Korea Development Institute (KDI) has for four straight months issued an assessment that "a modest economic improvement centered on consumption is being maintained" regarding the state of the economy. It noted, however, that "uncertainty is high" in exports and trade.
KDI on the 8th released its "December economic trends," containing this assessment. This is based on an analysis of economic conditions from September to November.
KDI said, "Consumption continued its improvement as the effect of interest rate cuts was reflected with a lag and the government's consumption support policies continued." Earlier, the Bank of Korea cut the benchmark rate to 2.5% in May and then kept it unchanged for four consecutive meetings. In July, the government finalized a second supplementary budget and issued two rounds of livelihood-recovery consumption coupons.
KDI assessed that the improvement in consumption led to modest increases in service output and in industrial production in September and October. It also saw employment gradually improving, mainly in areas closely tied to consumption. The increase in the number of employed in October was 193,000 from a year earlier, down from 312,000 in September, but employment conditions are improving in wholesale and retail, lodging and food, and the arts.
However, KDI judged that "uncertainty remains high" for the export and trade environment. In exports, semiconductors are showing strong performance on the back of a supercycle, but other key industries are sluggish. KDI said, "The high growth in semiconductor exports is partly due to a sharp rise in prices," adding, "In volume terms, the previously high export growth is gradually adjusting." It added, "With high U.S. tariff rates shrinking trade in institutional sectors other than semiconductors, trade uncertainty persists."