The government said, "Korea's economy continues on a recovery track," issuing a positive assessment for a fifth straight month. It added, however, that there is downside risk to the economy due to the fallout from the Middle East situation.
The Ministry of Finance and Economy, in its Mar. 20 release of the "March Recent Economic Trends (Green Book)," said that "the recovery trend is continuing, driven by improved domestic demand such as consumption and robust exports led by semiconductors," and stated accordingly.
Since assessing in Nov. last year that "the economy has recovered from weakness in the first half," the government has maintained the view for five months—Dec., and Jan., Feb., and Mar. this year—that the recovery trend is continuing.
However, it identified external uncertainty centered on the recent Middle East situation as a key variable. The ministry said, "While existing risks persist, including employment difficulties concentrated in vulnerable institutional sectors, delayed recovery in construction investment, and the impact of U.S. tariff imposition, geopolitical risks are expanding, such as rising international oil prices due to the Middle East situation," adding, "Accordingly, there are concerns about rising prices, increased burdens on people's livelihoods, and heightened downside risk to the economy." It has been eight months since language signaling "downside risk to the economy" last appeared in the Green Book, in July last year.
It also analyzed that the global economy is facing a worsening trade environment due to the Middle East situation and major countries' tariff measures, expanding volatility in international financial markets and energy prices and increasing the likelihood of slower trade and growth.
The government plans to launch an emergency response to minimize the shock originating from the Middle East. It will swiftly draw up a supplementary budget for stabilizing people's livelihoods and supporting the recovery, and, led by a joint interagency emergency response team, will monitor each institutional sector around the clock and respond immediately if any abnormal signs appear.