KDI "Moderate Economic Recovery... High External Uncertainty Maintained"

[Asia Economy Sejong=Reporter Son Seon-hee] The Korea Development Institute (KDI) diagnosed that economic uncertainty due to external factors remains high in the recent economic situation. However, it did not additionally mention the 'economic downturn' that had been a concern for two consecutive months.

On the 9th, KDI released the 'February Economic Trends' report, evaluating that "recently, our economy is maintaining a moderate economic recovery trend, but economic uncertainty remains high, especially in the external sector."

KDI expressed concern, stating, "The high rise in raw material prices continues, and the financial market shows instability, indicating that economic uncertainty remains high. The sharp rise in import prices, centered on raw material prices, is restricting the recovery of our economy, as evidenced by the trade deficit." Additionally, it added, "With growing expectations that the normalization of U.S. monetary policy will proceed rapidly, the stock market has plunged, showing unstable trends in the financial market."

However, regarding the domestic economy, it stated, "While manufacturing continues a favorable growth trend, the negative impact of the rapid spread of COVID-19 on the service sector has been limited compared to the past."

In December last year, total industrial production showed a high growth rate of 6.5%. In particular, the automobile sector turned to growth (8.0%) as the supply disruption of vehicle semiconductors partially eased.

Due to the spread of the Omicron variant virus and the re-strengthening of social distancing, production in the service sector, such as accommodation and food services, remained depressed. However, except for these sectors, the impact of COVID-19 was not significant, and employment maintained a moderate recovery trend, KDI analyzed.

KDI stated, "Despite the acceleration of COVID-19 spread in January, the business sentiment index somewhat improved, especially in non-manufacturing, and the consumer sentiment index also slightly rose, indicating that the negative impact of COVID-19 on the domestic economy is considered limited."

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