The government has removed the phrase "downside risk to the economy," which it had maintained for three months since the outbreak of the Middle East war, from its latest economic assessment. It judged that surging exports, led by semiconductors, have eased some economic concerns. However, it identified slowing employment as a new burden.
The Ministry of Finance and Economy said on June 12 in its June issue of Recent Economic Trends (Green Book), "Recently, Korea's economy continues on a recovery track, with strong exports and improved consumption and corporate sentiment," while also assessing, "With uncertainties from the Middle East war persisting, there are concerns about burdens on people's livelihoods such as rising prices and slowing employment."
Previously, from March to May, the ministry had cited "downside risk" to Korea's economy stemming from the Middle East war. This month, however, it changed the phrasing to "uncertainty." A ministry official said, "With the boom in semiconductors, exports have increased sharply recently, and growth forecasts for Korea are on an upward trend," adding, "The Middle East war remains a risk factor, but we expressed both upside and downside factors together."
Instead, the phrase "slowing employment" was newly added this month. In May, the number of employed people fell by 40,000 from a year earlier, marking the first negative reading in 17 months. It is the first time since January last year, when there was fallout from the "Dec. 3 martial law," that concerns about employment have appeared in the government's economic assessment. A ministry official said, "Depending on how the situation in the Middle East unfolds, the pace of employment recovery will differ."
Prices are also a concern. In May, the consumer price index rose 3.1%, widening from the previous month's 2.6%. In addition, as of the end of last month, the won-dollar exchange rate was 1,507.9 won, up 1.6 won from the end of the previous month. A ministry official said, "A higher exchange rate can affect import prices," adding, "We will make every effort to stabilize prices and livelihoods through swift execution of the supplementary budget for support against high oil prices and supply management of key items."