South Korea March Output Surges as China Factory Shutdowns

South Korea’s March factory output jumped by the most in 11 years as demand for display panels and cars received an unexpected boost from lengthy shutdowns in competing Chinese factories amid the coronavirus pandemic.

Industrial output surged by a seasonally adjusted 4.6% in March from a month earlier, government data showed on Wednesday, marking the biggest expansion since a 7.3% jump in February 2009 and handily beating a 1.3% fall tipped in a Reuters survey.

Production of electronic components including display panels soared 12.7% while autos output surged 45.1%, as virus-related production disruptions in China benefited Korean manufacturers and the launch of new car models also helped.

“Output of electronic components were seen weakening before March but demand surged in March on production disruptions at Chinese companies,” a Statistics Korea official said.

The boost is likely to be short-lived, however, as factories in China gradually restarted operations, he added.

Despite the surprise output surge, the prospect of a recession is growing in Asia’s fourth-largest economy.

The coronavirus pandemic pushed South Korea’s economy into its biggest contraction since 2008 in the first quarter, as self-isolation measures hit consumption and global trade slumped.

President Moon Jae-in on Tuesday said growth readings for the economy are likely to worsen in the second quarter with the deepening impact from the pandemic.

On a year-on-year basis, the factory output jumped 7.1%, compared with a 11.3% rise in February.