© Reuters. FILE PHOTO: A shopkeeper waits for customers at a traditional market in Seoul, South Korea, January 14, 2022. REUTERS/Kim Hong-Ji
SEOUL (Reuters) – South Korea President Moon Jae-in said on Monday the government will create a fund to better secure key raw materials essential for manufacturing and exporting in the face of current supply bottlenecks.
“As a control tower, the Presidential ‘Economic Security Supply Chain Management Committee’ will be newly established, and a fiscal backing will be made as we will create a fund to stabilize supply chain woes,” Moon said at a cabinet meeting, according to a statement from the presidential Blue House.
He said the government will make a list of raw materials and other items essential for “economic security” purposes and manage them to protect local companies against shortages.
With consumer inflation hovering at a decade high, everything from memory chips to food is getting more expensive, hurting sales at exporters such as Hyundai Motor and LG Energy Solution.
Over in the United States, the annul inflation rate has hit a 40-year high at 7.5% while Euro zone inflation surged to record high of 5% in December, underscoring supply chain challenges for export-led economies like South Korea.
Hyundai and its affiliate Kia Corp, together among the world’s top 10 automakers by sales, have forecast a 12.1% jump in their combined global sales for 2022, after their sales fell almost 4% short of a target of 6.92 million vehicles last year due to the chip shortages.
South Korea’s January factory activity grew at the fastest pace in six months, a private-sector survey showed on Feb. 3, but persistent supply chain woes weighed on the outlook.
Respondents in the survey said a stronger recovery was held back by sustained material shortages and the impact of the Omicron variant of the coronavirus.