The Korea Development Institute (Image courtesy of Yonhap)
SEOUL, Dec. 10 (Korea Bizwire) – South Korea’s economy is grappling with mounting challenges, as domestic construction downturns and global trade uncertainties weigh heavily on growth prospects, according to a report by the Korea Development Institute (KDI) on December 9.
While the report notably avoided direct mention of the ongoing political turmoil surrounding President Yoon Suk-yeol’s impeachment proceedings, it highlighted significant economic vulnerabilities independent of the political landscape.
KDI pointed to sluggish domestic consumption and declining construction investment as key constraints on recovery. While semiconductor production and exports remain strong, sectors such as home appliances, telecommunications, and cosmetics have seen sustained declines.
Vehicle sales, which briefly surged in October due to increased working days, reversed course in November, adding to the strain.
The construction sector is also faltering, with a prolonged contraction in building-related investments driven by reduced orders. KDI warned that this downturn is likely to persist in the near term.
Export performance, a critical driver of South Korea’s economy, shows signs of slowing. Although information and communication technology (ICT) exports remain robust, KDI flagged potential risks stemming from global trade tensions, particularly following Donald Trump’s return to U.S. politics, which could strain international commerce.
On inflation, the institute noted a continued moderation in core price growth, suggesting that demand-side pressures remain subdued despite broader global inflation concerns.
KDI’s findings underscore the urgent need for South Korea to navigate economic turbulence on multiple fronts, with a delicate balance required to mitigate both external and domestic risks.
M. H. Lee (mhlee@koreabizwire.com)
