SEOUL, - The South Korean economy is showing signs of a gradual easing of an economic downturn led by rising exports, but domestic consumption and investment remain weak amid high interest rates, a state-run think tank said Thursday.
"The Korean economy is exhibiting signs of a gradual easing of economic sluggishness, largely driven by exports," the Korea Development Institute (KDI) said in a monthly economic assessment report.
Exports, a key growth engine, advanced 7.8 percent on-year to US$55.8 billion, the second monthly gain. The growth came as sales of semiconductors rebounded for the first time since August 2022, according to government data.
The country experienced a yearlong decline in overall exports amid a global economic slowdown, but logged an on-year growth for the first time in 13 months in October. The government and experts say exports have bottomed out and are expected to rise further.
"High interest rates continue to put a drag on consumption and deteriorate investment conditions," the report read, pointing to falling equipment investment and the high level of semiconductor inventories.
Retail sales, a gauge of private spending, went down 0.8 percent on-month in October on weak demand for food and other non-durable goods.
Compared with a year earlier, retail sales lost 4.4 percent in October, compared with a 2.0 percent fall the previous month, as demand for home appliances and other durable goods, as well as clothing, food and other items, all went down, according to government data.
Facility investment also slid 3.3 percent in October from the previous month, and logged a 9.7 percent decrease in on-year terms due mainly to a fall in investment in machinery and auto sectors.
The Bank of Korea has kept its benchmark interest rate unchanged at 3.5 percent since January 2023. It froze the rate seven straight times, but the level is the highest since 2008.
The KDI said the global economy is forecast to grow at a slow pace for some time, as the prolonged monetary tightening policies have affected the manufacturing industry and retail sales in major nations.
Source: Yonhap News Agency