Weak consumption drags down economy

Korea’s economic recovery momentum remains feeble as weak domestic demand such as private consumption offset strong overseas sales, a government report said Friday.

“The Korean economy has been maintaining an upturn pace on the back of brisk exports and recovering global demand, but domestic consumption has remained flaccid as private consumption slowed down again,” the finance ministry said in its monthly economy assessment report called the “Green Book.”

The report is based on the latest economic indicators of such key factors as output, exports, consumption and corporate investment, which provide clues as to how the economy has been faring in recent months.

Korea’s exports have been on a steep upside cycle since November last year thanks to a spike in global demand. In September, Korea’s exports soared 35 percent to reach an all-time high of $55.1 billion, led by strong sales of semiconductors and displays.

Output in manufacturing and mining gained ground for two straight months marking a 0.4-percent on-month growth in August and 1.7-percent expansion in July, and production of the service industry edged up 0.1 percent on-month in August.

However, demand is still in the doldrums. Retail sales dropped 1 percent on-month in August, snapping their three straight months of gains, while facility investment fell 0.3 percent for two months in a row.

Moreover, the Korean economy is expected to face escalating external downward pressure in the coming months, including trade issues and geopolitical risks centered on North Korea, noted the finance ministry.

Yonhap