Weak domestic recovery and export slowdown fuel ongoing downside economic pressures in May

The finance authorities continue to sound the alarm about growing pressures on the local economy due to a combination of U.S.' tariffs and weaker consumption at home.

Park Jun-han explains.

The Ministry of Economy and Finance assessed that downside pressures on the economy are continuing to grow, for the fifth consecutive month.

This assessment comes in the ministry's Green Book, a monthly report detailing the nation's economic trends.

The ministry said a recovery of domestic demand — particularly in consumption and construction investment — has remained sluggish, while employment difficulties persist, especially in vulnerable sectors.

It also noted that the Korean economy has been facing increasing downside pressures, including a slowdown in exports due to worsening external conditions following the imposition of U.S. tariffs.

"I think the tariff impact is there, and that's why we used the term 'export slowdown' from April's data.

We also saw some growth in exports to countries outside of the U.S., making the April export data less severe than the tariff effects might suggest."

South Korea saw a dramatic decrease in construction investment from over a year ago.

Investment in the first quarter of 2025 saw a year-on-year decline of 12.2% .

In April 2025, there were about 28.9 million people employed, an increase of 194-thousand from the same period last year.

However, year-on-year manufacturing sector employment was down 124-thousand last month, the largest drop in six years and two months.

Employment challenges also persisted among the 15 to 29-year-old age group.

The unemployment rate for young people in April stayed at 7.3%, continuing in the 7% range since February.

To combat the slowdown in exports and to boost the country's industrial competitiveness,

the ministry pledged to swiftly execute the necessary supplementary budget.

The budget of 13.8 trillion won, or about 9.9 billion dollars, will be used to bolster the job market, construction, and support for small businesses.

Park Jun-han, Arirang News.