Energy Shock Dampened Korean Activity in April

South Korean industrial activity contracted in April 2026 due to energy disruptions, but a recovery is anticipated in May driven by strong semiconductor demand and improving sentiment.

Key Takeaways

• 1.South Korea's all-industry output fell in April for the first time in three months, primarily driven by energy shocks affecting manufacturing, services, and construction.
• 2.Retail sales and fuel consumption saw sharp declines, with fuel down 8.3% due to high prices and government car operation limitations.
• 3.Despite the April dip, ING expects a recovery in May fueled by improved sentiment, government cash payouts, and a strong semiconductor cycle.

Table of Contents

• Energy shocks dent manufacturing activity in April
• Energy shocks hit oil refinery activities hard
• The energy shock extended beyond manufacturing
• A notable decline in fuel consumption led to overall drop in retail sales
• Retail sales dropped quite notably in April
• We cautiously expect a recovery from May
• Despite prolonged war, consumer and business sentiment improved in May
• BoK watch

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