The South Korean government has assessed that the economic recovery trend is continuing, driven by improvements in domestic demand and strong semiconductor exports. However, it also noted that the slow recovery in construction investment and persistent external uncertainties, such as U.S. tariff policies, remain as risk factors.
In its Recent Economic Trends (Green Book) report released on Friday, the Ministry of Finance and Economy stated that the economy is currently experiencing a recovery trend due to improvements in domestic consumption and robust semiconductor exports. However, employment challenges persist in vulnerable sectors, and uncertainties remain regarding the pace of construction investment recovery and the impact of U.S. tariffs.
The ministry evaluated that the economic recovery trend has continued for three consecutive months, propelled by strong semiconductor performance and improvements in domestic demand.
Overall industrial production increased by 0.9% compared to the previous month, with growth seen across manufacturing, services, and construction sectors. Equipment investment grew by 1.5% month-over-month.
In December, employment rose by 168,000 compared to the same month the previous year, though this increase was lower than November’s gain of 225,000.
Retail sales decreased by 3.3% from the previous month. Consumer prices in December rose by 2.3% year-on-year, as the rate of increase in agricultural and petroleum prices slowed. Core inflation, excluding food and energy, was limited to a 2.0% increase. The Consumer Sentiment Index (CSI) stood at 109.9 in December, down 2.5 points from November, yet remained above the baseline of 100.
Addressing the recent high exchange rates, Jo Sung-jung, the economic analysis director at the ministry, stated that while this situation can increase import prices, potentially burdening import companies and consumers, the inflation rate hasn’t significantly deviated from the 2% target. Therefore, it doesn’t believe it’s currently constraining the economy.
Exports continue to show significant growth, driven by strong semiconductor performance, while the construction sector remains sluggish.
In December, exports surged by 13.4% year-on-year, buoyed by the semiconductor boom. The daily average export value increased by 8.7% compared to the previous year.
Although construction investment rose month-over-month in November, it still declined by 17.0% compared to the same month the previous year, indicating persistent weakness in the sector.
The government identified worsening trade conditions due to tariffs imposed by major countries and geopolitical uncertainties as external risks that could lead to volatility in international financial markets and slow trade and growth.
Jo explained that the recent developments in the Middle East are contributing to uncertainties not only in the global economy but also in the market.
The Ministry of Finance and Economy asserted that to strengthen the momentum of economic recovery, it will continue to implement proactive macroeconomic policies and efforts to stimulate consumption, investment, and exports. It will also accelerate the 2026 economic growth strategy aimed at boosting potential growth rates, achieving balanced national growth, overcoming polarization, and reinforcing the foundation for a significant economic leap forward.