SEOUL, December 08 (AJP) - South Korea’s economy is showing signs of gradual improvement, driven by stronger consumer spending, but risks remain from a prolonged construction downturn and persistent global trade uncertainties, the state-run Korea Development Institute (KDI) said in a report published on Monday.
In its December economic assessment, KDI said the delayed effects of interest rate cuts and continued government support were lifting household consumption, helping to sustain a modest recovery despite weakness in the construction sector.
Since August, KDI has shifted from a negative assessment to describing the economy as entering a consumer-led recovery phase, a view it has maintained in recent monthly reports.
The think tank said export momentum has been supported by a global semiconductor upturn, but warned that uncertainty surrounding trade conditions remains high. Industrial production in October fell 3.6 percent from a year earlier, partly due to fewer working days, but showed a combined 1.6 percent increase across September and October.
Construction output declined 14.2 percent year on year, underscoring the depth of the sector’s slowdown. Manufacturing production rose 1.6 percent, led by a 14.6 percent jump in semiconductor output. Service sector production grew 3.6 percent, supported by health and social welfare services, up 6.6 percent, and finance and insurance services, up 4.2 percent.
Consumer spending showed further signs of recovery. Retail and service consumption rose a combined 1.3 percent in September and October, although October retail sales increased only 0.3 percent, partly reflecting the Chuseok holiday.
“Interest rate cuts are gradually taking effect, and with the consumer sentiment index at 112.4, consumption is expected to continue improving,” the KDI report said.
Construction investment remains weak despite a recent uptick in building orders. KDI also highlighted ongoing uncertainty over external trade conditions, including tariff negotiations between the United States and South Korea and pending rulings by the U.S. Supreme Court.
* This article, published by Aju Business Daily, was translated by AI and edited by AJP.
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