Korean economy shows signs of gradual recovery: KDI

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 year-on-year to $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 year-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 month-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 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.