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Production growth remains weak; consumer sentiment shows improvement: KDI

Published: 07 Aug. 2025, 15:48 Updated: 07 Aug. 2025, 15:51

Grocery shoppers look around displays at a large supermarket in Seoul on Aug. 5. [NEWS1]

The Korean economy continues to show weak production gains, largely due to a slump in the construction sector, but consumer spending has shown some improvement as of late, a state-run think tank said Thursday.

"Recently, the Korean economy has been experiencing sluggish production growth primarily due to weakness in the construction sector but consumption conditions are showing signs of partial recovery," the Korea Development Institute (KDI) said in its monthly economic assessment report.

The report pointed out that construction investment continued to post a sharp decline.

In June, overall industrial output remained weak, according to government data. Noticeably, construction output fell by 12.3 percent on-year, following a sharper 19.8 percent drop in May.

The KDI attributed the improvement in consumer sentiment to falling interest rates and government-led stimulus measures.

"Consumption conditions appear to be improving, with the consumer sentiment index remaining at a relatively high level," the report said.

Despite easing trade uncertainties following recent tariff agreements between the United States and its major trading partners, the KDI warned that downward pressure on Korea's exports continues.

Last week, Korea and the United States reached an agreement to lower proposed U.S. tariffs on Korean imports from 25 percent to 15 percent, in exchange for investing $350 billion in the United States.

"Although trade-related uncertainties have somewhat diminished due to recent agreements between the U.S. and major economies, prolonged high tariffs continue to exert downward pressure on the economy," the KDI added.

Yonhap