Despite a boom in semiconductor exports, domestic indicators such as consumption and employment are sliding, prompting an assessment that an economic recovery skewed toward semiconductors—the so‑called "K‑shaped polarization"—could harden. There was also a warning that if currency policy is tightened too much in an effort to rein in prices and household debt, the domestic recovery could be delayed further.
Hyundai Research Institute issued a report on the 6th that included these points. According to the report, the advance estimate for second‑quarter real gross domestic product growth was 0.6%, slowing from 1.8% in the first quarter, with a 1.4% increase in exports supporting the growth rate.
Exports in August surged 68.7% from a year earlier on the back of strong semiconductors, and the share of semiconductors in total exports jumped from 25.9% in Aug. last year to about 47.5% in Aug. this year.
The problem is that while this export strength is concentrated in a single item—semiconductors—household sentiment is cooling. The retail sales index in July fell 2.4% from the previous month, and the growth rate of durable goods consumption turned from 10.3% in June to –4.1% in July.
Real income appears to have increased 0.4% in the first quarter and 1.5% in the second quarter, helped by high‑oil‑price subsidies, but excluding government aid, own income worsened from –0.3% in the first quarter to –1.3% in the second. Stripping out government support means the purchasing power households earn on their own keeps shrinking.
The job market shows a similar trend: the youth unemployment rate in July was 6.8%, up 1.3 percentage points (p) from a year earlier, and the number of employed young people has been declining for 45 consecutive months since Nov. 2022.
The institute noted that in this situation, currency policy should be guarded against becoming overly tight under the banner of managing prices and household debt. If market interest rates rise rapidly while household debt remains high, heavier interest burdens could dampen consumption, and the belated, accumulated effects of tightening could spill over into a credit crunch, leading to a slump in domestic demand.
Instead of leaving price stability solely to currency policy, it suggested avoiding an overreaction in currency policy by also using item‑specific micro responses such as cuts to fuel taxes. It added that available fiscal space should be used to lay the groundwork for medium‑ to long‑term growth in areas such as energy, supply chains, and logistics, while also strengthening support for small and midsize businesses and vulnerable groups.