Ministry of Economy and Finance: “Emerging from First-Half Sluggishness... Economic Improvement Continues”

October Economic Trends
Overall Improvement Highlighted
Despite Monthly Fluctuations in Production and Consumption Indicators

The government has diagnosed the country's economy as "showing signs of overcoming the sluggishness in the first half of the year" in its recent economic trends report, known as the Green Book. Despite some fluctuations in monthly consumption indicators, the government maintained an optimistic outlook, stating that the trend of economic improvement is continuing.

On October 17, the Ministry of Economy and Finance stated in the "October Recent Economic Trends (Green Book)" that, "Recently, the Korean economy continues to face concerns such as delayed recovery in construction investment, employment difficulties mainly in vulnerable sectors, and worries over export slowdown due to US tariffs." However, the ministry also assessed that, "Key indicators such as production and consumption are showing an overall improvement trend despite monthly ups and downs, indicating that the economy is moving past the sluggishness of the first half." This continues the positive assessment from last month's Green Book, which noted that consumption was "on the rise" and that signs of economic recovery were "strengthening."

Cho Sungjoong, Director of Economic Analysis at the Ministry, said in a briefing on the same day, "We have observed positive signals regarding the economy for three consecutive months," and added, "Although there have been monthly fluctuations in indicators such as card approval amounts from July to September, we believe there is an overall improvement trend when looking at the third quarter as a whole." He further explained, "The growth rate of domestic card approval amounts increased from 5.0% in August to 8.5% in September. Due to the late Chuseok holiday this year, the figure for August was somewhat low, while September saw a relative increase. Overall, this indicates an improving trend."

In fact, monthly consumption-related indicators have been inconsistent. In August, retail sales increased for semi-durable goods (1.0%) but decreased for non-durable goods (-3.9%) and durable goods (-1.6%), resulting in a 2.4% decline from the previous month. Card approval amounts at discount stores fell by 14.6% compared to the same month last year. The consumer sentiment index, while slightly down in September compared to August (111.4), remained strong at 110.1.

However, the growth rate of domestic card approval amounts expanded from 5.0% in August to 8.5% in September, and card approval amounts at department stores also turned to an increase, rising from -7.1% in the previous month to 7.1% in August. Director Cho noted, "There is a tendency for overall consumption to change depending on the business sector," and added, "Compared to August (-22.9%), the decline in card approval amounts at discount stores has lessened." The Ministry of Economy and Finance stated, "Positive factors include the robust consumer sentiment index and the expanded growth rate of domestic card approval amounts, while negative factors include the decrease in card approval amounts at discount stores."

The ministry expects that the expansion of consumption, driven by measures such as the issuance of livelihood recovery consumption coupons, will have a positive impact on the economy. Director Cho said, "At the beginning of the year, uncertainties at home and abroad dampened consumer sentiment, but from the second quarter onward, consumer sentiment began to recover, and the issuance of coupons helped accelerate this trend," adding, "This will continue to have a positive ripple effect on investment and production going forward." He also said, "Given the recent strong performance of the stock market, we believe this could also have a positive ripple effect on consumption, corporate activity, and the overall economy."

Regarding external economic conditions, the ministry stated, "The global economy faces concerns over continued volatility in international financial markets and a slowdown in trade and growth, due to the deterioration of the trade environment stemming from the imposition of tariffs by major countries." This is the same expression as in the previous month.