The government has assessed that the South Korean economy has shown signs of recovery in domestic demand for six consecutive months. The consumer price index has recently fallen to around 1%, indicating a trend of increasing stability.
In its Recent Economic Trends for October report, the Ministry of Economy and Finance stated, “Our economy is experiencing a steady recovery in exports and manufacturing, while the trend of price stability continues to expand. Additionally, we are seeing gradual improvement in domestic demand, primarily driven by equipment investment and the service sector, although the pace of recovery varies across different sectors.”
Last month, the government made a similar assessment, consistently noting signs of recovery in domestic demand since May.
In August, total industrial production saw a decline in construction output, which fell by 1.2%. However, this decline was offset by growth in mining and manufacturing, which rose by 4.1%, and a 0.2% increase in the service sector, resulting in an overall rise of 1.2% compared to the previous month.
Regarding spending patterns, equipment investment decreased by 5.4%, while retail sales experienced a 1.7% increase.
In September, the number of employed individuals rose by 144,000 compared to the same month last year, and the unemployment rate declined to 2.1%, a drop of 0.2 percentage points from the previous year.
Consumer prices in September increased by 1.6% compared to the same month last year, reflecting a significant decrease in the rate of increase from August’s 2.0%. This figure is now below the government’s inflation target of 2%.
The core inflation index, excluding food and energy, increased by 2.0%, while the index, excluding agricultural products and petroleum, rose by 1.8%. The living cost index, which includes items that consumers readily notice in their daily lives, saw a 1.5% increase.
The government also evaluated the external environment, stating, “The global economy is showing an overall recovery due to improvements in trade and shifts in major countries’ monetary policy. However, there are disparities in the pace of recovery across different regions. Geopolitical risks, such as the Russia-Ukraine conflict and escalating tensions in the Middle East, along with fluctuations in raw material prices and concerns about economic slowdowns in major countries, continue to create uncertainties.”
It continued, “We will establish a stable inflationary trend and swiftly implement key policy measures to stabilize livelihoods, including tailored support for small businesses and bolstering domestic demand. At the same time, we will advance the Dynamic Economy Roadmap to enhance our citizens’ quality of life and strengthen our economy’s sustainability.”