Korea's economy is facing "high" uncertainty amid worries over a global economic slowdown and a delayed recovery in consumption and corporate investment here, the finance ministry said Tuesday.
"At a time when worries over a global slowdown are lingering, the recoveries of consumption and investment sentiment are also being delayed. Uncertainty over economic situations here and overseas remain high," the ministry said in a report.
The report said employment conditions continue their upward trend, citing the latest job data that showed about 364,000 new jobs were added to the workforce in August from a year earlier. Consumer price growth also stayed stable in the 2-percent range last month.
Other indicators such as production, consumption and investment, however, appear to be losing traction, the report noted.
Industrial output declined 0.7 percent in August from the previous month, affected by labor strikes in the auto industry, and retail sales contracted 3 percent over the same period.
Facility investment also fell 13.0 percent on-month in August, indicating that investment sentiment remains sluggish, apparently due to bleak business outlooks.
The eurozone debt crisis is one of major factors that weighs on Korea's economy, according to the report. The latest exports data showed overseas shipments declined 1.8 percent in September from the same month a year earlier.
The assessment comes amid a series of bleak outlooks for Korea's export-driven economy at a time when there are no clear signs the eurozone fiscal problems and worries over the global slowdown will disappear.
Earlier, the International Monetary Fund revised down its growth outlook for Korea to 2.7 percent from the 3 percent it predicted just weeks earlier. It also cut its 2013 growth projection to 3.6 percent from its previous estimate of 3.9 percent.
Last month, the Korea Development Institute, a state-run think tank, slashed its growth outlook for Korea from 3.6 percent to 2.5 percent, adding that export and domestic demand growth appear to be slowing significantly.
On Tuesday, the think tank announced its monthly report on the latest economic trends, echoing the previous comments that domestic demand, in particular corporate investment, remains sluggish.
The government still sticks to its previous forecasts the economy will grow 3.3 percent this year and 4 percent next year. Analysts, however, say those forecasts are overly optimistic given current economic situations, and predict this year's economic growth could fall into the 2 percent range. (Yonhap)