sales of both durable and non-durable goods. However, exports in March showed resilience, increasing by 3.1% YoY to USD 56.56 billion, marking the sixth consecutive month of growth. The All Industry Production Index (AIPI) also displayed positive momentum, rising by 2.0% YoY and 1.3% MoM in February. In the domestic financial market during March, treasury bond yields declined, while the won/dollar exchange rates increased due to the strength of the dollar.

■ Pending Economic Issues: International Comparison of Labor Productivity in Major Industries in Korea and Implications
   Based on the OECD average (=100), Korea's service industry labor productivity in 2021 is 75.8, notably lower compared to major OECD countries such as the US (148.2), Japan (83.1), Germany (87.8), UK (86.2), Italy (94.3), and Canada (90.6). Particularly concerning are the subsectors of distribution/transportation/food/accommodation (65.2) and information and communication (64.5), which fall well below the OECD average. This deficiency indicates that Korea's labor productivity in service industries related to software and content production lags behind the OECD average. To address this challenge, increased investment in R&D within the service sector is crucial to bolster productivity levels. Additionally, there is a pressing need to expand investment in education, specifically targeting vocational education and training programs tailored for workers in low-productivity service sectors.