Economy likely to rebound soon: KDI

Jun 12, 2023, 10:05 am

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Image: Yonhap

AsiaToday reporter Lee Ji-hoon

The economy is likely to rebound soon, a state-run think tank said Sunday, as there are increasing indicators suggesting an economic low point.

“The economy has been sluggish recently, mainly in the manufacturing sector. However, there are increasing indicators suggesting an economic low point,” the Korea Development Institute (KDI) said in its monthly report.

“The semiconductor sector is still shrinking due to a large increase in inventory,” KDI said. “Amid a partial slowdown in semiconductor exports and supplies, the export slump is somewhat easing. For instance, the decline in exports to China has improved.”

The decrease in semiconductor exports improved, dropping 36.2 percent in May while it fell 41 percent in April. Similarly, exports to China shrank 20.8 percent in May compared with a 26.5 percent decline in April.

“The service industry continued to show favorable trend, led by face-to-face businesses at the forefront. Consumer sentiment is also on the recovery track,” KDI said. “Consumer price growth continued to slow down as inflationary pressure on the supply improved.”

Consumption growth weakened slightly in April, with the retail sales index falling 2.3 percent from the previous month, but the consumer sentiment index continued to rise to 98.0 in May. The increase rate for consumer prices stood at 3.3 percent in May, down 0.4 percentage point from the previous month.

However, KDI pointed out that investment demand is limited as the manufacturing industry continues to be sluggish.

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