Korea's economy gets 18% export boost amid sluggish domestic demand

A port in Busan [NEWS1]

Korea's economy is rebounding thanks to strong domestic manufacturing, but disparities persist, the finance ministry said Friday.

"Growing production and exports of the manufacturing sector have led an economic recovery recently amid moderating inflationary pressure," according to the Ministry of Economy and Finance's Green Book, its monthly economic assessment report.

"But the pace of recovery among sectors has been different, as private consumption slowed down and investment in the construction field, in particular, remained sluggish," the report read.

In December, industrial output rose 0.3 percent on-month, the second monthly gain.

Compared with a year earlier, production climbed 1.1 percent as the semiconductor sector logged a 53.3 percent increase in output on rising demand.

In January, exports, a key growth engine, jumped 18 percent on-year driven by strong semiconductor sales, and shipments to China logged an upturn for the first time in 20 months.

Consumer prices, a key gauge of inflation, rose 2.8 percent on-year last month, slowing from the previous month's 3.2 percent increase.

But retail sales fell 0.8 percent on-month in December. Compared to a year earlier, sales shed 2.2 percent amid high interest rates and inflation.

Facility investment rose 5.5 percent on-month, but decreased 5.9 percent on-year.

Construction investment lost 2.7 percent on-month and 1.2 percent on-year amid a property market slump, government data showed.

"There have been uncertainties stemming from geopolitical risks regarding the Russia-Ukraine war and the Middle East crisis, as well as concerns over supply chain disruptions, though the prospect for an improvement in the IT sector and a soft landing of the global economy has risen," the ministry said in the report.

"The government's policy priority will be on easing inflation at an early date, supporting the livelihood of people and boosting domestic demand while thoroughly managing potential risks," it said.

BY SEO JI-EUN, YONHAP [seo.jieun1@joongang.co.kr]