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Monday, 29 April, 2002, 05:48 GMT 06:48 UK
Factory output boosts South Korea
South Korean President Kim Dae-jung, centre, inspects a Kia Motors car assembly line in Kwangmyong
South Korean companies have been hard hit
Evidence that South Korea's industries are bouncing back from last year's downturn came on Monday in the form of the best monthly increase in factory output in two years.

March saw Korea's industrial sector production jump 3% from the previous month, the government said.

The main drive behind the boost was increased demand for cars and semiconductors - mostly destined for consumer devices rather than PCs.

The numbers reinforce the impression that South Korea is in for strong economic growth overall this year, following last year's 3% expansion.

Early predictions of 4% growth this year have now been revised upwards to about 5.9%.

But the data could also lay the ground for an increase in interest rates from their current record low of 4%, a possibility at which the central bank has repeatedly hinted in recent weeks.

The cupboards are bare

Underpinning the boost in output was news that inventories are shrinking fast, down 11.4% in March after a 9.6% drop in February.

Companies, it seems, have now largely sold off the excess stock built up during last year's downturn and are now ready to start stepping up production.

On top of that exports are strong, and the Commerce Ministry is predicting an expansion of 10% this month.

Consumers are also helping the recovery, showing an unaccustomed willingness to spend.

See also:

09 Apr 02 | Business
Asian rebound gathers pace
23 Mar 02 | Asia-Pacific
S Korea shops its way to recovery
22 Nov 01 | Business
Korean economy beats forecasts
20 Nov 01 | Business
Seoul cuts luxury taxes
01 Aug 01 | Business
Korean exports slump
19 Mar 01 | Business
Growth to slow in Asia
16 Mar 01 | Business
Dark clouds over Asia
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