Economy on recovery track despite manufacturing setback due to chip boom: KDI
Containers are stacked at a port in Pyeongtaek, around 60 kilometers south of Seoul, July 1. Yonhap
SEJONG — The Korean economy remains on the recovery track as gains from the booming chip industry offset the slowdown in the overall manufacturing sector, a state-run think tank said Wednesday.
"Korea's economy remained on a modest recovery path, supported by robust semiconductor exports and services activity, while manufacturing production softened," the Korea Development Institute (KDI) said in its monthly economic assessment.
The KDI pointed out exports by Asia's No. 4 economy continued to expand "strongly" amid robust artificial intelligence (AI)-related demand.
Korea's monthly exports hit a fresh record high by surpassing the $100 billion mark for the first time in June, surging 70.9 percent on-year to $102.25 billion.
"Although growth in semiconductor export volumes moderated, exports remained robust in value terms, supported by continued price increases," the KDI said.
Exports of semiconductors nearly tripled to reach $44.82 billion, with monthly exports surpassing $40 billion for the first time on the back of surging demand for memory chips.
The KDI, however, noted manufacturing production edged down as "the earlier rapid gains in semiconductors moderated and other segments remained subdued."
Touching on external risks, the think tank said uncertainties have eased since mid-June following talks on ending the U.S.-Iran war, although uncertainties remain over whether a final agreement will be reached.
The KDI added high oil prices and the weaker Korean won against the greenback may "continue to exert upward pressure on prices, raising the risk of further policy rate hikes that can weigh on the recovery in consumption."
Korea's consumer prices increased 3.2 percent in June from a year earlier. It marked the sharpest increase since December 2023, when the figure was at the same level.