Seoul: The South Korean economy is showing signs of recovery from a downturn experienced in the first half of the year, despite persistent concerns linked to external uncertainties, according to the finance ministry. The Ministry of Economy and Finance detailed its findings in the latest edition of the Green Book, its monthly economic report, which presents a more positive outlook compared to previous months.
According to Yonhap News Agency, the ministry noted that despite fluctuations in monthly data, key economic indicators are trending upwards, signaling a rebound from the challenges faced earlier in the year. The September edition of the report highlighted that "positive signs for economic recovery are strengthening," despite some lingering issues.
Industrial output in August remained relatively stable compared to July, though there was a slight 1.1 percent decline in facility investment. Retail sales, an important measure of private consumption, fell by 2.4 percent on a month-to-month basis in August, marking the first such decline in four months. However, September saw a significant increase in exports, which surged by 12.7 percent year-on-year to reach $65.95 billion, driven by strong demand for semiconductors. This figure represents the highest level of exports since March 2022.
The report also highlighted employment growth, with the creation of 312,000 new jobs last month, representing the fastest year-on-year growth in 19 months. This growth was primarily driven by gains in the service sector, following a government stimulus package aimed at bolstering employment. Consumer prices rose 2.1 percent year-on-year in September, returning to the 2 percent range after a month.
Despite these positive trends, the ministry pointed out several challenges, including weak construction investment and a sluggish job market in certain vulnerable sectors. Additionally, there are concerns about a potential slowdown in exports due to U.S. tariff measures. The ministry emphasized the ongoing volatility in international financial markets and increasing worries about sluggish trade and growth, exacerbated by unfavorable trade conditions linked to tariff policies imposed by major countries.
"The government will make all-out efforts to respond to trade risks and support domestic companies affected by U.S. tariffs," the ministry stated.
In a related development, South Korea and the U.S. agreed on a framework trade deal in late July. Under this agreement, Seoul committed to investing $350 billion in the U.S., in return for Washington's agreement to lower its "reciprocal" tariff on South Korea from 25 percent to 15 percent. However, the finalization of this deal is pending, as negotiations continue over remaining details. Key South Korean officials, including Finance Minister Koo Yun-cheol and Trade Minister Yeo Han-koo, are currently in Washington for what is expected to be a series of last-minute talks.