Christmas decorations are displayed at a Christmas goods shop in Namdaemun Market in Jung District, central Seoul. (Yonhap)
SEOUL, Dec. 8 (Korea Bizwire) — South Korea’s economy is showing signs of a modest recovery in industrial activity, supported by improving domestic consumption, even as a prolonged construction slump continues to weigh on output, the Korea Development Institute said Monday.
“Construction has remained subdued for an extended period, but consumption has strengthened as interest-rate reductions gradually filter through the economy, aided by fiscal measures,” the state think tank said in its monthly assessment. “A solid expansion in services has helped lift overall industrial production.”
Industrial output fell 3.6% in October, largely due to fewer business days during the extended Chuseok holiday. The autumn holiday landed in early October this year, compared with late September in 2024. Taken together, output for September and October rose 1.6% from a year earlier.
Construction activity contracted sharply, falling 14.2% over the two-month period. Manufacturing and mining output grew 1.6%, as semiconductor production surged 14.6% year-on-year, offsetting declines in autos and machinery, which fell 2.2% and 3.8%, respectively.
Service-sector output increased 3.6%, led by healthcare, social welfare and financial industries. Retail sales advanced 1.3% year-on-year in September and October, while the consumer sentiment index held at a relatively upbeat 112.4, supported by lower interest costs and government stimulus programs, including consumer coupons.
Myeongdong Street in central Seoul, a popular shopping district, is bustling with people in this Nov. 25, 2025, file photo. (Yonhap)
Exports continued to improve in November. Outbound shipments grew 8.4% from a year earlier to above $61 billion, driven by stronger demand for semiconductors and autos, which rose 38.6% and 13.7%, respectively. Other export categories, however, remained weak, tempering the overall rebound.
KDI said uncertainty remains in the trade outlook despite the conclusion of follow-up tariff negotiations between Seoul and Washington. A pending U.S. Supreme Court ruling on reciprocal tariffs could affect bilateral trade conditions.
The think tank added that the semiconductor sector’s strong performance is being propelled by rapid price gains, while export volumes appear to be leveling off, suggesting momentum could ease.
Ashley Song (ashley@koreabizwire.com)
