Domestic demand fueling growth momentum amid weak exports

Rising domestic demand in South Korea is stimulating industrial output and fueling growth momentum amid contracting exports and persistent overseas economic uncertainties, the finance ministry said Tuesday.

In its latest economic assessment report called the Green Book, the ministry said consumer spending rose 1.1 percent in the third quarter from three months earlier and gained 2 percent on-year. In August, private spending began to improve following a poor showing in the second quarter.

Production in the mining, manufacturing, gas and electricity industries jumped 1.9 percent on-month in September, accelerating from a 0.2 percent on-month gain in August.

Facility investment, another barometer of economic health, advanced 2 percent on-quarter in the third quarter and jumped 6.8 percent on-year.

The latest assessment also showed improvements in the employment market, with 347,000 new jobs being created in September, up from 256,000 the month before.

In the service and retail sectors, the ministry said the lowering of excise taxes on autos, large electronic appliances and certain luxury goods, coupled with the launching of nationwide discount events, like the Korea Grand Sale, contributed to more demand.

For October, sales of locally made cars surged 22.7 percent on-year, with sales at department stores advancing 17.4 percent.

Large discount store chains also said sales rose 1.6 percent, with car fuel sales moving up 9.2 percent.

The ministry, however, said that while many indicators were showing signs of recovery, exports continued to contract, nosediving 15.8 percent on-year in October. Last month's loss was worse than the minus 8.4 percent tallied in September.

The ministry said besides weak exports, Asia's fourth-largest economy still faces external uncertainties, such as the slowdown in growth in China and a possible U.S. interest rate hike.

China is South Korea's largest export market, while a U.S. rate hike can trigger financial market volatility that can pose challenges for the country. (Yonhap)