Economy on path to recovery as domestic demand improves: Finance Ministry

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Economy on path to recovery as domestic demand improves: Finance Ministry

Published: 18 Oct. 2024, 14:45

Shoppers stroll through Myeong-dong, central Seoul, on Sept. 30, 2024. [YONHAP]

The Korean economy has been on a path to recovery led by exports while domestic demand has shown signs of improvement, the Finance Ministry said Friday.

The ministry made the assessment in its monthly economic report, the Green Book, while noting that the pace of recovery is not uniform across all industries.

"The economy continues to show a recovery trend centering on exports and the manufacturing sector amid the stabilization of consumer prices. Domestic demand is also showing signs of a gradual recovery, led by facility investment and the service sector, though the pace differs among sectors," the report read.

The ministry pointed to signs of improving domestic demand over the last six straight months.

Retail sales, a gauge of private spending, rose 1.7 percent on month in August, and service production grew 0.2 percent from a month earlier.

In on-year terms, however, retail services fell 1.3 percent due to sluggish demand for cars, electronics, mobile gadgets and other goods, and facility investment and construction investment tumbled 5.4 percent and 9 percent, respectively.

"We've had some mixed signs with domestic demand. Credit card spending rose 4.6 percent on year in September and the sales of vehicles at home grew 1.7 percent. But consumer sentiment fell last month from a month earlier," a ministry official said.

Exports rose 7.5 percent on year to $58.7 billion in September, the 12th straight monthly gain, on the back of robust shipments of semiconductors, according to government data.

Consumer prices, a key gauge of inflation, rose 1.6 percent on year in September, marking the lowest level since February 2021.

As major challenges, the ministry cited concerns of an economic slowdown in major countries, as well as volatility in the prices of raw materials amid prolonged tensions in the Middle East.

Yonhap