Economic recovery remains sluggish due to faltering private consumption

Published : Mar 9, 2017 - 10:48 Updated : Mar 9, 2017 - 14:22

Faltering private consumption is dragging down South Korea's flaccid economic recovery, which has shown some signs of an upturn in exports and investment, a government report said Thursday.

"An upside mode of exports is expanding to production and investment, but domestic demand, such as consumption, continues to slow down and limit the recovery for the entire economy," the finance ministry said in its monthly economy assessment report called the "Green Book."

An image depicting the sluggish economic recovery in Korea (Yonhap)

The report is based on the latest economic indicators of such key factors as output, exports, consumption and corporate investment that could provide clues as to how the economy has been faring in recent months.

It said the production side improved to a large extent on the back of brisk exports and facility investment.

Outbound shipments rose to a five-year high of 20.2 percent in February on a sharp increase in semiconductors and petroleum products. The growing overseas demand for chips led facility investment, which rose 2.6 percent on-month in January to mark the third consecutive month of growth.

Moreover, rising exports helped industrial output rise 3.3 percent in January from a month earlier, a turnaround from a 0.5 percent on-month drop tallied in December.

Retail sales, however, fell 2.2 percent in January from a month earlier, as a protracted economic slump and rapidly rising oil prices dampened consumer confidence.

In February, department stores and discount outlets saw their sales retreat 1.1 percent and 14.6 percent, respectively.

The composite consumer sentiment index for February reached 94.4, up slightly from 93.3, the lowest since March 2009, when it stood at 75 in the aftermath of the global financial crisis.

The finance ministry said the South Korean economy will face rising external and internal downside pressures in the coming months.

"There are rising uncertainties at home and abroad, such as a possible US rate hike, trade issues and domestic situations," the ministry said. "The government will make every effort to improve the economy and create jobs." (Yonhap)