KDI: "Economy Shows Some Improvement Thanks to Consumption... Construction Slump Continues"

Economic Trends for November

Yonhap News

Despite a contraction in construction investment and a slowdown in export growth, a recent analysis by a national research institute indicates that the economy has shown some improvement, mainly driven by consumption.

On November 9, the Korea Development Institute (KDI) stated in its 'Economic Trends for November 2025' report, "Recently, our economy has shown some improvement centered on consumption, despite the contraction in construction investment and the slowdown in export growth." This is the first time KDI has used the term "economic improvement" in one year and five months since June of last year.

KDI explained that while the overall economic situation is not yet strong, the degree of easing in the economic downturn that has continued since August has made some further progress.

KDI analyzed that total industrial production in September expanded (-0.4%→6.7%), mainly due to growth in the service sector. In the case of service sector production-which includes wholesale and retail trade, accommodation, and food services, all closely related to consumption-KDI noted that even after accounting for the increased number of working days due to the Chuseok holiday shifting from September last year to October this year, the increase (1.0%→6.2%) was significant.

KDI assessed that consumption has been gradually improving, supported by declining market interest rates and government support policies. The retail sales index, which reflects goods consumption, experienced some monthly fluctuations due to the issuance of livelihood recovery consumption coupons, but as of the third quarter of this year, it increased by 1.5% compared to the previous quarter, indicating a mitigation of the downturn.

However, KDI maintained its assessment of a slump in the construction sector. Construction production in September (-17.4%→-4.3%) continued to decline despite the increase in working days due to the holiday shift.

KDI analyzed that although the magnitude of the decline has narrowed somewhat, this is attributable to temporary factors such as the increase in working days and the concentration of finishing works.

KDI also evaluated that export growth has slowed moderately, as strong performance in semiconductors was offset by weakness in other items.

Based on daily averages for September and October, exports to the United States (-12.9%) decreased, mainly due to automobiles (-23.2%), which are subject to relatively high tariffs. Exports to China (-6.8%) also remained sluggish, especially for items other than semiconductors (-11.6%).

KDI noted that although trade conditions have improved somewhat due to progress in the Korea-US trade agreement and easing US-China trade tensions, uncertainties remain.