Fa­cil­ity op­er­a­tion ra­tio reaches record low

The Korea Times - - FRONT PAGE - By Kang Se­ung-woo ksw@ktimes.com

The av­er­age fa­cil­ity op­er­a­tion ra­tio of the man­u­fac­tur­ing sec­tor has reached its low­est level since the 2009 global fi­nan­cial cri­sis, govern­ment data showed Sun­day.

The ra­tio can trans­late into de­clin­ing in­vest­ment and in­creas­ing unem­ploy­ment, pos­ing a set­back to the Moon Jae-in ad­min­is­tra­tion’s pol­icy of in­come-led growth and em­ploy­ment.

Ac­cord­ing to Sta­tis­tics Korea, lo­cal man­u­fac­tur­ers posted an av­er­age fa­cil­ity op­er­a­tion ra­tio of 71.6 per­cent in the sec­ond quar­ter of the year, down 1.2 per­cent­age points from the pre­vi­ous quar­ter.

The fig­ure is the low­est since the first quar­ter of 2009, when it reg­is­tered 66.5 per­cent amid the global fi­nan­cial cri­sis hit­ting the coun­try hard.

In ad­di­tion, it is the sec­ond-low­est in­dex reg­is­tered in the April-June pe­riod fol­low­ing 66.4 per­cent in 1998 fol­low­ing the Asian fi­nan­cial cri­sis which forced Korea to go to the In­ter­na­tional Mone­tary Fund for a bailout.

Since 2000 the op­er­a­tion ra­tio has been hov­er­ing over 70 per­cent — even once sur­pass­ing 80 per­cent — but it has failed to re­turn to the 80 per­cent mark since it last hit 80.9 per­cent in the third quar­ter of 2011 as the na­tion be­gan a long-term eco­nomic slump.

By year, af­ter peak­ing at 80.5 per- cent in 2011, the ra­tio has been slid­ing from 78.5 per­cent in 2012 to 72.6 per­cent in 2016.

To make mat­ters worse, in­dus­trial po­lar­iza­tion is be­com­ing more se­ri­ous.

The govern­ment re­cently raised its growth fore­cast for 2017 by 0.4 per­cent­age points to 3 per­cent as the na­tion has been bask­ing in brisk ex­ports led by the global eco­nomic re­cov­ery. Korea last recorded an eco­nomic growth of more than 3 per­cent in 2014 — at 3.3 per­cent.

How­ever, mar­ket watch­ers say the up­beat out­look came from a strong per­for­mance in the chip sec­tor. In the sec­ond quar­ter, Sam­sung Elec­tron­ics and SK hynix posted record earn­ings thanks to the me­mory chip “su­per cy­cle.”

“The re­cent slug­gish econ­omy is off­set by the me­mory chip boom,” said Sung Tae-yoon, an eco­nom­ics pro­fes­sor at Yon­sei Univer­sity.

The man­u­fac­tur­ing pro­duc­tion ca­pac­ity in­dex stood at 112.8, com­pared with 100 in 2000, but stark dif­fer­ences ap­peared be­tween in­dus­tries.

Al­though the semi­con­duc­tor sec­tor had 256.5, trans­porta­tion equip­ment and ma­chin­ery, in­clud­ing the ship­build­ing in­dus­try, recorded 105.1 and the car and trailer sec­tors gained 99.6.

“Other than chip man­u­fac­tur­ers, many in­dus­tries are strug­gling to op­er­ate their plants,” a govern­ment of­fi­cial said.

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