Sluggish Construction Investment and Weak Consumption Growth
Consumer Sentiment Index Remains at 93.4 in March
Export Growth Continues to Slow
Concerns Over Weakened Sentiment Among Export Companies
The Korea Development Institute (KDI), a government-funded research institute, has expressed concerns about downside risks to the economy for four consecutive months. It diagnosed that as domestic and external demand growth slows, production deceleration and worsening trade conditions due to U.S. tariff hikes have expanded downside pressure on exports.
In the April issue of its Economic Trends report released on the 7th, KDI explained, "Recently, our economy is showing signs of expanding downside pressure as external conditions rapidly deteriorate."
KDI pointed out, "Production is slowing as domestic and external demand growth shrinks." It also explained, "Downside pressure on exports has expanded as international trade conditions worsened due to U.S. tariff increases."
Despite a favorable trend in facility investment, the domestic economy is constrained in recovery due to sluggish construction investment and weak consumption growth. Exports rebounded somewhat from a low level at the beginning of the year, but the slowing growth trend continues.
Concerns also arise from the downward revision of global economic growth forecasts amid intensifying trade conflicts and the contraction of corporate sentiment, especially among export companies. Since the beginning of this month, the full-scale implementation of U.S. tariff hikes has further worsened export conditions.
Industrial production across all sectors increased by 1.2% in February. However, this was mainly due to an increase in working days (+1.5 days), with production slowing across industries including construction (-21.0%). Exports in the first quarter decreased by 2.1% due to a reduced increase in information and communication technology (ICT) products.
Due to weakness in semi-durable and non-durable goods, average retail sales from January to February declined by 1.1%. Last month, the consumer sentiment index was 93.4, below the baseline of 100. Construction output sharply decreased again in February (-21.0%) following January, indicating a sluggish economic trend. The consumer price index in March (2.1%) was similar to the previous month (2.0%).
The increase in the number of employed persons in February (136,000) was similar to the previous month. However, major sectors such as manufacturing (-74,000) and construction (-167,000) saw significant declines in employment. The unemployment rate rose across all age groups, and the employment rate’s upward trend is also slowing.
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