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Rising exports lead economic recovery despite weak domestic demand: finance ministry

By Yonhap

Published : March 15, 2024 - 10:25

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Kim Gwi-beom, official of economic analysis division in Finance Ministry, gives a brief on current statue of industrial activities at the government complex in Sejong, 112 kilometers south of Seoul, on Friday. (Yonhap) Kim Gwi-beom, official of economic analysis division in Finance Ministry, gives a brief on current statue of industrial activities at the government complex in Sejong, 112 kilometers south of Seoul, on Friday. (Yonhap)

The South Korean economy has been on a recovery track on the solid growth of exports, but disparities among sectors remain wide amid weak consumption and investment, the finance ministry said Friday.

"As shown in manufacturing production and exports, the country has seen an economic recovery and a stable job market," the Ministry of Economy and Finance said in the Green Book, its monthly economic assessment report.

"But the pace of recovery among sectors has been different as private consumption and investment in the construction sector, among other fields, remained weak," the report read.

Exports, a key economic growth engine, logged the fifth consecutive monthly gain through February after a yearlong downturn.

Industrial output rose 0.4 percent on-month in January, marking the third consecutive monthly gain.

Compared with a year earlier, production climbed 7.3 percent as chip output surged 44.1 percent.

Retail sales, a gauge of private spending, advanced 0.8 percent on-month in January, the second monthly increase, but they dropped 3.4 percent on an on-year basis amid still high interest rates and inflation.

Facility investment tumbled 5.6 percent in January from the previous month, and construction orders sank 53.6 percent on-year, the largest decline in more than 13 years, indicating that the construction sector could further slow down, according to the data by Statistics Korea.

"Hopes have been grown for a turnaround in the IT sector and a soft landing of the global economy. But uncertainties remain stemming from geopolitical risks regarding the Russia-Ukraine war and the Middle East crisis, as well as concerns over supply chain disruptions," the ministry said.

"Policy priority will be on easing inflation at an early date and achieving a well-balanced recovery by supporting the livelihoods of the people and boosting domestic demand, while thoroughly managing potential risks," it added.

Consumer prices, a key gauge of inflation, rose 3.1 percent on-year in February, rising over 3 percent in a month again on high prices of fruits, fresh food items and energy. (Yonhap)