Korea Development Institute (KDI) said the domestic economy has recently improved, led by consumption, but uncertainty still remains.
KDI, in its KDI Economic Trends released on the 7th, said, "Despite a contraction in construction investment and a slowdown in export growth, our economy is improving somewhat, centered on consumption."
According to KDI, consumption showed a modest recovery thanks to declining market interest rates and consumption-boosting measures. In particular, service output rose 6.2% from a year earlier, and the recovery continued, centered on institutional sectors closely tied to domestic demand such as wholesale and retail.
Retail sales in September also increased 2.2% from a year earlier. Although there were monthly fluctuations, the payment of consumption coupons and other factors led to a 1.5% quarter-on-quarter increase in the third quarter, easing the slump in retail sales. The consumer sentiment index last month also came in at 109.8, maintaining a high level.
However, KDI analyzed that "although the semiconductor cycle remains strong, export growth is gradually slowing as the effects of higher U.S. tariffs spread." In fact, average daily exports in September–October rose only 3.2% from a year earlier, narrowing from 5.7% in August.
Exports of major items excluding semiconductors were weak, reducing exports to key countries. In September–October, average daily exports to the United States fell 12.9% from a year earlier, and exports to China also decreased 6.8%.
The slump in construction investment also continued. Construction completed last month decreased 4.3% from a year earlier. Although the decline narrowed compared with the previous month (-17.4%), it remains weak.
KDI assessed that "trade conditions have improved thanks to progress in the Korea-U.S. free trade agreement and easing U.S.-China trade tensions, but external uncertainty still persists."