The government assessed that downside risks to Korea's economy have grown recently due to the "Middle East war." The "economic recovery trend" assessment, which had been maintained for five consecutive months through last month, has disappeared.

The Ministry of Finance and Economy said in the "Green Book: Recent Economic Trends for April" on the 17th that "while strong exports led by semiconductors have continued and domestic demand, including consumption, has also improved, there are concerns that consumption and corporations' sentiment are weakening due to the impact of the Middle East war, along with inflation from rising international oil prices and a heavier burden on livelihoods."

As international oil prices rise amid the fallout from the Middle East war, a gas station in Seoul displays fuel prices on the 16th. /Courtesy of News1

Previously, the ministry had maintained in the Green Book since Nov. last year through last month the assessment that "the Korean economy is continuing its recovery trend." Even in March, while expressing concern about downside risks from the Middle East situation, it still viewed the recovery trend as intact, but this month's assessment has changed.

Negative signals are appearing across the board. The consumer sentiment index (107) and the business sentiment index (94.1) for March fell by 5.1 points (p) and 0.1p, respectively, from a month earlier. The April outlook business sentiment index (93.1), surveyed in March, plunged 4.5p, marking the largest drop in 15 months since the emergency martial law.

With international oil prices rising last month, the average domestic prices of gasoline and diesel in March were 1,836 won and 1,829 won per liter (ℓ). They rose 147 won and 242 won from the previous month's averages (gasoline 1,689 won, diesel 1,587 won). As petroleum product prices climbed 9.9% from a year earlier, overall consumer prices rose 2.2%.

The ministry said it "will maintain an emergency economic response system to minimize the impact of the Middle East war," adding it will "closely monitor changes in conditions and impacts by institutional sector, swiftly execute the supplementary budget, and actively address on-site difficulties."

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