Domestic demand on mild improvement track: finance ministry

South Korea's domestic demand is gradually improving as a slump in the service sector caused by the pandemic has eased, the finance ministry said Friday.

In its monthly economic assessment report, the ministry presented a more positive assessment about private consumption than the previous month, when it said a slump in domestic demand has gradually eased.

"The manufacturing sector and investment have continued to improve on the back of robust exports, and domestic demand is on a mild improvement path as a slump in the in-person service sector has eased," the Ministry of Economy and Finance said in the Green Book.

Asia's fourth-largest economy is recovering from the pandemic as exports of chips and autos, key items, remained solid amid the global economic recovery.

Exports, which account for half of the country's economy, jumped 41.1 percent on-year in April to extend their gains to the six month.

The country's industrial output rose for the second straight month in March as the economic recovery has gathered pace.

Private spending grew 1.1 percent in the first quarter from three months earlier, rebounding from a 1.5 percent contraction in the final quarter of last year.

The domestic use of credit cards grew 18.3 percent on-year in April, marking the third straight month of gains.

Sales at department stores rose 26.8 percent on-year last month, slowing from a 63 percent jump in March, according to the ministry.

Amid an economic recovery, the county reported the largest job growth in almost seven years in April, with the number of employed people increasing by 652,000 from a year earlier.

Last month, consumer inflation grew at the fastest on-year pace in almost four years due to last year's low base and higher prices of farm and oil products.

The Bank of Korea (BOK) froze its key interest rate at a record low of 0.5 percent in April amid a flare-up in COVID-19 cases. The BOK aims to keep inflation at 2 percent over the medium term.

President Moon Jae-in said Monday the government will make efforts to help the Korean economy grow at least 4 percent this year. The finance ministry earlier penciled in the growth rate in the mid-to-high 3 percent range.

The ministry cited a resurge in COVID-19 cases in emerging countries and growing inflation concerns as potential downside risks for the global economy.

Global inflation concerns mounted as US consumer prices shot up 4.2 percent on-year in April, the fastest in 13 years, topping market expectations.

Kim Young-hoon, a senior ministry official, said it is doubtful whether US inflationary pressure will be sustainable as the job market remains sluggish. (Yonhap)