Korea’s economic growth is showing signs of “moderating” due to weakening exports and domestic demand, a state-run think tank said Sunday.

“The Korean economy showed signs of moderating growth as export growth slowed gradually and domestic demand weakened slightly,” the Korea Development Institute said in its monthly report analyzing current economic trends.

The report is based on the latest major economic indicators including industrial output, exports, employment, investment and consumer spending.

Exports grew 12.5 percent in December from a year earlier, a slowdown from the previous month’s 13.8 percent gain. Retail sales in November inched up 0.5 percent, lower than October’s 2.2 percent increase.

Industrial output rose 5.6 percent in November from a year earlier, slowing from the previous month’s on-year growth of 6.3 percent. It shrank 0.4 percent from a month earlier, marking the second straight month of contraction.

The report added that recent indicators are showing a “moderating” pace of growth especially in private consumption and consumer sentiment.

The KDI, however, noted that the nation’s employment market maintains “continuing healthy” conditions, citing the high growth rate of jobs being created in recent months.

The think tank still painted a gloomy picture of the global economic conditions mainly due to worries over a global economic slowdown and the lingering fiscal debt crisis in Europe.

“The global economy still faces downside risks related to the future economy such as a slowdown in global economic growth and fiscal crisis, although some economic indicators of advanced economies improved slightly,” the report said.

South Korea’s government worries that the nation’s economy will face tougher challenges in 2012 than last year as cloudy external market conditions could weigh on its export-reliant growth.

Last month, the government revised down its growth outlook for this year from 4.5 percent to 3.7 percent. That is lower than the 3.8 percent growth projected for 2011. (Yonhap News)