KDI "Easing of Consumption Slump... Maintaining Moderate Economic Recovery Trend"

[Sejong=Asia Economy Reporter Son Seon-hee] The Korea Development Institute (KDI) analyzed on the 7th that the Korean economy is gradually recovering, with exports maintaining a favorable trend and consumption sluggishness easing.

In its 'June Economic Trends' report released that day, KDI evaluated, "As consumer sentiment rapidly improves, the sluggishness in private consumption is easing."

Retail sales in April maintained a high growth rate of 8.6%, following the previous month's 10.9%. The Consumer Sentiment Index (CSI) last month also rose by 3.0 points from the previous month (102.2) to 105.2, indicating a recovery in consumer sentiment. However, KDI added, "Due to the continued spread of COVID-19, face-to-face service industries remain sluggish."

Regarding exports and facility investment, which have been showing favorable performance since the beginning of this year, KDI diagnosed, "The global economy is rapidly recovering centered on the United States and China, sustaining a significant growth trend." Exports last month recorded a high growth rate of 45.6%, following the previous month's 41.2%. Facility investment in April also showed a favorable trend, with growth expanding (9.5% → 16.8%), mainly in machinery.

However, KDI pointed out, "The global supply imbalance of raw materials and intermediate goods may act as a risk factor for future economic recovery." It added, "Supply disruptions in automotive semiconductors and construction materials such as steel may temporarily constrain manufacturing and construction production," and "The sharp rise in raw material prices, including oil prices, is exerting upward pressure on inflation."