South Korea IP likely to have contracted in March

South Korea will release March industrial production (IP) data on 30 May. IP is expected to have fallen 1.3% m/m on a seasonally adjusted basis, and 2.0% y/y. 

The three sectors with the largest weights in IP appear to have struggled in March: automobile production decreased by 2.5% y/y and mobile exports dropped 34%. 

The shipbuilding sector has been on a downtrend since 2013, and January-February data indicates that this trend will likely continue for a prolonged period. 

The correlation between exports and IP is now less, owing to the drop in export prices and inventory accumulation, but the 3.4% drop in exports in March affected IP performance negatively, although the extra working day in March this year likely minimised this.