S. Korea`s industrial output sinks record 25.6 pct in Jan.

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SEOUL, March 2 (Yonhap) -- South Korea's industrial output contracted at the
sharpest pace on record in January, adding to concerns that the nation's economy
is slipping into a recession at a faster pace than has been expected, a
government report showed Monday.
According to the report by the National Statistical Office (NSO), production in
the mining and manufacturing sectors shrank 25.6 percent in January from a year
earlier, compared with a revised 18.7 percent on-year decline in December.
The January contraction is the worst ever since related data began to be compiled
in January 1970. This is also higher than a median estimate of a 24.9 percent
decline in a poll conducted by Yonhap Infomax, the financial news arm of Yonhap
News Agency.
"The data reflect a continued economic downturn in January," the NSO said in a
statement. "The decline is attributed to reduced production of semiconductors,
chip parts and automobiles. Fewer working days due to Lunar New Year holidays
also contributed to the figures."
The slumping output comes as indicators show that South Korea's economy, Asia's
fourth-largest, is heading for its first recession in 11 years amid collapsing
exports and dwindling domestic demand.
Exports are falling sharply as recessions in the U.S., Japan and some European
countries erode demand for South Korean goods. In February, overseas shipments
fell around 17 percent to US$25.8 billion from a year earlier, according to
government data released earlier in the day.
Faltering exports caused South Korea to record its first current-account deficit
in four months in January, with shortfalls amounting to $1.36 billion, according
to the central bank.
Business sentiment remained weak, with a majority of the nation's manufacturing
companies forecasting the outlook to deteriorate in the second quarter, according
to a poll released last month.
With worsening economic conditions, rising household debts and few signs of a
quick recovery, companies are scaling back investment and recruitment.
According to the NSO, the economy lost around 100,000 jobs in January from a year
earlier. The government predicts about 200,000 jobs will evaporate this year as
the economy is expected to shrink 2 percent compared with the previous year's 2.5
percent advance.
On Feb. 24, Finance Minister Yoon Jeung-hyun met chiefs of the nation's key
business lobby groups, calling on the corporate sector to step up employment and
investment to help reinvigorate the fast slipping economy.
The government has also unveiled a raft of economic stimulus measures including
tax cuts and increased fiscal spending. Yoon earlier said that the government
will submit an extra budget plan to the National Assembly this month for
approval.
The central bank has been aggressive in easing its monetary policy, joining the
government's turnaround efforts.
Last month, the Bank of Korea (BOK), the nation's central bank, cut its key
interest rate by half a percentage point to a record low of 2 percent, the sixth
reduction in four months. Since October, the bank has trimmed the rate by a
combined 3.25 percentage points.
kokobj@yna.co.kr
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