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Economy suffering due to weak domestic and global demand: KDI

All News 13:50 June 10, 2019

SEJONG, June 10 (Yonhap) -- The South Korean economy is continuing to stagnate on slowing domestic demand and declining exports, a state-run think tank said Monday.

Retail sales rose 1.4 percent on-year in April, down from the average of 1.7 percent in the first quarter of this year.

South Korea's exports fell 9.4 percent in May from a year earlier, extending their on-year decline for the sixth consecutive month.

"Domestic demand is slowing and exports remain subdued, implying that overall economic activity continues to stagnate," the Korea Development Institute (KDI) said in its monthly economic assessment report, called Green Book.

It said exports stayed weak on a drop in outbound shipments of items, including semiconductors. Outbound shipments of semiconductors fell 30.5 percent in May from a year earlier, according to the report.

Semiconductors are a key export product in South Korea, home to Samsung Electronics, the world's largest memory chip maker, and its smaller rival, SK hynix.

Adding to the signs of decline, imports of semiconductor manufacturing equipment fell 62.5 percent in April, compared with a 44.3-percent decline in March, according to the KDI.

The South Korean economy, Asia's fourth-largest, unexpectedly contracted 0.4 percent in the January-March period, the worst performance in a decade, hit by a sharper-than-expected drop in exports and business spending.

The Bank of Korea slashed its economic growth projection for the year to 2.5 percent from 2.6 percent in April, and is tilted toward further trimming its projection, possibly next month.

The finance ministry may face a tough call regarding the downward revision of its own growth estimate, currently set at between 2.5 percent and 2.6 percent. The ministry is widely expected to cut its growth projection next month when it rolls out a set of economic policies for the second half of the year.

This file photo shows the Korea Development Institute's headquarters in Sejong, an administrative hub about 130 kilometers southeast of Seoul. (Yonhap)


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