The government has recently assessed that South Korea's economy is showing signs of improvement, particularly in exports and consumption. However, it noted that challenges related to high prices and employment difficulties for vulnerable groups persist due to the ongoing conflict in the Middle East.
The Ministry of Finance released its 'Recent Economic Trends (Green Book) for August' on the 14th, stating, "Our economy has seen a significant increase in exports and improvements in domestic consumption, reinforcing the trend of economic recovery. However, the pressure of rising prices due to high oil prices from the Middle East and the difficult employment conditions for vulnerable groups continue to burden the public."
Exports surged by 62.8% year-on-year last month, largely driven by strong performance in semiconductors, a key export item. The total export value reached $98.89 billion, with increases also noted in the exports of computers and ships. The average daily export value in July was $4.12 billion, marking a 69.6% increase compared to the same month last year.
Production saw steady growth across both the mining and service sectors. Overall industrial production rose by 2.3% in June compared to the previous month, with mining (6.4%), construction (4.1%), and services (0.7%) contributing to the overall increase. However, public administration experienced a decline of 4.0%.
Consumer sentiment also showed signs of improvement. Private consumption in the second quarter increased by 0.4% compared to the previous quarter and by 2.5% year-on-year. Retail sales in June rose by 2.7% from the previous month, driven by increases in durable goods (12.6%) and non-durable goods (0.2%).
A Ministry of Finance official commented, "While the rise in the consumer sentiment index and retail sales in July are positive indicators, the decline in domestic sales of locally produced cars may act as a negative factor."
In June, the current account recorded a surplus of $49.73 billion, continuing the trend of a trade surplus. The service account saw a reduction in its deficit as the travel balance recorded surpluses for two consecutive months. The income account surplus expanded due to an increase in dividend income.
Despite the impact of the Middle East conflict, consumer prices, which had fluctuated around 3%, showed some stabilization. Last month, consumer prices rose by 2.8% compared to a year earlier. The government attributed the slight decrease from the previous month to measures such as the maximum price system for petroleum products, which helped curb the rise in oil prices. The core inflation index, excluding food and energy, increased by 2.6% compared to the same period last year, driven by rising personal services.
As of July, the number of employed individuals increased by 108,000 compared to the same month last year, marking two consecutive months of growth. However, the youth demographic and sectors such as manufacturing and construction showed signs of weakness. A Ministry of Finance official explained, "Changes in hiring practices have led to a preference for experienced hires over large-scale public recruitment, making it difficult for young people entering the labor market for the first time. Additionally, structural challenges such as automation in manufacturing are contributing to these difficulties."
The won-dollar exchange rate stood at 1,424.0 won at the end of July, showing a decline from the end of the previous month.
However, the financial market could not escape a downward trend. The KOSPI closed at 6,595.45, down 22.19 points from the end of the previous month, while the KOSDAQ fell by 21.44 points to 719.76.
A Ministry of Finance official stated, "The global economy continues to show moderate growth, but uncertainties related to the Middle East conflict and U.S. tariff measures remain. We will ensure the management of supply and demand for key items and prioritize the safety of public livelihoods to minimize the impact of the Middle East conflict."
* This article has been translated by AI.
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