Seoul: The South Korean economy is showing signs of recovery following a downturn in the first half of the year, driven by improved domestic demand and a robust performance in the semiconductor sector, despite prevailing uncertainties, according to the finance ministry.
According to Yonhap News Agency, the Ministry of Economy and Finance highlighted these developments in its monthly economic report, the Green Book. The report emphasized an ongoing "recovery" for the third consecutive month, noting improvements in domestic consumption and semiconductor-led exports as key contributors to this positive trend.
However, the ministry also noted that uncertainties persist, citing employment difficulties in vulnerable sectors and significant month-to-month volatility in key indicators like industrial output and consumption. These fluctuations were attributed to the extended Chuseok holiday observed in October. The report further identified the impact of U.S. tariff measures and other external risks as continuous concerns for the economy.
In November, South Korea saw an addition of 225,000 jobs, continuing a positive trend in employment for the year. Despite this, the manufacturing and construction sectors, along with the younger population, experienced employment losses. October saw industrial output fall at its sharpest rate in over five years, and facility investment dropped by 14.1 percent on a monthly basis, reversing the gains from the previous month.
Retail sales, reflecting private consumption, rose by 3.5 percent on a monthly basis in October after two months of decline. The country's exports grew by 8.4 percent in November compared to the previous year, marking six months of consecutive growth, largely driven by strong demand for semiconductors.
Consumer prices, a key measure of inflation, rose by 2.4 percent from the previous year last month, surpassing the Bank of Korea's 2 percent target for the third month in a row. The ministry also warned of global economic risks, including potential trade slowdowns due to tariff concerns and continuing volatility in international financial markets.
In late October, Seoul and Washington finalized a deal on Seoul's $350 billion investment pledge in exchange for reduced U.S. tariffs, following summit discussions between President Lee Jae Myung and U.S. President Donald Trump. Last week, the Trump administration posted a notice on the Federal Register implementing certain tariff elements of the South Korea-U.S. trade deal, including a reduced duty rate of 15 percent on Korean autos retroactive to November 1.
Looking forward, the government intends to bolster domestic demand and ensure the swift execution of next year's budget plan. It also committed to supporting initiatives like an AI-centered transformation strategy to fulfill President Lee's five-year economic development blueprint for establishing a "super-innovation economy."