Seoul: South Korea's economy continues to face "concerns" due to a delayed recovery in construction investment and slowing exports, but there are some positive signs, including improved consumer sentiment, the finance ministry said Thursday. In its latest monthly economic assessment, known as the Green Book, the Ministry of Economy and Finance highlighted ongoing concerns -- the delay in the recovery of construction investment, employment difficulties in vulnerable sectors, and a slowdown in exports due to U.S. tariff measures.
According to Yonhap News Agency, the ministry omitted references to "downside risks" that had been mentioned in its previous reports for seven consecutive months, while mentioning "positive signs" for the second straight month. "The global economy continues to face uncertainties due to deteriorating trade conditions stemming from tariffs imposed by major economies, leading to ongoing volatility in international financial markets and concerns over weakening trade growth," the latest report said.
In June, retail sales, a gauge of private spending, gained 0.5 percent on-month, backed by strong demand for clothing and cosmetics. Retail sales of semi-durable goods, such as apparel, rose 4.1 percent, while nondurable goods, including cosmetics, gained 0.3 percent. In contrast, sales of durable goods, such as home appliances, fell 1.6 percent.
The ministry noted that improved retail sales showed positive signs, citing an increase in consumer sentiment and a rise in domestic credit card transactions, yet also warned that the slowing growth in passenger car sales could act as a negative factor in the coming months. To stimulate domestic demand, the ministry said the government will expedite the implementation of a supplementary budget, which includes cash handouts referred to as "consumption coupons." The first batch of those coupons was issued in late July.
In June, industrial production inched up while facility investment weakened across most sectors, with the exception of machinery used in semiconductor manufacturing. Meanwhile, the labor market continued to show some resilience, with more than 170,000 jobs added in July, the report noted. However, job losses persisted in the manufacturing and construction sectors, while youth employment remained sluggish.
Exports rebounded in July, rising 5.9 percent from a year earlier to US$60.8 billion on the back of robust global demand for semiconductors, despite the U.S. tariff scheme, it said.