S. Korea's economy sluggish on weak exports; domestic demand limits wane

economy-KDI assessment

S. Korea's economy sluggish on weak exports; domestic demand limits wane

By Kang Yoon-seung

SEOUL, May 8 (Yonhap) -- The South Korean economy remains sluggish amid ailing exports, but its downward trend has been moderated due to a recovery in its domestic consumption, a state-run think tank said Monday.

"Due to challenging external conditions, exports continued to decrease sharply, centering on semiconductors," the Korea Development Institute (KDI) said in its monthly report.

South Korea's exports fell for the seventh consecutive month in April due mainly to sagging global demand for semiconductors. Outbound shipments of chips plunged 41 percent on-year amid the downcycle of the industry.

"Manufacturing production and shipments continued to decline, while related business sentiment indices stood at low levels, indicating persistent weakness in economic activity," it added.

The KDI, however, said the economy's steep decline has been "somewhat tempered by a moderating slump in domestic demand."

"Retail sales experienced an easing of contraction led by automobiles, while services production sustained favorable growth backed by increased demand for tour activity," the institution said.

The think tank nevertheless pointed out that the country's economic activities are still showing "weakness," and manufacturing production and shipments continued to decline.

The KDI added the local financial market remains "stable" despite the growing concerns over the global banking sector.

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