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Economic recovery may lose steam due to spiking COVID-19 cases: KDI

Citizens wait in a long line to receive COVID-19 tests at a temporary testing center at Seoul Station. (Yonhap)
Citizens wait in a long line to receive COVID-19 tests at a temporary testing center at Seoul Station. (Yonhap)
The South Korean economy is on a modest recovery track, but its upward momentum may lose steam due to a resurgence in COVID-19 cases, a state-run think tank said Wednesday.

Asia's fourth-largest economy is on a recovery track amid solid exports, but it also faces high economic uncertainty from the fast spread of the more contagious delta COVID-19 variant and spiking virus cases, according to a monthly economic assessment report by the Korea Development Institute (KDI).

"Due to the surge in infection cases since late June, the economic recovery may be delayed," the English-language report showed.

South Korea's daily new virus cases jumped by the most in about six months Wednesday, fanning fears of a fourth wave of infections over the summer.

The country reported 1,212 more COVID-19 cases, including 1,168 local infections, raising the total to 162,753, according to health authorities.

The nation has reported a total of 2,817 cases of four major contagious variants of the new coronavirus so far, with the number of the delta variant, first identified in India, tallied at 416.

The KDI assessed the overall economy is on a modest recovery path although the auto and construction sectors underwent partial constraints in production due to disruptions in the supply of raw materials and intermediate goods.

Exports, which account for half of the economy, jumped 39.7 percent on-year in June to extend their gains to the eighth straight month on strong demand for chips.

The country's industrial output bounced back in May, but retail sales fell by the most in 10 months in the latest sign that the recovery of private spending still remains weak amid the pandemic.

The finance ministry recently revised up its 2021 growth outlook for the Korean economy to an 11-year high of 4.2 percent from its earlier estimate of 3.2 percent. (Yonhap)