Recent Economic Trends (Green Book), January Issue
Uncertainties Persist, Including Impact of U.S. Tariffs
The government has diagnosed for the third consecutive month that the economic recovery trend is continuing. It assessed that improvements in consumption and robust exports, particularly in semiconductors, are supporting the recovery.
On January 16, the Ministry of Economy and Finance stated in the January issue of its "Recent Economic Trends (Green Book)" that "the Korean economy is showing a continued recovery trend, driven by improvements in domestic demand, such as consumption, and strong exports centered on semiconductors." Since removing the phrase "downward pressure on the economy" in August last year, the government has gradually upgraded its economic outlook, maintaining the "recovery trend" assessment for this month, following November and December.
The government added, "However, indicators that saw significant increases in the third quarter are now undergoing adjustments due to base effects and the impact of extended holidays, leading to greater month-to-month volatility. Uncertainties remain, such as employment difficulties in vulnerable sectors, the pace of recovery in construction investment, and the effects of U.S. tariff impositions." Regarding global conditions, the government also diagnosed that worsening trade environments in major countries and geopolitical uncertainties could continue to cause volatility in international financial markets.
Real economic indicators showed mixed results. According to the November industrial activity trends, manufacturing output increased by 0.6% compared to the previous month but decreased by 1.4% year-on-year. Construction output also rose by 6.6% month-on-month but fell by 17.0% compared to the previous year. Service sector output increased by 0.7% from the previous month and by 3.0% year-on-year. As a result, total industrial output rose by 0.9% month-on-month and by 0.3% year-on-year.
On the expenditure side, retail sales decreased by 3.3% compared to the previous month, while facility investment increased by 1.5%. Regarding consumption conditions, the Consumer Sentiment Index (CSI) for December fell by 2.5 points from the previous month to 109.9, but remained above the baseline of 100. Business sentiment showed mixed signals of improvement and deterioration. The Business Survey Index (CBSI) for all industries in December was 93.7, up 1.6 points from the previous month, but the outlook for January this year dropped by 1.7 points to 89.4. Looking at economic indicators, the coincident index for November fell by 0.4 points from the previous month, while the leading index rose by 0.3 points.
Employment continued to increase, but the pace slowed. The number of employed persons in December last year increased by 168,000, down from 225,000 in the previous month. The unemployment rate stood at 4.1%, up 0.3 percentage points from the same month the previous year. The Ministry of Economy and Finance explained that employment growth is continuing, especially in service sectors such as health, social welfare, transportation, and warehousing, but the sluggish performance in manufacturing and construction continues to have an impact.
Inflation showed a slight slowdown. The Consumer Price Index in December rose by 2.3% year-on-year, driven by higher prices for agricultural products and petroleum, but the increase was slightly less than the previous month's 2.4%. The core inflation rate stood at 2.0%.
The government stated, "To further spread the momentum of economic recovery, we will continue active macroeconomic policies and efforts to boost consumption, investment, and exports. We will also swiftly implement this year's economic growth strategy to achieve a rebound in potential growth rate, balanced national growth, overcoming polarization, and strengthening the foundation for a major leap forward."
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