Rising Optimism for Economic Recovery... Government Says "Consumption Increasing, Positive Signals Strengthening"

September Green Book by the Ministry of Economy and Finance
Consumption "Increasing" Due to Policy Effects
Upward Trend Continues for Credit Card Approvals

The government has issued a positive assessment in its latest Economic Trends (Green Book) report, highlighting that consumption is increasing due to recent measures such as the distribution of consumer coupons aimed at supporting livelihoods. By emphasizing improvements in consumption indicators, the report expresses optimism about an economic recovery.

Yonhap News Agency

On September 12, the Ministry of Economy and Finance stated in its "September Recent Economic Trends (Green Book)" that "although concerns remain over delayed recovery in construction investment, employment difficulties in vulnerable sectors, and a slowdown in exports due to U.S. tariffs, positive signals for economic recovery are being strengthened, such as an increase in consumption resulting from policy effects."

Last month, the ministry omitted the phrase "downward pressure on the economy," which had been included for seven consecutive months, and began to mention positive signals for the economy for the first time in eight months. In the August Green Book, it was stated that "positive signals for future economic recovery are emerging, such as a turnaround in consumption." This month, the report went a step further, describing consumption as "increasing" and stating that signals of economic recovery are "strengthening."

Cho Sungjoong, Director of Economic Analysis at the Ministry of Economy and Finance, explained at a briefing that "there has not been a significant change in the wording compared to last month," adding, "Looking at the data from July, positive signals are appearing." He continued, "However, since a clear recovery in construction investment has not yet materialized and concerns about a slowdown in exports due to U.S. tariffs persist, how quickly construction can rebound and how much exports can be sustained will be key points for the future economy." He further explained, "The expression 'positive signals for economic recovery' reflects the ministry's cautious tone, indicating that we need to continue monitoring the situation."

In fact, consumption-related indicators are gradually improving. In July, retail sales increased by 2.5% compared to the previous month and by 2.4% year-on-year. Sales rose across all categories: durable goods (5.4%), semi-durable goods (2.7%), and non-durable goods (1.1%). The consumer sentiment index also improved, rising from 110.8 in July to 111.4 in August. Passenger car sales increased by 5.0% compared to the same month last year. The domestic credit card approval amount also continued to rise year-on-year, expanding by 3.7% in June, 6.3% in July, and 5.0% in August. Director Cho commented, "The domestic credit card approval amount rebounded significantly in both July and August, and the strong pace of recovery in consumption is a positive sign."

However, the credit card approval amount at discount stores fell by 22.9% year-on-year, and at department stores, it decreased by 7.1%, turning negative from a 1.1% increase in the previous month. Director Cho explained, "Last year, Chuseok fell in mid-September, so the positive consumption effect occurred from mid-August. This year, with Chuseok in October, we expect the effect to appear from mid-September." The ministry stated, "The improvement in the consumer sentiment index and the increase in domestic passenger car sales are positive factors, while the decrease in credit card approval amounts at discount and department stores are expected to act as negative factors."

Construction, another pillar of domestic demand, is still sluggish. In the second quarter, construction investment (provisional GDP figures) decreased by 1.2% compared to the previous quarter and by 11.4% year-on-year. Construction performance declined by 1.0% from the previous month and by 14.2% year-on-year. Director Cho stated, "A rapid rebound in the construction sector will be an important factor for the future economy." Regarding exports, he said, "Although exports are performing better than initially feared, uncertainties remain." In August, exports increased by 1.3% year-on-year, marking a third consecutive month of growth, but exports to the United States fell by 12% due to U.S. tariffs, reaching the lowest level in two and a half years.

Regarding external economic conditions, the ministry assessed that "the global economy faces concerns over continued volatility in international financial markets and a slowdown in trade and growth, due to worsening trade environments caused by major countries imposing tariffs." The same wording as last month was used, reflecting concerns about the global economy becoming more challenging due to tariffs. Until July, the ministry had stated that although uncertainties persist due to trade regulations, "an overall recovery trend is emerging, driven by improvements in trade."

This content was produced with the assistance of AI translation services.