KDI "The economy's low point has passed after a sluggish period"...Assessment of easing economic downturn

KDI July Economic Trends
"Easing of Slump Including Narrowed Decline in Semiconductor Exports"

The Korea Development Institute (KDI), a government-funded research institute, has diagnosed that the previously sluggish Korean economy is passing its bottom.

In the 'July Economic Trends' report published on the 9th, KDI stated, "Recently, the Korean economy is passing the economic bottom as the manufacturing slump, centered on semiconductors, has partially eased." It evaluated that the downturn is easing, with the decline in production and exports centered on semiconductors narrowing.

In May, KDI assessed that "the sharp downward trend is somewhat calming down, supported by the easing of domestic demand slump." In June, it said, "Indicators suggesting the economic bottom are increasing, such as the slowdown in the decline of semiconductor export value and volume," and this month, it went further to say the economy is passing the bottom.

KDI said, "Since March, the decline in semiconductor production has continuously narrowed, and export volume has turned to an increase," adding, "The high production growth of automobiles continues, and the slump in chemical products and electronic components has also eased."

The year-on-year decline rate of semiconductor export value narrowed from -36.2% in May to -28.0% last month, indicating an easing of the slump. The decline in exports to China continued, narrowing from -20.8% in May to -19.0% last month, but exports to regions excluding China eased to -2.2%.

KDI stated, "The service sector is maintaining a moderate growth trend, and accordingly, employment conditions showed a favorable outlook," and "the consumer price inflation rate fell sharply as supply-side inflationary pressures eased." The consumer price inflation rate in June this year recorded 2.7%, entering the 2% range for the first time in 21 months.

Regarding facility investment, KDI evaluated, "Investment demand remains limited while maintaining a flow similar to the previous month." For construction investment, it said, "While the growth rate of construction investment has slowed, housing starts and construction orders continue to decline sharply, suggesting that the growth of construction investment, centered on the housing sector, may be constrained."

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