Economy shows signs of recovery on strong exports, soft inflation: finance ministry

The South Korean economy continues to show signs of recovery, driven by strong exports and manufacturing output, with consumer prices showing signs of stabilization, the finance ministry said Friday.

The Ministry of Economy and Finance made the assessment in the Green Book, its monthly economic report, noting that domestic demand is also recovering, led by facility investment and the service sector.

"The South Korean economy is experiencing a recovery trend amid the stabilization of consumer prices, driven by robust exports and the manufacturing sector," the ministry said.

"Domestic demand is also showing signs of a gradual recovery, led by facility investment and the service sector, although the pace differs among sectors," it added.

The ministry highlighted signs of improving domestic demand for five straight months.

"The global economy is also showing signs of a recovery in general, driven by improving trade and changes in the monetary policies of major countries," it added.

The report, however, noted that geopolitical risks, including Russia's invasion of Ukraine and rising tensions in the Middle East, continue to pose uncertainties for Asia's fourth-largest economy.

South Korea's exports, meanwhile, extended on-year gains for the 11th straight month in August, driven by strong demand for semiconductors.

Consumer prices, a key gauge of inflation, rose 2 percent on-year in August, marking the slowest increase since March 2021, when consumer prices grew by 1.9 percent.

Output in the service industries increased 0.7 percent on-month in July, as gains from the telecommunications and travel industries offset losses in the financial sector.

Retail sales, a gauge of private spending, fell 1.9 percent on-month in July, mainly due to declining sales of automobiles, gasoline, and semidurables.

Facility investment, on the other hand, increased by 10.1 percent from a month earlier in July, bolstered by the transportation sector, which jumped 50.5 percent, the data showed. (Yonhap)