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The Korea Development Institute (KDI) diagnosed on the 10th that the nation's recent economic recovery is expanding, driven by increases in semiconductor exports and facility investment.
In its August issue of the Economic Trends released today, KDI stated, "The Korean economy is showing an expanding recovery centering on semiconductor-related sectors."
This is a more upbeat expression compared to last month's description that the economy was "maintaining a modest recovery trend backed by semiconductor exports and a buoyant service sector."
KDI noted, "While exports and facility investment are showing a high growth rate centering on semiconductors, consumption is also expanding its growth rate, centered around durable goods."
However, it added, "Amid lingering internal and external uncertainties such as U.S. tariff measures and instability in the Middle East situation, inflation rates remain at a high level and employment conditions are slowing down."
All-industry production recorded a relatively high growth rate as the service sector maintained a favorable trend and manufacturing also rebounded.
In June, all-industry production increased by 4.2% compared to the same month last year, expanding its growth momentum from the previous month (1.9%).
Mining and manufacturing production (5.8%) saw semiconductor growth limited to 2.2% due to a base effect, but the vast majority of industries turned to growth, including automobiles (12.6%), machinery and equipment (14.4%), and electrical equipment (8.8%).
Service sector production continued its favorable growth momentum, centered around financial and insurance services (9.2%) and professional, scientific, and technical services (13.7%).
KDI evaluated that buoyed by strong semiconductor exports, export business sentiment maintained a level exceeding the long-term average, while domestic market business sentiment also continued a modest recovery trend.
The retail sales index in June (1.5 to 4.2%) rose centering on durable goods, expanding its growth scale.
Passenger car sales shifted from a 10.7% decline in the previous month to a 12.2% increase.
This was the result of a surge in demand ahead of the expiration of the individual consumption tax cut amid easing bottlenecks in automotive parts supply and demand.
Home appliance sales also increased by 13.1% compared to the same month last year, driven by Samsung Electronics' Onnuri product voucher refund event.
However, as these growth factors are largely of a temporary impact, it remains uncertain whether they will continue to affect consumption in July.
For facility investment, semiconductor-related investment continued a solid trend while other sectors also rebounded, increasing the scale of growth.
KDI diagnosed that construction investment continues to show sluggishness centered on residential buildings, but non-residential buildings are gradually improving.
In the labor market, employment growth remains at a low level.
The number of employed persons in June increased by 63,000 compared to the same month last year, which is an improvement from the previous month (-40,000) but still significantly below the first-quarter average (183,000).
KDI diagnosed that employment growth remains on a slowing trend.
In addition, it evaluated that consumer price inflation narrowed its scale of increase due to falling international oil prices, but still remains at a high level.
The consumer price inflation rate for July recorded 2.8%, as the upward pressure from petroleum products (24.7 to 15.5%) narrowed significantly.
It marked the 2% range in three months.
Core inflation, excluding food and energy, rose 2.6%, showing a higher rate than the previous month (2.5%).
(Photo: Yonhap News)
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