S. Korean economy remains weak amid sluggish construction, exports: KDI

The South Korean economy remains sluggish amid the prolonged doldrums in the construction sector and slowing exports in light of U.S. tariffs.

Now this is according to the latest assessment by a state-run think tank.

Our Moon Ji-young has more.

A state-run think tank has diagnosed that the South Korean economy remains subdued overall, noting escalating external uncertainties, driven by U.S. tariff hikes.

According to the June Economic Trends Report released on Tuesday, the Korea Development Institute states that the country's economy is weighed down by continued weakness in the construction sector and a slowdown in exports.

The agency stated that construction investment continued its decline, constraining recovery in domestic demand.

Overall production growth is also slowing, with the construction sector notably contributing to this deceleration, posing a significant drag on the economy.

Exports also showed weakening momentum, especially in sectors heavily exposed to U.S. tariffs.

This included a continued decline in exports to the U.S, with automobile shipments notably falling by 32 percent year on year.

In contrast, manufacturing production maintained solid growth, led by semiconductors, with persistent demand supporting robust growth in production, exports, and related equipment investment in this sector.

Meanwhile, household and business sentiment showed modest improvement amid easing political uncertainties and progress in trade talks between Washington and Beijing.

The Consumer Sentiment Index recovered to the baseline level in May, signaling an easing in the contraction seen since last year.

"It seems the situation itself has improved compared to the first quarter. Since interest rate policy is now moving towards an easing stance, I think it might gradually contribute to an improvement in domestic demand."

However,

the KDI warned that trade-related uncertainty remains high due to further increases in steel and aluminum tariffs and concerns over a potential resurgence of U.S.-China trade tensions.

Moon Ji-young, Arirang News.