Economy recovering from first-half downturn despite lingering concerns: finance ministry

Customers shop at a major discount chain store in Seoul, Thursday. Yonhap

The Korean economy is recovering from a downturn in the first half despite lingering concerns over external uncertainties, the finance ministry said Friday.

The Ministry of Economy and Finance made the assessment in its monthly economic report, the Green Book, striking a more upbeat tone compared with last month.

"Despite monthly fluctuations, key indicators are showing an overall improving trend, signaling a rebound from the slump seen in the first half of this year," the report said.

In its September edition, the ministry said "positive signs for economic recovery are strengthening."

Industrial output was nearly unchanged in August compared with a month earlier, while facility investment declined 1.1 percent. Retail sales, a gauge of private consumption, fell 2.4 percent on-month in August, marking the first decline in four months.

In September, the country's exports jumped 12.7 percent on-year $65.95 billion on strong demand for semiconductors, marking the highest level since March 2022, the ministry noted.

Also, it added 312,000 jobs last month, the fastest on-year growth in 19 months, led by employment gains in the service sector following the government's stimulus package.

Consumer prices rose 2.1 percent on-year in September, returning to the 2 percent range in a month.

The ministry, however, cited weak construction investment, a sluggish job market in vulnerable sectors and concerns over a slowdown in exports due to U.S. tariff measures as major headwinds.

"In the global economy, volatility in international financial markets persists, and concerns over sluggish trade and growth are mounting due to deteriorating trade conditions caused by tariff measures imposed by major countries," it said.

"The government will make all-out efforts to respond to trade risks and support domestic companies affected by U.S. tariffs."

Korea and the U.S. reached a framework trade deal in late July, under which Seoul pledged to invest $350 billion in the U.S., among other commitments, in exchange for Washington's agreement to reduce its "reciprocal" tariff on Korea from 25 percent to 15 percent.

But the deal has not yet been finalized, as negotiations continue over the remaining details. Finance Minister Koo Yun-cheol, Industry Minister Kim Jung-kwan, Trade Minister Yeo Han-koo and Kim Yong-bum, the presidential chief of staff for policy, are currently in Washington for what are expected to be last-minute talks.