[THE INVESTOR] The South Korean economy is unlikely to gain momentum in the short-term as faltering exports and flaccid production offset a modest rise in domestic consumption, a state-run think tank said on Aug.4.

“Despite continued favorable growth in domestic demand, including retail sales and construction investment, the economy is showing little signs of an overall recovery,” the Korea Development Institute said in its monthly evaluation of the country‘s economic conditions.

“Moreover, a rapid improvement is unlikely with the excise tax cut effect dissipating and corporate restructuring taking its toll.”

The think tank said downside risks will weigh heavily on the economy in the coming months, with the on-going corporate restructuring in shaky industries like shipbuilding expected to lay more pressure on the labor market.

“With the excise tax cut expiring, the second half will likely see declines in durable goods sales and transport equipment investment, which has posted marked growth,” the KDI said.

“Meanwhile, the unemployment rate went up in regions where shipbuilding businesses are clustered, meaning that corporate restructuring could temporarily retard the economic recovery.”

(theinvestor@heraldcorp.com)