Economy swayed by sluggish exports, domestic demand: gov't report

The South Korean economy has remained at a weak recovery pace as sluggish exports and faltering domestic demand weigh heavily on Asia's fourth-largest economy, a government report said Tuesday.

"Domestic demand such as private consumption and investment was dragged down by the production termination of the Galaxy Note 7 and other one-off factors," the finance ministry said in its monthly economy assessment report called the "Green Book."

The report is based on the latest economic indicators of such key factors as output, exports, consumption and corporate investment that could provide clues as to how the economy has been faring in recent months.

The recent data showed that the economy has been facing double trouble at home and abroad as domestic consumption, which had propped up the recovery momentum for nearly a year, started to lose steam as the production side is still suffering from a steady decline in exports.

The gross domestic product of private consumption for the third quarter gained 0.5 percent from three months earlier, sharply contracting from a 1 percent on-quarter gain in the April-June period.

In September alone, retail sales fell 4.5 percent on-month, with those of durable goods dropping 6.1 percent and non-durables such as foodstuffs losing 5.1 percent.

Facility investment backtracked 0.1 percent in the third quarter, backtracking from a 2.8 percent jump in the previous quarter.

The production side is still in the doldrums, as industrial output of the mining and manufacturing sector retreated 2.4 percent on-month in August and edged up 0.3 percent in September due to partial strikes at major carmakers including industry leader Hyundai Motor Co.

In line with the production slump, exports, the country's key economic driver, fell 3.2 percent on-year in October due to a sharp drop in automobiles and mobile handsets stemming from the work stoppage and the production halt of the Galaxy Note 7.

The finance ministry said the future of the South Korean economy is still not bright in the remaining months of the year on rising uncertainties of a possible U.S. rate hike and the results of the U.S. presidential election.

"Downside risks and uncertainties surrounding our economy are expanding at this time," said the ministry. "The government will keep close tabs on the local markets to deal with the potential impact." (Yonhap)