Korea sees second month of eased economic slowdown

[Photo by Yonhap]

The South Korean government said on Friday that the pace of economic slowdown has partly eased for a second consecutive month.

In the September issue of its “green book” on recent economic trends, the Ministry of Economy and Finance said that the economic slowdown appears to be easing to some extent although volatility remains due to the rise in international oil prices and seasonal factors. This is the second month in a row that the government has made the same assessment, following last month’s change in wording from “sustained” to “easing.”

The government based this judgment on several factors, including the continued moderation of inflationary pressures, improvements in export performance, and positive developments in consumer sentiment and employment.

The consumer price index rose by 3.4 percent in August, an increase compared to the previous month’s 2.3 percent. However, the government attributes this uptick to temporary factors such as rising international oil prices and agricultural product price volatility, maintaining that an overall trend of economic softening still persists.

Although exports recorded a year-on-year decrease of 8.4 percent in August, totaling $51.87 billion, the rate of decline has slowed compared to July’s 16.4 percent drop. South Korea’s trade balance also continued its positive trend for a third consecutive month, posting a surplus of $870 million, primarily due to a significant 22.8 percent reduction in imports while the current account surplus stood at $3.58 billion in July. While the goods and income account remained in surplus, the services account recorded a deficit, mainly due to deteriorating travel-related services.

Domestic consumption showed signs of sluggishness, with retail sales down by 3.2 percent month-on-month and 1.7 percent year-on-year in July. Consumer confidence also dipped by 0.1 points to 103.1 in August.

Meanwhile, industry production saw a year-on-year decrease of 1.4 percent in July, while the service sector and construction industry experienced growth. The mining and manufacturing sectors and public administration witnessed declines.

The concurrent economic indicator, a crucial gauge of the country’s economic health, fell by 0.5 points to 99.6 in August, slipping below the 100-point mark.

The number of employed persons increased by 268,000 in August, marking an expansion of growth compared to the previous month.